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India outpaces China in attracting green technology investment
Industry News- Dec 10,24
Despite this progress, India still trails China in total green technology funding for the year, raising $3.6 billion compared to China’s $5.6 billion.
India has surpassed China as a key destination for clean technology funding, driven by government-backed initiatives and growing investor interest in the nation’s green manufacturing ambitions. According to BloombergNEF, India secured approximately $2.4 billion in clean energy investments during the third quarter of 2024, over four times China’s total for the same period and the second-highest globally, after the United States.
India’s push to expand its local clean energy capacity and reduce dependency on China has positioned it as a potential global exporter of green technologies. Raj Pai, Founding Partner, GEF Capital Partners, attributes this momentum to the rising appeal of the climate sector for both public and private capital.
Prime Minister Narendra Modi’s government has implemented several policies to accelerate renewable energy development, making India one of the fastest-growing markets for renewables. The International Energy Agency predicts India will lead in renewable energy expansion among major economies through the end of the decade.
This year, more than a dozen renewable energy and electric vehicle companies have gone public in India. Notable examples include solar panel maker Waaree Energies and Ola Electric Mobility, a leading scooter manufacturer. Shares of NTPC Green Energy have risen over 30% since its market debut.
The burgeoning climate sector has attracted significant venture capital interest. Abhinav Sinha, Head- Technology and Telecoms, British International Investment (BII), notes that climate tech is currently a top focus area for venture capital in India. BII, which has pledged $1 billion for climate projects in India by 2026, highlights that a quarter of all seed-stage investments in the country are directed toward climate-related startups.
Despite this progress, India still trails China in total green technology funding for the year, raising $3.6 billion compared to China’s $5.6 billion. Accelerating India’s net-zero target to 2050 would require an investment of up to $12.4 trillion, according to BloombergNEF.
Challenges persist for India’s green startups, particularly in attracting growth-stage funding. Reports by IIMA Ventures and Mitsubishi UFJ Financial Group indicate that only a quarter of India’s 800 climate-focused startups have raised capital over the past decade, with funding totals significantly lagging behind fintech investments.
Nevertheless, the market for climate solutions in India, the world’s third-largest emitter of greenhouse gases, is expected to expand rapidly. Investors like Avaana Capital, which recently raised $135 million for green initiatives, and family offices are optimistic about the sector’s growth prospects. Anjali Bansal, Founding Partner, Avaana, expressed confidence in the market, noting increased backing from diverse funders.
India’s green technology journey is set to accelerate as it continues to develop solutions to reduce emissions and transition to a sustainable energy future.
(ET)
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