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India Considers Mandating 'Green Steel' in Public Projects

  //business-finance.news-articles.net/content/202 .. rs-mandating-green-steel-in-public-projects.html
  Published in Business and Finance on Friday, April 3rd 2026 at 23:32 GMT by Business Today
      Locale: INDIA

New Delhi, April 4th, 2026 - A sweeping shift is on the horizon for the Indian steel industry as a potential government mandate requiring the use of 'green steel' in public procurement projects gains momentum. A comprehensive study released this week underscores the transformative potential - and inherent challenges - of such a policy, predicting a significant restructuring of the sector and a surge in demand for renewable energy-powered steel production.

Green steel, defined as steel produced using hydrogen or other renewable energy sources instead of traditional coal-fired methods, represents a critical step towards decarbonizing one of the world's most emissions-intensive industries. The Indian government's consideration of a mandatory procurement rule signifies a bold commitment to achieving its ambitious climate goals and positioning itself as a leader in sustainable manufacturing.

Currently, the vast majority of steel production in India relies on the Blast Furnace-Basic Oxygen Furnace (BF-BOF) route, which is heavily dependent on coal. This process generates substantial carbon dioxide emissions. Green steel production, conversely, utilizes technologies like Direct Reduced Iron (DRI) powered by green hydrogen - produced through electrolysis using renewable electricity - or electric arc furnaces (EAFs) powered by renewable sources. While these technologies are still relatively nascent and often more expensive than traditional methods, their environmental benefits are undeniable.

The study highlights that a mandated shift to green steel within public projects - encompassing infrastructure development, government buildings, and defense contracts - would create a substantial initial demand, incentivizing manufacturers to invest in these cleaner technologies. This initial demand is projected to create a ripple effect, driving down the cost of green steel production through economies of scale and further accelerating adoption across the private sector.

However, the transition won't be seamless. The report emphasizes the vulnerability of smaller and medium-sized enterprises (SMEs) in the steel sector. Many lack the capital needed to invest in new DRI-EAF facilities, hydrogen production infrastructure, or carbon capture technologies. The study advocates for a carefully calibrated, phased implementation approach to mitigate this risk. A phased rollout, beginning with less stringent requirements and gradually increasing the green steel content over time, would allow SMEs to adapt and compete.

"The success of this mandate hinges on a multi-pronged strategy," explains Dr. Anya Sharma, lead author of the study and a professor of Sustainable Industrial Policy at the Indian Institute of Technology Delhi. "Government support is paramount. This includes financial incentives for technology upgrades, streamlined regulatory approvals for green steel projects, and dedicated funding for research and development in hydrogen production and carbon capture."

Furthermore, the availability and affordability of green hydrogen are critical. India is already making significant strides in developing a national hydrogen mission, with plans for large-scale electrolyzer deployment and the establishment of green hydrogen hubs. However, scaling up hydrogen production to meet the anticipated demand from the steel sector will require substantial investments in renewable energy infrastructure - solar and wind power - and efficient hydrogen storage and transportation networks. The current cost of green hydrogen remains a significant barrier, requiring further technological advancements and policy support to bring it down to a competitive level.

The study also points to the importance of carbon capture and storage (CCS) as a complementary technology. While green hydrogen-based DRI-EAF routes are the preferred long-term solution, CCS can help reduce emissions from existing BF-BOF facilities during the transition period. However, the viability of CCS depends on the availability of suitable geological storage sites and the development of cost-effective carbon capture technologies.

The long-term implications of a successful green steel mandate extend beyond environmental benefits. It has the potential to enhance India's steel industry's competitiveness in global markets, particularly as demand for low-carbon steel increases from environmentally conscious consumers and industries worldwide. It also positions India as a technology leader in green steel production, attracting foreign investment and creating high-skilled jobs. The report suggests that a proactive approach to green steel will not only reduce India's carbon footprint but also strengthen its economic resilience and industrial leadership.

Looking ahead, the government is expected to unveil the details of the green steel procurement policy in the coming months, setting the stage for a fundamental transformation of the Indian steel industry.