Introduction
Sustainability has gained a significant place in government procurement as a priority when considering policies worldwide. India is at the lead of this change, especially with its ambitious climate targets related to climate resilience for all rounds of India commitments and plans to reference green growth more broadly. It is common for Government e-Marketplace (GeM), ministries, and public sector undertakings to see sustainability conditions in procurement documentation. There is a growth towards "Green Tender" in public sector procurement projects, specifically about requiring or cultivating environmentally preferable products and services in 2025 and beyond. This development process will have consequences for businesses, especially smaller and medium enterprises (SMEs).
The Policy Push Behind Green Procurement
The Indian government expressed its commitment to net-zero emissions by 2070 at COP26. Sustainable public procurement is emerging as an important enabler of this objective. The Public Procurement (Preference to Make in India) Order, Energy Efficiency Financing guidelines, and the GeM Sustainable Procurement Guidelines are encouraging vendors and contractors to procure products that meet green standards. The Union Budget 2025 identified the ₹11 lakh crore capital expenditure outlay, a significant part of which is allocated to green infrastructure, including renewable energy, metro rail extension, EVs, and green hydrogen adoption. Ministries such as Housing & Urban Affairs, Power, and Road Transport have been asked to promote the use of green materials, impartial energy systems, and sustainable building practices where appropriate in their tendering.
Defining Green Tenders in India
Green tenders are contracts for which sustainability-related criteria are either mandatory or given substantial weight in the evaluation process. The Centre for Environmental Planning and Technology (CEPT) suggests that in a green procurement process, you consider life cycle costs, carbon footprints, and compliance with national/international eco-labels.
Examples include:
Mandating the use of fly ash and recycled aggregates in construction tenders.
Procurement of electric buses under the FAME-II scheme.
Mandatory solar rooftop installations in government buildings.
Preference for low-VOC paints, LED lighting, and water-saving fixtures.
By 2025, the number of green-linked tenders floated by state and central agencies has more than doubled compared to 2020, according to World Bank Procurement Data.
Case Studies: Green Tenders in Action
Delhi Metro Rail Corporation (DMRC) has consistently integrated green procurement, using solar power for stations and energy-efficient rolling stock.
Indian Railways has floated large-scale tenders for renewable energy, with a target of achieving net-zero carbon emissions by 2030.
Smart Cities Mission projects are embedding green building codes, renewable integration, and sustainable urban mobility requirements.
The Ministry of Defence has begun pilot projects for renewable-powered cantonments, opening opportunities for green vendors.
Opportunities for SMEs in Green Procurement
Small and medium-sized enterprises (SMEs) are crucial providers of innovative green products and services. The MSME Procurement Policy mandates that at least 25% of annual procurement by CPSEs is directed toward MSMEs, with an additional preference for green SMEs.
Key opportunities include:
Renewable Energy Components: Solar panels, inverters, batteries, and charging infrastructure.
Eco-Friendly Construction Materials: Fly ash bricks, bamboo composites, recycled steel, and energy-efficient glass.
Waste Management Solutions: Composters, recycling units, and waste-to-energy technology.
Sustainable Mobility: Electric 2-wheelers, 3-wheelers, and EV charging solutions for municipal bodies.
GeM has also created a Green Category, where vendors can tag their products under eco-friendly specifications, making them more visible to buyers.
Challenges in Green Tender Participation
Despite rising opportunities, SMEs face barriers:
High Certification Costs – Obtaining ISO 14001, Ecolabel, or Bureau of Energy Efficiency certifications can be expensive.
Lack of Awareness – Many vendors are unaware of sustainability-linked tender clauses or how to meet them.
Technology Gaps – SMEs may not have access to advanced technologies needed for compliance.
Financing Constraints – Green technologies often require upfront investment, and SMEs struggle with limited access to green credit.
According to CII (Confederation of Indian Industry), only 30–35% of SMEs bidding for government projects are currently equipped to meet green compliance norms.
How Government is Supporting Green Procurement
Recognizing these challenges, the government has rolled out several initiatives:
GeM Sustainability Guidelines (2024 Update): Mandates buyers to consider environmental criteria in at least 20% of all new tenders.
MSME Green Financing Schemes: SIDBI has introduced concessional loans for green technology adoption.
Standardization of Eco-Labels: Bureau of Indian Standards (BIS) is aligning with international green product standards.
Capacity-Building Workshops: The Ministry of Environment is training procurement officers and SMEs on sustainability in tenders.
Global Benchmarks and India’s Position
Countries across the globe, including South Korea, Germany, and the UK, have implemented sustainability as a component in over 60% of public procurement contracts. India has achieved around 25-30% and is well on its way to catching up. In 2024, the World Bank's Green Procurement Index identified India as one of the "emerging leaders" in sustainable procurement.
Germany, for instance, requires lifecycle costing in all major infrastructure tenders, and South Korea utilizes a Green Public Procurement database similar to GeM’s Green Category. India is now looking to scale its National Green Procurement Policy (draft 2025), inspired by these examples, which could be a game changer.
The Future of Green Tenders in India
Sustainability in procurement is only going to become more important. By 2030, it is predicted that over half of central government tenders will include some level of green compliance. New technologies, such as AI and blockchain, will facilitate transparency on carbon footprints along supply chains.
For SMEs, being proactive in responding to the green agenda will allow access to long-term opportunities, both in tenders at home and in international projects funded by organizations such as the World Bank or the ADB. Adapting and securing certifications, developing eco-friendly products, and registering with GeM under the green categories will enable businesses to retain a competitive advantage.
Conclusion
Green tenders are no longer a niche segment but the new normal in procurement for Indian government purchases. Sustainability, also supported by India’s climate commitments, budgetary focus on green infrastructure, and procurement guidelines, is becoming the most important criterion in winning contracts. There is a wealth of opportunity for SMEs if they can overcome barriers around awareness, certification, and financing.
As we approach 2025, participating in government contracts with no green plan will increasingly mean being cut off from active participation. Businesses on GeM and other platforms must be prepared to understand and react to what it means to procure green - it is not just compliance now - it is an opportunity to grow.
