India’s Green Revolution 2.

0
Trends Shaping India’s Climate-Tech Sector
RISHI AGARWAL, AKSHAY KOHLI
MARCH 2024
About FSG
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OVERVIEW
India’s climate-tech sector is a vibrant ecosystem where environmental imperatives, the forces of innovation, and
market dynamics coalesce. As the country grapples with the challenges associated with climate change, the sector
is playing a critical role in shaping a more sustainable and resilient future for the Indian economy.

The evolution of the climate-tech sector is also significant for its potential to address social and equity issues.
Initiatives in renewable energy and sustainable agriculture have the capacity to uplift rural communities, providing
access to clean energy and improving livelihoods. As India strives for inclusive and sustainable development, the
climate-tech sector becomes a catalyst for positive social impact, aligning economic growth with environmental
and social well-being.

The growth of the sector is indicative of a transformative approach that balances economic development with
environmental stewardship, setting an example for sustainable development on a global scale. Investments
supporting the development and deployment of innovative climate technologies are helping India transition to
cleaner energy sources, improve resource efficiency, and implement sustainable practices in various industries to
meet climate commitments.

This report tracks the trajectory of investments in India’s climate-tech sector in recent years, analyzing funding
stock and flows across the sub-sectors in climate-tech. Exploring emerging trends and potential business models in
the sector, it also offers insight into the future outlook for each sub-sector and delves into the implications for key
stakeholders such as start-ups, legacy companies, government, and investors.

Investments in the climate-tech sector

Investments in India's climate-tech sector have experienced significant growth, reflecting increasing interest from
both domestic and international investors. Despite a temporary setback in 2020 due to the economic disruptions
induced by COVID-19, which led to a 42% reduction in funding compared to 2019, the sector has demonstrated
resilience, registering an overall funding increase of 29% from 2019 to 2022 (see Figure 1). This growth
culminated in a record total investment exceeding US$5 billion in 2022, a milestone signifying a robust vote of
confidence in the sector’s potential for impact.

The investment surge in the sector can be attributed to several key factors. Primarily, there has been a significant
rise in awareness among citizens, businesses, and governments regarding the importance of embracing
sustainable practices. Additionally, the government has steadily enhanced incentives in the sector, sparking interest
among investors. These interconnected factors have collectively fueled the sector’s growth.1

INDIA’S GREEN REVOLUTION 2.0 | 1

 However, the investment momentum waned by the end of November 2023, with the sector attracting only
57% of the total investments garnered in 2022. This deceleration was driven by a decline in late-stage
investments, attributed to valuation cuts and a discernably pronounced investor focus on profitability.2

Meanwhile, in a broader context, global climate-tech financing also witnessed a notable upswing, with a
growth of over 108% from 2019 till the end of 2022, despite fluctuations. While investments reached a
record high of US$ 73 billion in 2021, there was a significant decline in 2022 due to a hike in global interest
rates and heightened caution by investors amid mounting uncertainty. The US Federal Reserve, which had
maintained interest rates near zero since the onset of the COVID-19 pandemic, rolled out nine rate hikes
between March 2022 and March 2023 to tackle rising inflation, diminishing the capacity and inclination of
venture capital (VC) funds for investment. In particular, 2022 saw a steep reduction in funding for climate-
tech solutions in mobility and transport, a segment that typically accounts for a significant portion of the
global climate-tech funding.

While the general trajectory of the climate-tech sector shows an upward trend, there are distinct variations
within specific sub-sectors3, which are explored in greater detail in the paper (see Figure 1). Notably,
investment activity has been driven primarily by significant funding in the mobility and energy sub-sectors,
which collectively represent over 94% of the total climate-tech investments in India from 2019 till November
2023. This dominant trend underscores the critical focus on these areas within the broader climate
technology field. They are followed by the industry, manufacturing, and resource management sub-sector,
garnering close to 2% of total investments over the same period, and the built environment and food,
agriculture, and land use sub-sectors, each of which secured slightly over 1% of the total funding. The
financial services sub-sector received less than 1% of the total climate-tech funding. Greenhouse gas (GHG)
capture, removal, and storage, as well as climate change management and reporting, are nascent sub-sectors
that received a negligible share of the investment pie.

