The global threat of climate change demands urgent action from every nation. With carbon emissions reaching critical levels globally, reducing carbon footprints has become an imperative. India, as one of the world’s most populous and rapidly growing economies, is both a significant contributor to global emissions and a key player in the effort to mitigate climate change. As the world’s third-largest emitter of carbon dioxide (CO?), India faces an enormous challenge in achieving its decarbonisation targets, but it also holds vast opportunities in transitioning to a sustainable, low-carbon economy.

India’s commitment to net-zero carbon emissions by 2070 was announced at COP26 in Glasgow, marking the country’s long-term climate ambition. This ambitious commitment aligns with the global goal to limit global warming to 1.5°C above pre-industrial levels. However, the pathway to decarbonisation is filled with complexities that require coordinated efforts across various sectors of the economy, technological innovation, robust financial support, and political will.

Mukesh Vasani, Founder & Chairman, Aimtron Electronics, explains, “India's long road toward its 2070 net-zero target strikes me with a mix of ambition and stark complexity. Decarbonising the economy is no simple feat, particularly in the manufacturing sector, where progress often hinges on hefty capital commitments, regulatory stability, and an environment that encourages innovation. Cleaner technologies remain costly, and access to green financing remains inconsistent.”

Rajamani Krishnamurti, President, Indian Stainless Steel Development Association (ISSDA), believes that decarbonisation is no longer optional; it is imperative. India’s manufacturing sector is energy-intensive and contributes significantly to national emissions. “As global markets increasingly prioritise low-carbon products, Indian manufacturers must align with climate commitments to remain competitive. Decarbonising now enables us to future-proof our industries, attract green investments, and position India as a preferred sourcing destination for sustainable materials. In stainless steel, for instance, our shift to electric arc furnaces and scrap-based production already gives us a head start in low-carbon manufacturing,” he says. 

Why decarbonise?

India is a fast-developing country where industrialisation and urbanisation are rapidly advancing. Its economic growth, however, has brought with it an increase in carbon emissions, especially in high-emission sectors like power, steel, cement, and transport. As the country works towards its ambitious target of decarbonisation, it is essential to balance economic growth with sustainability.

“Decarbonising Indian manufacturing is now both a value protection and value creation strategic opportunity. The timing is critical because global market policies and regulations; along with buyer expectations are changing fast. It's important that the capital allocation decisions Indian industry makes in short to medium period will lock in technology, cost structures and emissions profiles for decades,” opines Sambitosh Mohapatra, Partner and Leader, Climate and Energy, PwC India.

Figure 1: Carbon emission across countries 

Source: Wikimedia Commons

India’s journey to decarbonisation is crucial, not just for the country’s future economic stability and energy security but also for global climate goals. “When we speak of decarbonisation, the first question must be: What is the price of carbon? Without a defined CO? price, it becomes difficult to prioritise technologies, evaluate cost-effectiveness, or attract long-term investment. Today, voluntary carbon-market prices vary widely—from below $ 1 to well above $ 100 per tonne—making planning uncertain. Introducing a transparent carbon-pricing mechanism would naturally guide the sector towards the most efficient solutions,” states Darshak Mehta, Energy Sector Group Consultant, Asian Development Bank (ADB). 

As the third-largest emitter of CO?, India accounts for over 7 per cent of global emissions. Yet, India’s per capita emissions are still comparatively lower than those of developed countries, which reflects the nation’s late industrialisation. However, the country’s growing economic output and rising energy demand are set to increase emissions, making decarbonisation all the more urgent.

Abhishek Malik, Executive Director, Calcom Vision Ltd, states, “For most manufacturers, the decarbonisation journey begins with understanding and measuring their emissions accurately. The challenge lies in getting consistent and credible data from across the supply chain, where standards and reporting frameworks often vary. In addition, high upfront investment costs for energy-efficient machinery and renewable integration, coupled with limited access to clean energy in some industrial clusters, make the transition gradual. Companies are increasingly recognising that decarbonisation is not just an environmental goal, it's also about future-proofing competitiveness in a global market that’s becoming more sustainability-driven.”

