India stands at the cusp of a transformative opportunity to lead the way in green transition finance for infrastructure. Building future-ready, green infrastructure will require creating synergies across the sectors of infrastructure development. The commitment to achieve net zero carbon emissions by 2070 offers an opportunity to define a holistic approach to financing green infrastructure.
This transition is expected to require large-scale financing, with preliminary estimates for annual investments ranging between USD 28 billion and USD 50 billion until 2070, highlighting the need for continued investment and innovation. The Economic Survey 2023-24 also emphasised the importance of creating new pathways for financing to achieve India’s net zero target.
The green infrastructure landscape
The path to net zero is turning real assets into attractive investment opportunities. This shift is evident in sectors that directly contribute to greening the economy. One such key area is the energy sector, encompassing renewable power generation, transmission corridors and smart meter distribution, as well as e-mobility and battery storage.
Another significant opportunity emerges from efforts focused on making industrial inputs and resources more efficient and sustainable. This includes financing the green transition of traditionally carbon-intensive industries such as using green hydrogen for cement and steel production, as well as making resources such as water more sustainable through wastewater management, recycling, etc.
India is on the path to achieving the target of 500 GW of renewable energy by 2030. Power consumption since 2011 has grown faster than fossil fuel demand. The EV revolution is taking off. Supporting this growing transition-focused infrastructure ecosystem will require a concerted effort towards enabling policies and regulations, a large pool of diverse capital and close collaboration among all key stakeholders. This three-pronged approach can unlock greater capital and opportunities over the next few decades.
Policies, Capital, Collaboration
Government initiatives like the National Infrastructure Pipeline and PM GatiShakti have provided a roadmap for infrastructure development. The National Monetisation Pipeline has enabled the government to attract long-term global and domestic institutional investors who prefer investing in assets where government entities transfer ownership.
Moreover, infrastructure investment opportunities span the risk spectrum, necessitating a diverse toolkit of financial instruments to cater to projects from established technologies to innovative solutions. It will also require large capital flows from both global and local institutional investors who can offer diverse financing solutions – low-cost debt for less riskier projects, mezzanine and subordinated debt to bridge funding gaps, equity and venture capital for relatively high-risk projects. Institutions such as the National Investment and Infrastructure Fund Ltd (NIIF), a sovereign-linked fund manager, represent an initiative in this direction.
The third important aspect is to continue to focus on enabling public-private partnerships (PPP). The government has also focused on attracting private capital by doubling its public capital expenditure over the last six years to 3.4% of GDP in 2024-25. Public investment is typically expected to crowd-in private investment. The survey also highlighted the need to improve private sector participation in infrastructure.
This effort helps lay the groundwork for a future that is smarter, greener and more resilient. A holistic approach combining coordinated policies, diverse financing strategies and continued public private partnerships can leverage global and local capital at scale to achieve India’s net zero target.