Emissions realities and funding disparities

Aligning climate-tech investments with the need for emissions reduction in sectors contributing significantly
to greenhouse gas emissions offers the potential for both environmental impact and economic growth. The
energy sector is the largest contributor to GHG emissions in India, accounting for approximately 40% of
emissions. Climate-tech companies in the energy sector have garnered the majority of the country’s climate-
tech funding over the years.

Following closely, the industry, manufacturing, and resource management sector contributes around 30%
of GHG emissions, while food, agriculture, and land use accounts for approximately 20% of emissions.
However, despite these sectors’ significant contributions to GHG emissions, they have received only a small
proportion of climate-tech investments, collectively representing about 4-5% of the total investments over
the analysis years. This dissonance between emissions and financial support raises critical questions about
the alignment of investment strategies with environmental priorities, necessitating a reevaluation of resource
allocation for more impactful outcomes.

2 | FSG
FIGURE 1: INDIAN AND GLOBAL FUNDING LANDSCAPE ACROSS CLIMATE-TECH COMPONENTS, AND SECTOR-WISE
GHG EMISSIONS, FOR CALENDAR YEARS 2019-23

Total funding across Climate-tech Global funding across Climate-tech Sector wise GHG emissions in India,
components in India, 2019-2023 (in US$ Million) components, 2019-2022 (in US$ Billion) 2020-2022 (%, million metric tonnes)

5,077M $73B 3,521

2% 0.1% 2% 0% 3% 0%
4% 0.1% 3,356 0%
2% 0% 0%
2% 0% 5% 4% 0% 0%
5% 3,069 0%
0.04%
0%
4,218M 0.01% 3% 5% 0%
0.01% 1% 16% 29%
3,931M 0% 2%
0.08% 1% 30%
3% 0.5% 3% 1%
1% 2% $52B
0% 29%
11% 0.6% 13% 32% 12% 7%
0.2%
1% 0.01% 6%
3% 0.3% 0.1%
2,853M 0.1% 9% 19%
3% 0.4% 19%
0.1% 9% 1%
9% 0.04% 20%
2,291M 0% 7% 23%
5% 0.3% 1% $29B
10%
0.8%
6% 2% 2% 2% 9%
3% 2% $25B 3% 8% 2% 9% 9%
56%
0.8% 1%
82% 0.01%74% 45% 5% 1% 17%
10%
8% 16%
43% 35% 39%
80% 38%
37%
18%
67%
51%
0.1%
17% 7% 11%
4% 2%
2019 2020 2021 2022 2023 (Up to 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023
November 30) (Data not (Data not (Data not
available) available) available)

Components Key investees

Energy Generation Storage Management

Mobility and Supporting

Transport Manufacturer infra Services

Food, agriculture & land use

Industry, manufacturing & resource management

Built environment

Financial services

GHG capture, removal and storage

Climate change management & reporting

Note: The analysis pertains to calendar years (CYs) 2019 – 23. For CY 2023, the data analyzed was till November 30. More deals may have been recorded later that year
as investors tend to publish annual reports at the end of the calendar year.
Source: FSG Analysis based on Tracxn (CY19-23), Dealroom data, CEEW, ourworldindata.org, and IEA

INDIA’S GREEN REVOLUTION 2.0 | 3

 1 Energy

As India grapples with the challenges of meeting its growing energy demand, yet curbing
emissions from its energy sector, climate-tech solutions are playing a transformative role in
its approach to energy security. The growth of India’s green energy sector is the lynchpin for
fostering a resilient and sustainable energy ecosystem for the future.