The need for decarbonisation goes beyond climate change mitigation; it is critical for ensuring the nation’s energy security, reducing reliance on imported fossil fuels, and creating long-term, sustainable job opportunities in emerging sectors like renewable energy, green manufacturing, and clean technology.

India’s rapidly growing economy, fuelled by the industrial sector, requires an increase in energy consumption, which in turn leads to higher emissions. The primary sources of emissions in India are energy-intensive industries such as cement, steel, transport, and power. Given that these sectors contribute significantly to the country’s emissions, it is essential to decarbonise them to meet global and national climate goals. However, addressing these challenges requires substantial investments, new technologies, and systemic changes in both industry practices and government policies.

India’s decarbonisation strategy

India’s net-zero target by 2070 is a long-term commitment that reflects the country’s determination to decarbonise its economy. While the path forward may seem daunting, India has already made significant strides in transitioning to clean energy, especially in the power sector. India’s renewable energy capacity is growing rapidly, with a notable increase in solar and wind energy deployment. By 2025, India had achieved a major milestone: half of its total power generation capacity was sourced from non-fossil fuel sources, five years ahead of schedule.

Figure 2: Indian steel industry's decarbonisation plan 

Source: Industry Reports, JMK Research; Courtesy: Institute for Energy Economics and Financial Analysis (IEEFA)

Note: Coal-based processes including DRI-EAF, DRI-EIF and BF-BOF. Others can include Molten Oxide Electrolysis, Electrowinning, etc

“Despite the growth of the renewable energy infrastructure, it is evident that effective scaling still requires significant effort. In the electronics manufacturing space, the challenges are even more nuanced. Our reliance on imported parts introduces vulnerabilities, and while sustainability policies do exist, their on-the-ground implementation tends to vary widely. The regulatory landscape can also be challenging, often as unpredictable as it is complex. But one of the more under-discussed hurdles is the absence of a standardised method for measuring emissions or tracking carbon footprints. Without a consistent framework, it is hard to gauge real progress,” opines Mukesh Vasani.

The country’s renewable energy target of 500 GW by 2030 is within reach, with significant investments in solar, wind, and battery storage technologies. The government is also pushing for electric mobility, with the National Electric Mobility Mission Plan (NEMMP) aiming to accelerate the adoption of electric vehicles (EVs) across the country.

However, despite these achievements, there are significant hurdles to overcome. India’s electricity demand continues to rise, driven by economic growth and urbanisation. To meet this demand sustainably, India will need to scale up renewable energy production and improve grid stability. Investment in energy storage solutions, such as batteries and pumped-storage hydropower, will also be critical to accommodate the growing share of renewables in the grid.

The country’s decarbonisation strategy must include a comprehensive roadmap for key sectors, such as transport, steel, cement, and agriculture. These sectors are critical to India’s emissions profile and must undergo major transitions to reduce emissions. 

Different industries like chemical, power, aluminium, steel, cement, etc face unique decarbonisation challenges. Hence, there is a need to adopt sector-specific strategies to mitigate emission challenge. Rajeev Ralhan, Partner and Leader, Decarbonisation, PwC India, elaborates, “It is clear that each of the different industries will have their respective challenges with respect to meeting the respective corporate level commitments, ranging from 2045 till as aligned with India's net zero target of 2070. The individual corporate/ sub-sector journey will also be impacted by macro level opportunities for cross cutting levers such as increased share of bio and renewable energy, enhanced circularity and technologies involving green hydrogen, alternative fuels and carbon capture storage/utilisation (CCS/U). A holistic vision of India Inc on identifying opportunities of collaboration between different industrial segments may be expected to bring these levers closers to reality.”

On the other hand, he adds, “A large share of the outputs from most of these industries is dependent on public procurement. Integrating green public procurement principles, especially in areas such as steel, cement, etc. will enhance industry's confidence in investing in low-carbon technologies.” 

