Executive Summary

India’s pursuit of development and low-carbon transition will define both its own growth trajectory and the global climate transition. Standing at a pivotal juncture, the country aims to achieve developed economy status by 2047 (Viksit Bharat) while reaching Net Zero emissions by 2070. It has already made strong progress, reducing emissions intensity by 36% over 2005 levels and achieving 50% non-fossil power capacity five years ahead of the Nationally Determined Contribution (NDC) target. However, meeting long-term goals will require unprecedented capital mobilisation of trillions required by 2070, compared to current annual flows of just USD 135 billion (of which USD 80-90 billion supports clean energy). High capital costs, limited concessional finance, and structural constraints continue to deter investment in emerging and hard-to-abate sectors. India’s transition spans technologies at different maturity levels, ranging from mature renewables requiring scale-up capital, mid-stage options like storage and e-mobility requiring concessional or structured finance, while frontier areas such as green hydrogen and Carbon Capture, Utilisation, and Storage (CCUS) depend on grants and blended capital. A stage-sensitive, technology-specific financing strategy is therefore essential.

Global financing gaps and India’s emerging green finance architecture: Globally, finance for climate action has risen to about USD 1.9 trillion annually in 2023, but remains well below the USD 6–9 trillion required annually to stay on a 1.5°C trajectory. Finance flows remain heavily concentrated with 80% in East Asia, Western Europe, and North America, leaving South Asia and Sub-Saharan Africa dependent on limited public sources. Debt dominates global flows, while adaptation and early-stage technologies continue to be underfunded. For India, these global imbalances highlight both the urgency and opportunity to mobilise diversified finance through concessional, blended, and risk-sharing instruments. The country’s emerging climate finance ecosystem, anchored in a national taxonomy, carbon market, Production-Linked Incentive (PLI) schemes, green bonds, and strengthened disclosure frameworks, provides a strong foundation.

A rigorous, India-specific modelling approach: The analysis adopts an Integrated Assessment Modelling (IAM) framework to estimate India’s investment needs and financing capacity across power, industry, and transport sectors. Macroeconomic projections from the Long-Term Growth Model (LTGM) feed into energy models, TIMES, and the India Energy Security Scenarios (IESS), to simulate energy demand, technology adoption, and emissions trajectories under the Current Policy Scenario and the Net Zero Scenario.

Technology-specific Capital Expenditure (CAPEX) assumptions are applied to quantify investment requirements for generation, storage, transmission, mobility, and industrial decarbonisation. The finance supply analysis adopts an asset-flow model to estimate the total capital that can be mobilised domestically and from foreign sources. The asset flow model estimates flows from banks, Non-Banking Financial Companies (NBFCs), institutional investors, and capital markets, xviii Scenarios Towards Viksit Bharat and Net Zero: Financing Needs Executive Summary, alongside foreign inflows via Foreign Direct Investment (FDI), Foreign Portfolio Investment (FPI), external borrowing, etc. Together, this framework captures both the scale of investment required and the composition of capital available, revealing sectoral financing gaps and dependencies between domestic mobilisation and global finance.