In our analysis of investment in the sector, we have segmented the funding into three
distinct sub-categories – energy generation, energy storage, and energy management.
While the first encompasses energy generation companies, like Adani Green Energy and
ReNew Power, the second focuses on energy storage, featuring companies like Cygni Energy
and Matter Energy that specialize in non-EV related battery technologies and thermal energy
solutions for grids. The third sub-category encompasses energy management, with firms like
Serentica Renewables and Inox Green Energy specializing in smart grid management and
sophisticated monitoring and management systems for industrial hubs.

Investments in the Energy sector

The total climate-tech The green energy sector in India has witnessed significant investment fluctuations over the
funding in India's years. It attracted its highest investments totaling US$ 3,262 million in 2019, when two
energy sector fell in companies (ReNew Power and Mytrah) accounted for approximately 70% of the funding
2022 and 2023 due (see Figure 2). While the domestic green energy sector faced a 43% decrease in investments
to global economic between 2019 and 2020, the global green energy sector also faced a decline of 29% in
challenges and a fall in investments during the same period, primarily due to the economic impacts of the COVID-19
the average deal size pandemic. This is also evident from the diminished number of deals and average deal size.
The domestic sector recorded a 20% decrease in the number of deals and a reduction of
29% in the investment amount per deal compared to the figures from 2019.

However, India’s green energy sector displayed remarkable resilience, rebounding with a
substantial 75% surge in investments from 2020 to 2021, reaching a noteworthy US$ 3,235
million. This can be attributed to the post-IPO round raised by Adani Green in 2021, which
accounted for 77% of funding in the sector that year.

The sector witnessed a decline in 2022 and 2023 as investments fell, with 2022 recording
deals worth US$ 2,702 million, a 16% decrease from the previous year, and 2023 recording
total deals of US$ 980 million, just about 36% of the total amount raised in 2022. This can

4 | FSG
be attributed to the global economic challenges and the fall in average deal sizes; the total
funding dropped in 2022 despite 40 deals that year compared to just 24 in 2021.

FIGURE 2: INDIAN AND GLOBAL FUNDING LANDSCAPE FOR THE ENERGY SECTOR, FOR
CALENDAR YEARS 2019-23

40

No. of
disclosed 30 deals
deals $3,262M $3,235M
0% 1% 3% 0%
$2,702M
24 24 1%
18%
$1,853M
1% 0%
99% 96% 14

$980M
81%
0% Legend:
99%
Indian funding 48% Management
(in US$) Storage
52%
Generation
2019 2020 2021 2022 2023 (Up to
November 30)

Average Indian
deal size $108.75M $77.20M $134.79M
(in US$)
$67.54M $69.97M

Global funding
$0.96B $0.68B $5.09B $5.89B
Data not The energy generation
(in US$) available
segment secured 94%
Source: FSG Analysis based on Tracxn (FY19-23), Dealroom data
of total investments in
India's green energy
The energy generation segment emerged as the focal point for investments, securing
sector from 2019
approximately 94% of the total investments in the green energy sector from 2019 to 2022.
to 2022
This can be ascribed to India’s policy initiatives aimed at enhancing renewable capacity, the
remarkable cost competitiveness of solar energy—anticipated to surpass traditional coal-fired
power by 2030 even when coupled with battery storage—and the escalating demand for
energy. Conversely, the energy storage and energy management segments are still in the
early stages of attention, encountering obstacles like substantial upfront costs, technological
limitations, and regulatory complexities.4 The energy sector is the
biggest contributor to
The energy sector is the biggest contributor to India’s GHG emissions, responsible for around
India’s GHG emissions,
38% of the country’s total emissions. Between 2019 and 2022, the green energy sector
responsible for around
secured an average 74% share of climate-tech investments. While this outsized investment
38% of the country’s
favors the energy sector, it leaves other emissions-intensive sectors lacking adequate
total emissions
funding.