Financing decarbonisation 

Achieving net-zero emissions by 2070 is a capital-intensive goal, and the financial resources required to decarbonise India’s high-emission sectors are immense. According to a new paper from the Centre for Social and Economic Progress (CSEP) and Task Force on Climate, Development and the International Monetary Fund, India will need approximately $467 billion by 2030 to decarbonise its transport, steel, cement, and power sectors, which together account for more than half of the country’s carbon emissions.

While the Indian government has introduced various green financing initiatives, such as the Green Bonds scheme and other market mechanisms, the scale of investment required is much higher. India will need to tap into both domestic and international sources of finance to close this funding gap. Furthermore, attracting private investment will require clearer regulatory frameworks, incentives, and long-term policy stability.

According to Rajeev Ralhan, decarbonisation is no longer optional; it is critical for remaining competitive in global markets. “The government’s Green Hydrogen Mission and Carbon Credit Trading Scheme will play a pivotal role in accelerating India’s low-carbon transition,” he says.

The financial support from multilateral institutions will also be crucial in enabling decarbonisation at scale. Institutions like the Asian Development Bank (ADB) have already been working with companies like Dalmia Cement to support carbon capture and storage (CCS) projects and green hydrogen adoption. 

As more sectors move towards cleaner technologies, increased investment in energy-efficient technologies and clean energy infrastructure will be essential to meet emission reduction targets. For smaller industries, such as MSMEs (Micro, Small, and Medium Enterprises), the financial burden of transitioning to low-carbon technologies can be a significant barrier. “MSMEs bear a significant risk in the decarbonisation trajectory of Indian industries. It is also one of the lowest-hanging fruits in decarbonising the supply chain of large industries. Increased availability of transition and climate finance for capacity enhancement and green technology adoption needs to be pushed,” suggests Rajeev Ralhan.

Support from government schemes and collaboration with larger industries will be necessary to ensure that MSMEs can play an active role in the decarbonisation process. Financial incentives, access to green finance, and risk-sharing mechanisms will be key to enabling MSMEs to make the transition to sustainable practices.

Overcoming the barriers

Technological innovation is at the heart of decarbonisation efforts. However, many of India’s key industries, such as cement, steel, and chemicals, face significant technological barriers. The lack of affordable and scalable clean technologies remains one of the largest obstacles to decarbonisation.

In the steel sector, for instance, decarbonisation requires the transition from traditional blast furnaces to more energy-efficient methods, such as electric arc furnaces (EAF). Additionally, green hydrogen has the potential to replace fossil fuels in steel production, but scaling up the infrastructure for hydrogen production remains a significant challenge. Similarly, the cement industry faces difficulties in adopting carbon capture and storage (CCS) technologies due to the high cost of implementation.

“ADB has led sector-wide CCS readiness studies across cement, steel, and concrete. Incorporating CCUS-ready designs into new-plant planning—at a marginal cost of just 0.25–0.5 per cent of total capex—can save substantial future retrofit costs by ensuring adequate space, cooling capacity, and connection points. Financially, ADB can help design and fund enabling infrastructure such as CO? hubs, similar to water or gas-transmission networks, and also extend venture-fund and blended-finance support for first-of-its-kind projects. In the past, under the Clean Development Mechanism, ADB facilitated advance purchase of carbon credits to provide upfront liquidity—such models could re-emerge as new carbon markets mature,” says Darshak Mehta.

Industries are also finding new pathways to reduce carbon footprint. For example, the cement sector is increasingly relying on alternative fuels (AFR/TSR), biomass, and other low-carbon alternatives to reduce its carbon footprint. “It is important to adopt the belief that clean and green is profitable and sustainable. Once sustainability becomes a business strategy rather than an obligation, transformation follows. At Dalmia Cement, we have set an aspirational goal of becoming carbon-negative by 2040—a commitment we treat as both a responsibility and a business lever. Our clinker factor has been optimised by ~27 per cent, and our blended-cement portfolio has grown from 40–46 per cent to nearly 85 per cent today,” said Lovish Ahuja, Chief Sustainability Officer at Dalmia Cement, during a recently panel discussion hosted by Indian Cement Review (ICR) magazine – published by ASAPP Info Global Group.

