India’s Green Finance: Record Growth and Urgent Challenges

Green finance in India surged by 20% in FY 2021/22, reflecting increased commitment to mitigation and adaptation projects

The rise in green finance flows marks progress

• Mitigation finance averaged ₹3,712 billion (USD 50 billion) annually, driven by investments in clean energy, energy efficiency, and clean transportation.

• Adaptation finance tripled between 2019/20 and 2021/22, with agriculture-related activities added to the scope.

• International finance rose to 17% of total mitigation funding, with public and private sectors sharing responsibilities.

  
  

India’s green finance landscape reached a new milestone in FY 2021/22, recording significant growth despite pandemic-related disruptions. According to the Climate Policy Initiative’s (CPI) “Landscape of Green Finance in India 2024”, mitigation finance saw an average annual increase of 20%, reflecting a growing emphasis on clean energy, energy efficiency, and sustainable transportation. Meanwhile, adaptation finance expanded threefold, partly due to the inclusion of agricultural adaptation projects in the tracking methodology.

Despite this progress, India’s green finance flows still meet only a fraction of the estimated ₹11 trillion needed annually to achieve its Nationally Determined Contributions (NDCs). With high vulnerability to climate change impacts, scaling mitigation and adaptation finance is critical for India’s low-carbon and climate-resilient development.

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Technical Focus

In FY 2021/22, green finance for mitigation was sourced primarily domestically (83%), with the private sector contributing 66% of the domestic funds and 63% of international flows. Clean energy attracted 47% of tracked funds, followed by energy efficiency (35%) and clean transportation (18%). On the adaptation side, 98% of tracked funds came from domestic public sources, with disaster risk management (42%), flood/cyclone mitigation (32%), and agricultural adaptation (24%) as key areas of focus.

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"The 20% growth in mitigation finance and the threefold rise in adaptation funding highlight India’s progress," noted Vivek Sen of CPI. "But the gap between what is needed and what is available remains stark. Scaling innovative financial instruments and fostering public-private partnerships is vital."

Increased international finance (now 17% of total flows) underscores global interest in India’s green projects, but better coordination and streamlined policies are needed to accelerate this momentum.

The CPI recommends coordinated action, enhanced adaptation funding, robust policy measures, and improved data collection to bridge funding gaps. For sustainable progress, it will be crucial to operationalize a national climate finance taxonomy, incentivize private investment, and integrate domestic Measurement, Reporting, and Verification (MRV) systems.