India will require an estimated $467 billion in climate finance by 2030 to set four of its most carbon-intensive sectors — power, steel, cement and transport — on a low-carbon growth path, according to a new study released Thursday.
The working paper, India’s Climate Finance Requirements: An Assessment, authored by economists Janak Raj and Rakesh Mohan for the Centre for Social and Economic Progress (CSEP) and the Task Force on Climate, Development and the IMF, highlights sector-wise financial needs to meet the country’s decarbonisation goals.
The report calculates that India would need average annual funding of $54 billion between 2022 and 2030, equivalent to around 1.3% of GDP. Together, the four sectors accounted for more than half of India’s carbon dioxide emissions in 2023.
Steel and cement dominate funding needs
The study points out that the bulk of the financial requirement — more than 80% of the total — will come from the steel and cement industries, which are considered “hard to abate” due to their reliance on carbon-intensive processes. These sectors will depend heavily on costly carbon capture and storage (CCS) technologies, currently the only large-scale option available for reducing emissions.
By comparison, the power sector’s requirement is estimated at $57 billion, relatively modest due to rapidly declining renewable energy costs. Meanwhile, the transport sector will require significant investments to scale up electric mobility, including charging infrastructure and innovative financing models to replace internal combustion engine vehicles.
‘Within reach, but action needed’
Although the overall numbers appear substantial, the authors argue they are manageable. “The additional resources required for India’s energy transition, steel, cement and transport sectors — averaging 1.3% of GDP up to 2030 — are within reach,” Mohan noted.
The paper warns, however, that delays in mobilising funds could lock the economy into a high-carbon growth path, making later course correction more costly.
Closing the financing gap
To bridge the financing gap, the study recommends a mix of domestic and international funding. It suggests that India could consider prudently expanding its fiscal deficit up to 2.5% of GDP to accommodate foreign climate finance, while also boosting domestic mobilisation.
Policy recommendations include incentives for private investment in green steel and cement production, targeted subsidies, enhanced research and development, and stronger international technology transfers. It also calls for a national strategy to speed up electric vehicle adoption and strengthen the electricity grid with expanded storage and hydro-pump capacity.
The authors emphasised that steel and cement will be the “financial linchpin” of India’s decarbonisation journey, making them central to policy and investment decisions.
The findings come ahead of COP30 in Belem, Brazil, later this year, where India is expected to push for stronger global climate finance commitments.