Sambitosh Mohapatra stresses, “Decarbonising Indian manufacturing is a strategic opportunity. The timing is critical because global market policies and regulations, along with buyer expectations, are changing fast. It’s important that the capital allocation decisions Indian industry makes in the short to medium period will lock in technology, cost structures, and emissions profiles for decades.”

Emerging technologies such as green hydrogen, digitalisation, and carbon capture are reshaping the manufacturing landscape. “These technologies are reshaping the manufacturing landscape. Green hydrogen offers a clean alternative for high-temperature processes in steel and chemicals. While infrastructure and cost remain challenges, India’s renewable energy potential makes scaling feasible. Digitalisation, through AI, IoT, and digital twins, is already enhancing energy efficiency and emissions tracking in stainless steel plants. Predictive maintenance and real-time analytics are driving smarter operations. Carbon Capture is essential for hard-to-abate sectors. Indian companies are embracing these technologies, but scaling requires policy support, financing, and collaborative innovation,” observes Rajamani Krishnamurti.

Policy support to accelerate decarbonisation

Government policies will be crucial in driving India’s decarbonisation efforts. The Indian government has already introduced several key initiatives to support the transition to a low-carbon economy. The Green Hydrogen Mission, the Perform, Achieve, and Trade (PAT) scheme, and the upcoming Carbon Credit Trading Scheme are just a few examples of policy frameworks aimed at reducing emissions. Rajeev Ralhan explains, “PAT scheme was among the earliest regulations for decarbonising large energy consumers by assigning targets to lower the energy intensity of the process. The scheme is now graduating into a Carbon Credit Trading Scheme (CCTS) focusing on lowering the emission intensity of the target entities.”

S Sunil Kumar, Country President, Henkel India, observes, "Under the National Green Hydrogen Mission, India is taking bold strides toward building a clean energy future. The government has set an ambitious target of producing 5 million tonnes of green hydrogen by 2030, supported by several states introducing incentive frameworks to accelerate electrolyser manufacturing and lower power costs for hydrogen projects. The sector is still developing, with infrastructure, capital costs, and offtake mechanisms evolving. However, these early efforts are laying the foundation for a robust hydrogen ecosystem. At the same time, the government is advancing plans to strengthen carbon capture, utilization, and storage (CCUS), with an Rs 389 billion program aimed at driving adoption in carbon-intensive industries. Together, these initiatives reflect India’s proactive approach to enabling next-generation low-carbon technologies and building a resilient, sustainable industrial future."

One of the key challenges in decarbonisation is ensuring that policies are aligned with industry needs. While regulations like the Green Hydrogen Mission and carbon pricing are important, the government must also streamline the regulatory process, ensuring that there is clarity and stability in the policy landscape. Simplifying the approval processes, providing incentives for green technology adoption, and setting long-term targets will provide industries with the certainty needed to invest in low-carbon solutions.

Mukesh Vasani believes, “The government has a real opportunity to lead the charge in helping companies transition to lower-carbon operations. Targeted incentives, clearer regulations, and investments in capability-building can make a significant difference. Programs like the Production Linked Incentive (PLI) scheme and capital support for electronics manufacturing have already begun to ease the upfront financial burden of adopting greener technologies. These measures give companies the breathing room to modernise without compromising on growth. To create a more stable and supportive environment for innovation, we can set up shared facilities, make the approval process easier, and connect emission goals to a well-organised carbon market.”

Global challenges: EU CBAM and beyond

India faces the additional challenge of global trade policies that are increasingly linked to carbon emissions. The European Union’s Carbon Border Adjustment Mechanism (CBAM) is one such challenge. The CBAM imposes a carbon tax on imports based on the carbon intensity of the goods. This will impact industries like steel, cement, and aluminium, which are among India’s major exports.