INDIA’S GREEN REVOLUTION 2.0 | 5

 Key trends in the Energy sector

The energy sector in India is undergoing a dynamic transformation, shaped by both

government initiatives and industry-driven innovations. These transformative trends not
only shape the nation’s energy future but also offer a highly encouraging landscape for the
advancement of climate-tech in the energy sector.

The National Green The government is actively steering India’s energy sector transition by focusing on
Hydrogen Mission aims renewables like green hydrogen, solar energy, and wind energy, digitizing energy
to achieve a green management services, and promoting the circularity of waste-to-energy processes.
hydrogen production
capacity of at least 5 In line with its clean energy strategy, the government is actively promoting the
MMT per year production and use of green hydrogen (GH2).5 It has introduced various policies
and guidelines to achieve this aim, such as the Green Hydrogen Policy, the National
Green Hydrogen Mission (NGHM), and Niti Aayog’s report on Harnessing Green
Hydrogen. The NGHM aims to achieve a green hydrogen production capacity of at
least 5 MMT per year. The government also intends to create a framework to distribute
incentives of ₹ 1,300 crore (US$ 157 million). The goal is to support 3.6 million tons
of GH2 capacity over the next three years, with the incentive amount per kilogram of
GH2 decreasing annually.

The government The government is pushing for self-sufficiency in high-efficiency solar PV

is pushing for module manufacturing and roof-top solarization to transition to renewables.
self-sufficiency in Through various schemes like the Production Linked Incentive (PLI), Scheme for
high-efficiency solar PV National Programme on High-Efficiency Solar PV Modules, Domestic Content
module manufacturing Requirement (DCR), and customs regulations, it is promoting local manufacturing of
and roof-top solar photo voltaic modules.6 The country’s cumulative solar module manufacturing
solarization capacity more than doubled from 18GW to 38GW between 2022 and 2023 and
is estimated to reach 100GW in the next 3-5 years.7 To this end, the Interim Union
Budget for FY25 announced plans for the roof-top solarization of 1 crore households.8

Complementing the thrust on solar energy, the government is ramping up wind

energy generation for its green energy transition. Between April 2022 and January
2023, the electricity produced from wind energy projects in the country was 64.54
For its energy billion units. The government has set a target of harnessing 140 GW of installed wind
management
energy capacity by 2030.9
digitization push, the
government aims to While challenges remain, the government’s promotion of energy management
install 250 million smart digitization through smart meters10 is making headway, with a significant number
meters by 2025 sanctioned, ordered, and installed across the county. The government aims to install
250 million smart meters by the end of 2025. Under the National Smart Grid Mission

6 | FSG
launched in July 2021, as many as 230 million smart meters have been sanctioned till
July 2023, of which 36.5 million smart meters have been ordered. States across the
country have installed 6.7 million smart meters.

Simultaneously, government support for waste-to-energy initiatives11 is

powering a shift towards circularity in the energy sector. At the forefront, the
Ministry of New and Renewable Energy (MNRE) is implementing the Waste to Energy
(WTE) Program under the umbrella of the National Bioenergy Program. The WTE
program is backed by a substantial budget outlay of ₹ 600 crore (US$ 72 million)
for the period FY 2021-22 to FY 2025-26, representing a significant commitment to
converting waste into a renewable energy source.

FIGURE 3: PADDY STRAW CONSUMPTION DISTRIBUTION 2022

Government support
Bio-gas Industrial Units
plants (Pellets)
for waste-to-energy
5% 2% initiatives is powering a
shift towards circularity
in the energy sector
18.5 Mn Set
50%
Managed 44%
MT Ablaze
In-situ

The underutilization of agri-waste is also a growing concern. India generates 500 MT

of agri-waste annually and burns 20% of it.12 Punjab, one of the largest producers
of agri-waste, generates 18.5 million tonnes of paddy straw annually (see Figure 3).
About half of this is managed responsibly through in-situ (mixing the residue in the
soil) and ex-situ (used as fuel) methods. The rest is burned, contributing to severe air
pollution in North India, especially during winter, raising health concerns.

