The Rise of Green Economy in India: Opportunities for Foreign Investment

India, with one-sixth of the world’s population but less than 3% of its land, faces growing resource constraints with each passing day. Despite steady economic growth, the gap between resource demand and supply is widening, which is further escalated with rising environmental challenges. As a result, the government of India is making significant efforts to transition to a green economy. At COP26, India pledged to achieve net zero emissions by 2070. In the near term, the objective is to install 500 gigawatts of renewable energy capacity from non-fossil fuel sources by the end of this decade.

The government of India has introduced and implemented several business-friendly policies to foster a favorable environment for foreign investment, supporting the clean energy goals. As India accelerates its shift towards a green economy, it offers a compelling opportunity for investors to gain significant financial benefits while contributing to a sustainable future. 

Government Policies Supporting Green Economy

India’s policy framework is becoming increasingly aligned with its sustainability goals, creating a supportive ecosystem for both climate action and green investments. Here are some examples:

• National Action Plan for Climate Change (NAPCC): The NAPCC is a comprehensive strategy to address climate change while promoting sustainable development in the country. Launched in 2008, it consists of eight missions focused on areas like solar energy, energy efficiency, water, and sustainable agriculture. The plan aims to balance economic growth with environmental responsibility by encouraging clean technologies and adaptive strategies.

• National Solar Mission (NSM): The National Solar Mission is one of the eight missions under India’s NAPCC, launched in 2010 to promote the use of solar energy. Its goal is to make solar power affordable and widely accessible.

• Sovereign Green Bonds: The Indian government issues sovereign green bonds (SGrBs) to raise funds for environmentally friendly infrastructure projects, primarily in the public sector. In FY 2022–23, bonds worth around INR 16,000 crore were issued, with INR 6,186 crore directed specifically toward renewable energy. These bonds offer a sustainable investment avenue for foreign investors while enabling the country to work towards its climate goals. To enhance foreign investor participation in sovereign green bonds (SGrBs), the Reserve Bank of India (RBI) launched a new scheme last year enabling their trading and settlement within the International Financial Services Centre (IFSC).

Potential Investment Segments 

To maximize renewable energy use and address growing supply-demand gaps, India is focusing on expanding its Battery Energy Storage Systems (BESS) capacity, which is projected to rise significantly from 34.7 GWh in 2026–27 to 1,840 GWh by 2047. This surge presents various partnership opportunities across the BESS value chain, including supply, manufacturing, and engineering.

Simultaneously, green hydrogen has emerged as a cornerstone of India’s clean energy future. With the launch of the National Green Hydrogen Mission in 2023, the country aims to become a global hub for green hydrogen production, opening up investment potential across production, distribution, and end-use applications. Offshore wind energy is another high-potential area, with India possessing an estimated 195 GW of offshore wind capacity. 

Despite the target of reaching 30 GW by 2030, the country currently has no operational projects. With the government of India actively working to catalyze investments in this segment, there is a big opportunity on the horizon for international firms with expertise in offshore technology, turbines, and specialized vessels.

India stands at a crucial juncture in its development journey, balancing rapid economic growth with the urgent need for environmental sustainability. Through progressive regulatory and financial policies, the government is actively laying the groundwork for a greener, low-carbon future. With significant potential in key sectors like battery storage, green hydrogen, and more, India offers a dynamic landscape for global investors seeking both meaningful impact and strong returns. By investing in India’s green economy today, stakeholders can play a vital role in shaping a more sustainable, resilient, and inclusive tomorrow.