Mohapatra highlights, “The EU’s CBAM will be implemented soon - initially covering steel, aluminium, cement, fertilisers, electricity and hydrogen. Other markets are moving toward similar ‘embedded carbon’ rules or ‘Buy Clean’ procurement. Various analysts predict that at current EU carbon prices in the €60–100/tCO2 range, conventional Indian blast-furnace steel (?2 tCO2 per tonne) could face €120–200 per ton in levies; coal-powered primary aluminium can face even higher effective penalties. That is enough to wipe out margins or restrict market and finance access.”

Global supply chains are undergoing decarbonisation as major OEMs in sectors such as automotive, electronics, consumer goods, and construction are driving Scope 3 emissions reductions. They are increasingly demanding product carbon footprints, Environmental Product Declarations (EPDs), and verified targets (SBTi). Suppliers who lack credible decarbonisation strategies and data may find themselves unable to compete or secure contracts, regardless of their pricing. Hence, low-carbon production can minimise CBAM-type charges and keep Indian materials competitive in the EU and other markets. It also aligns with buyer procurement criteria, maintaining or growing export share.

Sunil Kumar opines, "As regulations evolve and mechanisms like the EU CBAM reshape global trade, Indian chemical manufacturers have an opportunity to position themselves as sustainability leaders. By adopting a phased innovation-driven approach, which focuses on renewable energy integration, process optimisation, circular chemistry, and low-carbon feedstocks, the sector can decarbonise while continuing to expand. With targeted incentives, consistent policy frameworks, and investment in local green manufacturing, India can transform its chemical industry into a globally competitive, climate-resilient, and future-ready growth engine."

Emphasising the need for Indian manufacturers to align with global sustainability standards, Mukesh Vasani states, “For Indian manufacturers, it is crucial to establish a clear foundation by firmly grasping emissions data and aligning their operations with established global sustainability benchmarks. Without that foundation, subsequent actions risk becoming reactive rather than strategic. From there, it’s quickly becoming non-negotiable to design products with low-carbon processes in mind and to switch to cleaner energy sources. Maintaining a level of openness with buyers, who increasingly demand visibility in the production process, is equally important. That said, change doesn’t have to come all at once. By experimenting with initiatives such as product-level Life Cycle Assessments (LCA), promoting supplier transparency, or collaborating with trade associations, companies can make significant progress. These steps not only help companies stay ahead of shifting regulatory landscapes but also make them more resilient in a market that’s leaning harder than ever into sustainability.”

Abhishek Malik adds, “As global trade becomes more linked to sustainability standards, Indian manufacturers will need to embed carbon management into everyday operations. Mechanisms like the EU’s CBAM will demand traceable, verifiable data on emissions from energy-intensive materials such as steel and aluminium. The best way to prepare is to standardise supplier data collection, adopt recognised carbon accounting frameworks, and maintain transparency in energy and resource use. These steps will not only ensure compliance but also strengthen India’s position as a credible sourcing base for global markets.”

On the green manufacturing path

As global markets push for greener products, India must prepare its industries to meet the stringent carbon standards set by importing nations. This includes investing in cleaner technologies, improving energy efficiency, and ensuring transparency in emissions reporting. Abhishek Malik opines, “Government policy plays a pivotal role in shaping the financial and infrastructural ecosystem needed for green manufacturing. Measures such as Time-of-Day power tariffs, Green Open Access, and the Carbon Credit Trading Scheme have already made renewable adoption more practical for industries. Going forward, targeted incentives for energy-efficient technologies, easier access to green finance, and the development of shared infrastructure for recycling and waste management within industrial clusters can further accelerate adoption.”

Rajamani Krishnamurti observes, “Decarbonisation demands an ecosystem approach. Manufacturers must collaborate with suppliers for greener inputs, with policymakers for enabling regulations, and with financiers for capital access. Industry associations like ISSDA play a pivotal role in convening stakeholders, sharing best practices, and driving collective action. Only through such collaboration can we build a resilient and low-carbon manufacturing base.”

India has the potential to become a global leader in green manufacturing by 2040-2050. However, this vision hinges on key enablers such as technological innovation, policy support, and the establishment of green infrastructure. Rajamani Krishnamurti outlines the critical elements for India to emerge as a green manufacturing hub: “India’s emergence as a green manufacturing hub hinges on: building green corridors, renewable energy access, hydrogen infrastructure, and technological innovation. Through collaboration between industry and government, India can lead globally in sustainable manufacturing.”

