Overview
India needs about ₹162.5 trillion (≈ $2.5 trillion) by 2030 to meet its Nationally Determined Contributions, and roughly $10.1 trillion by 2070 for net‑zero. The shortfall must be met mainly from domestic sources. The government and regulators are now shaping a financing architecture that can mobilise capital at scale.
Key Developments in 2025‑26
- In 2025 the RBI issued the Climate Finance and Management of Climate Change Risks Directions for commercial and small finance banks. The framework makes climate risk a mandatory part of lending and risk‑management.
- The Directions allow eligible green activities to count towards PSL targets, and recognise investments in sovereign green bonds.
- The Union Budget 2024‑25 announced the creation of a climate‑finance taxonomy to give legal certainty to green bonds and PSL classifications.
- The RBI is exploring the use of sovereign green bonds as collateral, flexible margin requirements and differentiated capital norms that would make brown lending more capital‑intensive and green lending cheaper.
- Regulatory steps such as the Climate Risk Information System and a sandbox for sustainable finance have been introduced, paving the way for a comprehensive climate stress testing regime.
Important Facts & Figures
- Decarbonising steel, cement, power and road transport will need $467 billion in extra capex from 2022‑2030 (≈ ₹54 billion per year, 1.3 % of GDP).
- By end‑2024 India had issued $55.9 billion in green, social and sustainability‑linked debt, a 186 % rise since 2021. Green bonds account for 83 % of this pool.
- Developing economies need $5‑6 trillion annually for climate action; the pr