Tracking India’s green finance

The recent ‘Landscape of Green Finance in India’ released by the Climate Policy Initiative (CPI), highlights that India’s tracked green finance increased, driven largely by domestic capital. The report maps finance flows across sources, instruments, sectors, and subsectors for FY2022-23 and FY2023-24. These findings communicate the scale of growth, who is financing it, and where the finance is flowing.

The report finds that India’s tracked green finance flows reached an annual average of USD 100.4 billion — comprising USD 81.9 billion for mitigation and USD 18.5 billion for adaptation, as a CPI brief on its website explains. It points out that India’s green finance landscape has expanded, with growth alongside a strengthening policy and regulatory environment. Growing flows for climate mitigation and adaptation point to opportunities to build further momentum across sectors, technologies, and finance sources. Achieving India’s climate and development goals will require not only increased finance but also diversified sources and more capital flowing toward emerging sectors, technologies, and adaptation priorities where finance remains limited relative to identified needs. Key actions include leveraging enabling policies and regulations, mobilizing private capital through appropriate market mechanisms, coordinated action across actors, and strengthening data and information systems. The process can be aided by enabling levers across policy, regulations, markets, and cooperation across diverse actors.

The report also states that domestic green finance has grown significantly amid a strengthening policy and regulatory environment, accounting for the largest share of flows for both mitigation (88%) and adaptation (95%). Government expenditure, including new targeted schemes for clean energy and resilient agriculture, along with growing domestic private flows, is providing a strong foundation to scale green finance. Continued policy signalling can build on this momentum and increase visibility of emerging opportunities to finance green activities. Greater alignment of climate finance with national priorities can support financing across a broader range of green and climate-aligned activities. Mitigation finance has grown but remains concentrated in a few sectors and technologies. More guidance, roadmaps, and an evolving climate finance taxonomy can enable flows to climate-supportive technologies and activities.

Five takeaways from India’s green finance landscape, according to the report, are listed in the CPI brief.

Finding 1 states that tracked mitigation finance has grown substantially, with domestic and private capital accounting for the largest shares. India’s tracked mitigation finance increased by 80% in 2023/24, reaching USD 81.9 billion, up from USD 50 billion in 2021/22. Growth was recorded across clean energy, energy efficiency, and clean transportation, reflecting increasing investments supported by domestic and private capital.

Finding 2 shows that domestic finance remained the primary source of mitigation flows, led by private capital. Domestic sources accounted for 88% (USD 72.4 billion) of total mitigation finance in 2023/24, with private actors contributing 68% of domestic flows, led by commercial financial institutions. Domestic public finance was primarily driven by public sector undertakings and government budgetary expenditure.

Finding 3 says that clean energy received the largest share of mitigation finance, while clean transportation and energy efficiency recorded substantial growth. Clean energy accounted for 51% (USD 41.4 billion) of mitigation finance in 2023/24, followed by energy efficiency (31%) and clean transportation (18%). Solar attracted the largest share of clean energy investments (45%), while onshore wind investments more than tripled. Within clean transportation, EV investments increased more than fivefold, while energy-efficient appliances accounted for 78% of energy efficiency flows.

Finding 4 points out that tracked adaptation finance reached USD 18.5 billion, with expanded coverage of adaptation-relevant health activities. Finance for previously tracked disaster risk management and on-farm agricultural adaptation activities increased by approximately 5% from 2021/22 to in 2023/24. Disaster risk management received USD 9.2 billion, accounting for nearly half of tracked adaptation flows. Finance for on-farm adaptation-related agricultural activities increased by nearly 50%, with crop insurance and resilient cropping systems receiving the largest shares. This edition additionally tracks USD 4.4 billion in adaptation-relevant health expenditure for the first time, representing approximately 24% of the tracked adaptation total.

Finding 5 states that tracked adaptation finance remained predominantly domestic and public. Domestic sources accounted for approximately 95% of tracked adaptation finance in 2023/24, primarily through central and state government budgets. Private adaptation finance remains only partially captured, limiting a comprehensive assessment of private-sector contributions.