Mukesh Vasani adds, “For India to truly position itself as a green manufacturing powerhouse by mid-century, we’ll need to act with both urgency and clarity. It’s not just about setting lofty goals, it is about aligning policy, building out resilient infrastructure, and embracing technology that supports clean growth. None of these developments can happen in silos. The path forward demands tight collaboration between industry and government, a shared willingness to experiment, and a focus on long-term impact over short-term wins. If we achieve this alignment and commit fully, India will not just compete globally, it can lead.” 

According to Abhishek Malik, to establish India as a green manufacturing hub, two enablers are essential: the availability of clean, reliable power at scale and transparent, standardised emissions reporting across industries. “The country has made commendable progress, with over half of its installed capacity now from non-fossil sources. The next step is to pair this momentum with digitalisation, circular economy practices, and widespread adoption of global sustainability standards. Over time, green manufacturing must evolve from being a compliance goal to a defining feature of India’s industrial competitiveness and export identity,” he states.

Building a low-carbon future

India’s decarbonisation journey is ambitious, but it is not without its challenges. The financial, technological, and policy-related hurdles can be overcome with the right mix of government support, industry participation, and innovation. Mohapatra opines, "India is adding capacity in steel, cement, chemicals, and non-ferrous metals. These assets last 20–40 years. If built with high-carbon technologies now, they will either become stranded or be expensive to retrofit; building them clean from the start preserves competitiveness over their entire lifecycle."

India’s industry leaders have already demonstrated that sustainability and competitiveness can go hand in hand. By focusing on renewable energy, adopting green technologies, and scaling up clean manufacturing practices, India can not only meet its decarbonisation targets but also become a global leader in green manufacturing.

The path to a net-zero India by 2070 is complex, but with coordinated action, strategic investments, and collaboration across sectors, India can transition to a sustainable, low-carbon economy. The journey is challenging but achievable, and India has the potential to lead by example in the global fight against climate change.

In conclusion, Mohapatra says, “Decarbonisation is increasingly becoming a prerequisite for engaging in premium global markets. It helps reduce costs, secure market access, attract investment, and positions India as a leading supplier of competitive, low-carbon materials and products. The 2025–2030 period is critical: companies that act early will set industry standards and reap the benefits, while those that delay will face tariffs, lost orders, and higher capital costs.”

Rajamani Krishnamurti, President, ISSDA

Decarbonising now enables us to future-proof our industries, attract green investments, and position India as a preferred sourcing destination for sustainable materials.

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Mukesh Vasani, Founder & Chairman, Aimtron Electronics

Our reliance on imported parts introduces vulnerabilities, and while sustainability policies do exist, their on-the-ground implementation tends to vary widely.

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Rajeev Ralhan, Partner and Leader, Decarbonisation, PwC India

MSMEs bear a significant risk in the decarbonisation trajectory of Indian industries. It is also one of the lowest-hanging fruits in decarbonising the supply chain of large industries.

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Lovish Ahuja, CSO, Dalmia Cement (Bharat) Ltd

It is important to adopt the belief that clean and green is profitable and sustainable. Once sustainability becomes a business strategy rather than an obligation, transformation follows.

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Abhishek Malik, Executive Director, Calcom Vision Ltd

Companies are increasingly recognising that decarbonisation is not just an environmental goal, it's also about future-proofing competitiveness in a global market that’s becoming more sustainability-driven.

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S Sunil Kumar, Country President, Henkel India

As regulations evolve and mechanisms like the EU CBAM reshape global trade, Indian chemical manufacturers have an opportunity to position themselves as sustainability leaders.

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Sambitosh Mohapatra, Partner and Leader, Climate and Energy, PwC India

Decarbonising Indian manufacturing is now both a value protection and value creation strategic opportunity. The timing is critical because global market policies and regulations are changing fast.