India appears to be on the right track in respect of its accelerated pivot towards renewable energy (RE). However, going by present trends, national capacity-addition with regard to RE is not even close to the annual rate required for achieving its ambitious climate-related targets. Even as the country remains poised to witness a massive increase in electricity demand over the next few decades, in order to remain on a sustainable path, it needs much more funding than what is available in the current policy environment. Further, significant foreign investment is essential to address a developmental change as paradigmatic as achieving carbon-neutrality, especially given the country’s fundamental anxieties related to local industry and energy security. While its climate-related initiatives have mainly been funded through domestic capital so far, India now requires, in addition, both capital and technology from outside. Accordingly, sovereign and international development finance institutions, as well as foreign lenders and investors, need to play a key role towards funding India’s clean energy transition, over and above the government’s own legislative and regulatory interventions.