In order to address this concern, governmental authorities are actively encouraging

thermal power plants to adopt agricultural waste as a sustainable fuel source. The
Companies are
National Green Tribunal (NGT) has specifically mandated that thermal power plants
investing in
incorporate stubble pellets, constituting 5-10% of their total fuel consumption.13
sustainability to reduce
Amid these forward leaps, corporate commitment to emissions reduction risks associated with
and de-carbonization is gaining momentum. With growing awareness of the climate change and
interconnectedness of sustainability and business success, the private sector’s role align with the demands
in climate action is increasing. Companies are investing in sustainability to reduce of conscious consumers
the risks associated with climate change and align with the demands of a conscious

INDIA’S GREEN REVOLUTION 2.0 | 7

 consumer base. Eight of the country’s top ten companies by market capitalization have
set net-zero targets that are to be achieved between 2030 and 2050.14 Moreover, 79
companies in India have committed to reducing GHG emissions under the Science-
Based Target Initiative (SBTi).15

The lack of reliable Meanwhile, however, significant challenges persist in the energy sector. A major
last-mile infrastructure concern is the lack of reliable last-mile infrastructure for electricity transmission
for electricity to rural households, leading to a range of issues including low electricity voltage,
transmission to rural restricted hours of availability, no power during late evening and night hours, and
households remains unreliable or poor connections.16 Although the government declared that every village
a concern in the country had gained access to electricity by April 28, 2018, several villages were
considered electrified even if only 10% of their households had such access.17

Additionally, the quality of electricity supplied to households is poor due to financial

strains faced by power distribution companies.18 The Saubhagya scheme has failed
to incentivize DISCOMs to refine their electricity supply as it does not consider
households’ inability to pay.19 Although initiatives like the Ujwal DISCOM Assurance
Yojana (UDAY)20 scheme aim to alleviate debts and aid failing DISCOMs, a pressing
need for further action remains.

Future outlook for the Energy sector

Looking ahead, the future of climate-tech in India’s energy landscape holds exciting
prospects. The energy sector in the country is at a crossroads, poised to make significant
strides in the pursuit of sustainable and clean energy solutions. There are several key focal
points that highlight this promising future.

Potential for Green Hydrogen to revolutionize multiple sectors

India has announced a target of energy independence by 2047 and net-zero emissions by
2070. Green hydrogen is expected to play a substantial role in achieving these goals. To this
Green Hydrogen end, the central government has launched the National Green Hydrogen Mission to make
has the potential to India aatmanirbhar (self-reliant) through clean energy and to serve as an inspiration for a
decarbonize several global transition towards clean energy. It plans to achieve this by creating demand for green
sectors, including hydrogen, piloting green hydrogen projects and hubs, implementing strategic interventions
transportation,
for the energy transition, and developing infrastructure and an enabling policy framework.
shipping, and steel
The need for Green Hydrogen is rapidly increasing due to its potential to decarbonize several
sectors, including transportation, shipping, and steel. Green hydrogen can replace traditional
fossil fuels in transportation that contribute significantly to greenhouse gas emissions. It
can also be used in industry for the production of ammonia, methanol, and steel, which

8 | FSG
is currently heavily reliant on fossil fuels. Additionally, Green Hydrogen can be used as a
backup energy source for renewable energy plants, providing a constant and reliable source
of energy.21

Legacy companies such as Tata and Ashok Leyland have started testing hydrogen-powered
heavy-duty trucks and buses. India’s oil refiners, such as IOCL, HPCL, and BPCL, are already
building green hydrogen production and storage facilities across the country. Private players
like RIL, Adani Group, and Tata Steel are also preparing roadmaps to transition to green
hydrogen in the coming years.22

