India is likely to see a surge in green investments in infrastructure over the next five years, with an estimated Rs 31 lakh crore expected to come into the sector by 2030, according to a report by Crisil Intelligence released at its infrastructure summit in the capital. Crisil says this investment push aligns with India’s ambitious net-zero goals and the increasing importance of sustainable practices across industries from mobility to energy. However, some sectors like the EV ecosystem need a push – as there has been a decline in investment potential year on year.
Key sectors that will attract this green investment include renewable energy and storage, which will likely get about Rs 19 lakh crore. The transport and automotive sectors are expected to receive Rs 4.1 lakh crore, while the oil and gas sector is poised to attract Rs 3.3 lakh crore – with a push towards green hydrogen and smarter refining.
Crisil, however, sees a challenge in financing this green transition. While solar and wind power projects have access to adequate debt financing, newer technologies such as green hydrogen and carbon capture need new funding initiatives, including sops from the government.
“There needs to be a strong focus on energy efficiency with sector-specific roadmaps for industries, buildings and transportation. To mobilise funding for this green transition, there is a need to accelerate green bonds, green revolving funds and green credit schemes, and provide support for emerging technologies,” says Rahul Prithiani, senior director and global head, of energy and sustainability, Crisil Intelligence.
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The report points out the need for collaboration between the private sector, government and international funds. Besides the capital markets, developing green bond markets, and leveraging innovative financing structures like blended finance are crucial to address the funding gap and steer India’s net-zero journey.
Pointing out the growth in investments in different sectors through its “Infrastructure Investibility Index”, which highlights investment potential in different sectors, Crisil says investment in the electric vehicle (EV) ecosystem declined in the past year by about 4% while mining also saw a 6.2% decline. Investment potential in power transmission and renewable energy is up about 2.6% and 2.7% respectively.
Hemal N Thakar, senior practice leader and director, Crisil says “The slowdown in the EV ecosystem is because of the lack of a long-term initiative. The FAME III scheme and PM-EDRIVE schemes are short-term incentives and the sector needs a better push. That said segments like two-wheelers and three-wheelers will see growth in EV adoption much faster.”
He points out the need for consistent policies and private-sector participation to achieve this goal.