NEW DELHI, Feb 9: India will need investments totalling USD 22.7 trillion to reduce greenhouse gas emissions and achieve the net zero target by 2070, a Niti Aayog study said on Monday.
On an annualised basis, this cumulative requirement translates into average flows of approximately USD 500 billion per year, compared with actual annual investment of around USD 135 billion in 2024, of which only USD 70—80 billion currently supports clean energy, said the Niti Aayog’s study report on ‘Scenarios Towards Viksit Bharat and Net Zero: An Overview’.
Of the total, approximately USD 8 trillion must be front-loaded by 2050, including nearly USD 5 trillion in the power sector, given the capital-intensive nature of most low-carbon technologies.
The Net Zero Scenario reflects an ambitious pathway aligned with India’s commitment to achieve net zero GHG emissions by 2070.
With coordinated domestic and external reforms, India could credibly mobilise around USD 16.2 trillion towards its net zero transition by 2070 through a structural expansion in the scale, depth and efficiency of available capital, the study said.
Domestically, this entails deepening the corporate bond market, increasing the financialisation of household savings, and enabling institutional investors to invest in new areas, while safeguarding returns through diversified, high-quality corporate and green assets, the study said.
Externally, scaling FDI (foreign direct investment) and FPI (foreign portfolio investment), supported by credible transition roadmaps, a strong pipeline of bankable projects and deeper financial markets, would anchor sustained foreign capital inflows.
“Against the Net Zero Scenario investment requirement of USD 22.7 trillion and estimated aggregate flows of USD 16.2 trillion, a financing gap of USD 6.53 trillion remains. Given domestic constraints and the risk of crowding out and higher interest rates, this gap is expected to be met largely through external sources, raising the share of international sources to 42 per cent of total capital needs by 2070, rising from 17 per cent in 2022—23,” it said.
International capital, particularly concessional finance and grants, will therefore be critical to supporting technologies essential for net zero that are not yet commercially viable.
“Realising India’s aspirations of becoming Viksit Bharat, i.e., a developed economy by 2047 and achieving the net zero goal by 2070 will require an enabling ecosystem that spans robust institutions, innovative finance, integrated data systems, and strategic planning,” the Niti study said.
The study also said the net-zero transition has a limited impact on long-term GDP growth but demands high investment.
“India’s GDP is projected to stay broadly resilient even in Net Zero scenarios, reaching USD 30 trillion by 2047, which is aligned to the Viksit Bharat goal,” it said.
While the transition demands massive capital mobilisation, scenarios with a higher share of foreign financing limit total GDP variations to about 0.5 per cent by 2050.
“This highlights the importance of the financing structure: mobilising external capital, such as FDI, prevents pressure on domestic savings and avoids crowding out private investment,” the Niti study said.
The study examines India’s transition through two principal scenarios: the Current Policy Scenario and the Net Zero Scenario.
The Current Policy Scenario represents a level of effort that is realistically achievable based on historical trends and continuation of current policies (as of 2023), thereby projecting ongoing trends in low-carbon technology deployment.
Total investment requirements are estimated at USD 14.7 trillion under the Current Policy Scenario.
The Net Zero scenario reflects an ambitious pathway aligned with India’s commitment to achieve net zero greenhouse gas (GHG) emissions by 2070.
It incorporates both existing and additional policy measures to accelerate demand electrification, enhance circularity, improve energy efficiency, promote the rapid development of low-carbon technologies/fuels and encourage behavioural shifts. (PTI)
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