Green Public Procurement in India: From Fragmented Practice to a Scalable Green Market Transition

Public procurement is a foundational instrument of governance. It not only enables the functioning of government but also shapes markets, steers industrial behavior, and channelizes investments towards national priorities. Globally, public procurement accounts for an estimated USD 9.5 trillion, representing around 12% of GDP in OECD countries and up to 30% in developing economies, underscoring its significance. Public procurement-linked activity is estimated to account for nearly 15% of greenhouse gas emissions globally.

Goal 12.7 of the sustainable development goals (SDGs) seeks to promote public procurement practices that are sustainable, in accordance with national policies and priorities. Globally, Green public procurement (GPP) is recognized as a core instrument within sustainable public procurement (SPP) or strategic procurement along with socially responsible public procurement and innovation procurement. GPP integrates environmental, resource efficiency, and lifecycle considerations into procurement through standards, technical specifications, ecolabels, certification systems, and life-cycle based criteria.

GPP is increasingly being institutionalized through technical criteria and alignment with circular economy and climate policy goals. In the European Union, GPP is encouraged across member states through voluntary criteria and EU ecolabel across product and service groups, including ICT equipment, data centers, furniture, and catering services, with a trajectory moving towards mandatory requirements under its Circular Economy Action Plan and due to be adopted Circular Economy Act. Countries such as Japan and the Republic of Korea similarly embed ecolabels, life-cycle costing, and emissions-based tracking, reflecting a systemic shift towards using procurement to shape cleaner production systems and industrial upgrading.

Green public procurement foundations in India
Public procurement in India represents approximately 20–22% of GDP, making it a powerful lever of state-led market signaling. India’s procurement system is not anchored in a single overarching legislation but is instead derives mandates from its constitutional provision, the General Financial Rules (GFR) of 2017, procurement manuals, and digital platforms such as the Government e-Marketplace (GeM) and the Central Public Procurement Portal (CPPP). India’s digital procurement ecosystem provides a strong platform to operationalize these enabling provisions. The Government e-Marketplace (GeM), launched in 2017, has transformed procurement into a transparent, data-driven system.

Regulatory framework of public procurement in India

Source: https://teriin.org/policy-brief/green-public-procurement-advancing-sustainable-development-india-policy-nudges

The Third Nationally Determined Contribution by India targets a 47% reduction in emissions intensity of GDP by 2035 from 2005 levels. India’s Long-Term Low-Carbon Development Strategy identifies public procurement as a key demand-side intervention to enable of structural transformations in the supply side.

GFR forms the operational backbone of procurement governance wherein entry points for environmental and efficiency integration already exist. Rule 136 of GFR enables life-cycle costing, shifting procurement beyond upfront price to long-term value, including energy use and end-of-life costs. Rule 144 requires specifications to be objective and aligned with recognized standards, enabling environmental benchmarks and ecolabels. Rule 173 further allows evaluation based on environmental characteristics, and mandates procurement of Bureau of Energy Efficiency (BEE) star-rated appliances in notified categories. These provisions create a permissive but underutilized foundation for scaling Green Public Procurement, with scope for systematically integrating environmental and circularity considerations into procurement practice.

GeM is also increasingly promoting sustainable public procurement. It includes promotion of green goods such as solar products, pollution monitoring equipment, waste management systems, and green room air-conditioners. Service categories such as energy audits, afforestation, electric vehicle leasing, and electric bus operations further reflect an emerging ecosystem for cleaner infrastructure and services. A developing Green Transition Service aims to support public entities seeking to achieve carbon neutrality.

Other issue-based procurement in India
India’s Public Procurement Policy for Micro and Small Enterprises provide an instructive precedent for scaling such transitions. Introduced in 2012 as a phased procurement approach with a minimum 20% target in the next 3 years and made 25% annual public procurement mandatory in 2021, it demonstrates how mandated thresholds combined with digital monitoring can generate measurable shifts in supplier participation. Of the total annual procurement target of 25 per cent from Micro and Small Enterprises (MSEs), 3 per cent is earmarked for procurement from women-owned MSEs and 4 per cent for procurement from MSEs owned by SC/ST entrepreneurs. A similar architecture could support green procurement through mandates, tagging and monitoring procurement shares across ministries.

Another trajectory is of India’s energy efficiency procurement framework. The Bureau of Energy Efficiency (BEE), under the Energy Conservation Act, 2001, introduced its Standards and Labelling programme in 2006, now covering 34 appliances. A 2013 mandate by the Ministry of Finance required procurement of energy-efficient appliances in selected categories. However, alignment between procurement rules and expanding label coverage remains partial, indicating scope for a “mandate with flexibility” approach. A similar convergence could extend to Ecomark-certified products.

India also uses procurement to promote domestic manufacturing through minimum local content requirements. Suppliers are classified as Class-I, with at least 50 per cent local content, and Class-II, with at least 20 per cent. The policy grants preference to Class-I suppliers, restricts bidding in sectors with adequate domestic capacity, and provides penalties for non-compliance.

Information and digital procurement
India’s digital marketplace already uses visual identifiers to improve buyer visibility for select policy priorities, including start-ups, local content, and women entrepreneurs or MSEs. These identifiers help government buyers recognize specific categories of sellers or products within the procurement platform. Strengthening digital identifiers and linking them with certification or labelling systems can help make the procurement system more robust

For enabling green public procurement, this approach can be extended to visual identifiers for energy efficiency, eco-products, and quality and environmental management by MSMEs. Relevant labels and certifications such as the BEE Star Label, ECO Mark, and ZED Certification can serve as practical entry points for improving product visibility, supporting informed purchasing decisions, and gradually building a more robust green procurement ecosystem on GeM.

Table 1 highlights how existing digital identifiers on GeM for start-ups, local content, and social goals. It also shows the scope for greening in future. At present, India’s digital marketplace includes digital identifiers for select categories, such as start-ups, local content and goods from women entrepreneurs.

Table 1: Information and digital procurement in India

A key area for GPP is green procurement mandates and the visibility of environmental information at the point of purchase. To enable green public procurement, the next step would be to promote clear visual identifiers for energy efficiency, eco-products, and quality and environmental management by MSMEs. These could include the BEE Star Label, ECO Mark and ZED Certification.

The way forward
India has strong enabling conditions for advancing green public procurement, anchored in the three pillars of digital public infrastructure, labelling and certification systems, and an expanding environmental policy framework. From a Global South perspective, these foundations show how procurement reform can serve not only as an environmental instrument, but also as a tool for industrial development, market transformation, MSME competitiveness and inclusive economic transition.

The next step is to integrate these pillars through flexible mandates, improved information provision and systematic tracking of green procurement outcomes. India already has experience with such flexibility through the procurement of BEE Star-rated appliances, where a limited set of notified products provides a practical entry point while allowing future expansion. This approach can be extended to Ecomark-labelled products and other environmental goods, services and works. Internationally, there is also a need for a more nuanced engagement with local content in GPP. For developing countries, local content can support domestic value chains, employment, technology diffusion and resilience, while also generating environmental gains through shorter supply chains and cleaner production.

India’s public procurement can show that climate ambition, equity and development are not competing priorities, but the building blocks of inclusive and green market transitions.