India’s twin goals of becoming a “Viksit Bharat” by 2047 and reaching net-zero emissions by 2070 have the potentials of the most ambitious economic transformations ever attempted by a developing nation.
At the heart of this transition is the difficult task of balancing rapid growth with the simultaneous rewiring of the country’s energy, industrial, and financial systems. Two recent reports by NITI Aayog make it clear that India’s climate journey is as much about money and livelihoods as it is about emissions and technology.
For decades, India’s growth story has been powered by energy-intensive expansion—coal-based electricity, heavy industry, infrastructure construction and rising urban consumption. Unlike advanced economies, which began decarbonising after achieving high income levels, India must cut emissions while still building factories, roads, cities and jobs for millions. That makes energy transition complex.
The reports argue that climate policy cannot be treated as an environmental add-on. It must function as core economic strategy, shaping investment flows, industrial competitiveness, employment patterns and regional development. In practical terms, every rupee spent on the green transition must serve multiple purposes—cutting emissions while boosting productivity, creating jobs, improving energy access or lowering long-term household costs.
The investment scale is mammoth for Net Zero. India will need an estimated USD 22.7 trillion in cumulative investment by 2070 to reach net zero. Expected capital availability stands closer to USD 16.2 trillion, leaving a financing gap of roughly USD 6.5 trillion. That gap reflects structural limitations in domestic finance. India’s capital markets are growing but remain relatively shallow, with limited access to long-term, low-cost funds suited to infrastructure-scale projects.
The power sector alone accounts for about 82% of the financing gap, dwarfing industry and transport. This is because clean electricity is the backbone of the entire transition. Electric vehicles, green hydrogen manufacturing and low-carbon buildings all depend on abundant, affordable renewable power. In effect, decarbonising electricity is the master key that unlocks emission cuts across the economy.
The next two to three decades will require heavy upfront spending on renewable capacity, transmission networks, battery storage, charging infrastructure and hydrogen facilities. Delaying these investments risks locking India into carbon-intensive systems that would later require costly retrofits or early scrapping.
Large infrastructure projects need patient, low-cost capital. If developers rely on expensive commercial borrowing, project costs rise, tariffs increase and adoption slows. Instruments such as concessional loans, blended finance and sovereign guarantees can lower risks and attract private investors. Without them, the transition could become financially prohibitive, particularly for sectors already operating on thin margins.
Estimates suggest international finance could meet up to 42% of India’s total investment needs. That makes India’s transition a global test of climate finance credibility. If developed economies deliver on funding and technology promises, India could accelerate its shift. If they do not, progress may slow—not just here but worldwide.
While financing dominates the discourse, the social dimension may ultimately decide whether the transition succeeds. The analysis shows that clean energy growth is likely to create more jobs overall, with renewable sectors already employing over a million people and projected to generate several million more in coming decades.
But national gains can mask local pain. Coal-dependent districts risk economic disruption if mining declines without replacement industries. For these regions, just-transition policies—reskilling workers, attracting new industries, investing in infrastructure—are essential. Without them, regional inequality could widen and political resistance could grow.
Households face their own challenges. Clean technologies such as electric vehicles or rooftop solar often have higher upfront costs even though they save money over time. Lower-income families may struggle to afford these initial investments. Targeted subsidies, concessional loans and innovative payment models will be critical to ensure the transition does not become a privilege of the affluent.
One of the most striking insights from the reports is how closely financial decisions shape social outcomes. The cost of capital affects electricity tariffs; tariffs affect affordability; affordability determines whether households and businesses adopt clean technologies. In other words, climate finance is not just a technical issue—it is a distributional one.
Low-cost financing for renewable projects can lower power prices for consumers. Credit lines for industries can help factories modernise rather than shut down, preserving jobs. Concessional international funding can make emerging technologies viable sooner, widening access. Conversely, high-interest financing can raise energy costs and slow adoption, hitting poorer households hardest.
The shift to net zero will transform entire sectors. For example, in power, the move from coal to renewables demands grid modernisation, digital systems and storage capacity. In transport, electrification will redirect value chains from oil refining toward batteries, charging infrastructure and recycling. In industry, hard-to-abate sectors such as steel and cement must adopt advanced technologies like hydrogen-based production or carbon capture.
These changes will reshape trade patterns, skill demand and regional growth. With the right policies, India could emerge as a global hub for green manufacturing. But that will require coordinated industrial policy, strong research ecosystems and large-scale skill development to match workers with new opportunities.
Climate mitigation is a shared global responsibility. Wealthier nations possess capital and technology that can accelerate transitions in developing economies. Effective partnerships—combining finance, technology transfer and risk-sharing—could enable India to leapfrog directly to cleaner systems. Failure to cooperate would slow progress everywhere, as emissions from emerging markets play a decisive role in global totals.
India must expand access to low-cost, long-term finance through green bonds and blended instruments; deepen domestic capital markets so household savings can flow into climate infrastructure; create just-transition funds for fossil-fuel regions; align education and training with green skill demand; and ensure clean technologies remain affordable through targeted support.
Above all, climate policy must move out of administrative silos. It cannot remain confined to environment ministries while finance, industry, labour and power departments operate separately. The transition will succeed only if it is treated as a whole-of-economy mission.
India’s net-zero pathway is undeniably daunting, but doable. The investment needs are enormous, the social adjustments complex and the coordination challenge formidable. Yet it also presents a rare opportunity—to modernise infrastructure, create millions of jobs, improve public health and strengthen long-term competitiveness.
Success will depend not only on how much money India mobilises, but on how wisely it deploys it and how fairly the benefits are shared. If financing strategy and social policy move together, India can show the world that rapid development and deep decarbonisation are not conflicting goals but complementary ones. And if it succeeds, it will not just meet its own targets—it will set the template for sustainable growth in the century ahead.