Start-ups like NewTrace and Ohmium have started working on electrolyzers and
management systems to manufacture green energy.23 Ossus Biorenewables uses proprietary
bioreactors to convert organic carbon in industrial effluents to green hydrogen and has
already started partnering with industrial plants to produce 30 kgs of green hydrogen per
day from each plant.24

Time of Day (ToD) tariff structure for electricity in India25,26

The ToD tariff approach involves charging varying electricity rates based on the time of day.
It offers consumers the opportunity to reduce their bills by adjusting their energy usage
patterns and can help power systems utilize resources more efficiently. Installation of smart
meters will play a pivotal role in facilitating ToD tariff adoption.

The Government of India’s amendment to the Electricity (Rights of Consumers) Rules, 2020, Installation of smart
introducing ToD tariff, reflects a commitment to this transformative strategy. The ToD tariff meters will play
structure is set to introduce dynamic pricing, with rates to be 20% lower during solar hours a pivotal role in
(duration of eight hours in a day as specified by the State Electricity Regulatory Commission) facilitating Time of Day
and 10-20% higher during peak hours (night hours when households use heavy electrical tariff adoption
appliances like air conditioners).

Legacy companies will have to adapt to the new infrastructure, including installing and
integrating smart meters. This could involve significant changes to their existing systems and
processes. For example, in the US, companies like Google, Ecobee, Emerson, and Honeywell
are designing smart thermostats that are preprogrammed to meet individual customer
preferences.27 Companies may need to adjust their operations to align with the peak and
off-peak hours defined in the ToD tariff structure.28,29

Scope of peer-to-peer (P2P) energy trading in India30,31

The peer-to-peer (P2P) energy trading model establishes an online marketplace where
prosumers and consumers engage in direct electricity trading, eliminating the need for
intermediaries and allowing for transactions at mutually agreed prices. This approach fosters
increased deployment of renewable energy and enhances grid flexibility.

INDIA’S GREEN REVOLUTION 2.0 | 9

 Several enabling factors have paved the way for the successful implementation of P2P
energy trading in India. The presence of distributed renewable energy resources, coupled
with a robust digitalization infrastructure and a conducive regulatory framework, forms the
bedrock for the growth of P2P trading.

The expansive potential for commercialization in P2P energy trading renders it an

exceptionally attractive space for start-ups. For example, in Bangladesh, a company
The presence of
called SOLshare operates as a P2P trading platform, connecting local consumers through
distributed renewable
small-scale mini-grids. Other P2P trading platforms are gaining traction around the
energy sources,
world, like Brooklyn Microgrid (US), Centrica plc (UK), Piclo (UK), Lumenaza (Germany),
robust digitalization
sonnenCommunity (Germany), Transactive Energy Initiative (Colombia) and Vandebron
infrastructure, and a
(Netherlands).
conducive regulatory
framework form the The government also acknowledges the significance of P2P energy trading. The blockchain-
bedrock for the growth based P2P trading pilot initiative in Uttar Pradesh reflects this. It was launched in 2020 and
of P2P energy trading spearheaded by the India Smart Grid Forum (ISGF) and Powerledger. The pilot garnered
widespread interest from numerous distribution companies across India, subsequently
inspiring the replication of similar initiatives in states such as Delhi and West Bengal.

Need to prioritize the development of grid-scale storage32

As India strives to achieve 50% of its energy requirements from renewable sources by 2030,
the escalating penetration of renewable energy has heightened the strain on the already
burdened transmission and distribution grid. This underscores the urgent need for solutions
that enhance the flexibility of power systems, and the development of grid-scale storage
emerges as a strategic imperative.

Anticipating the growing need for energy storage, the government is poised to institute
comprehensive policies to bolster energy storage capacity in India. In line with this
commitment, the National Electricity Plan 2023 outlines a projection for the energy storage
capacity, targeting 41.65 GW from Battery Energy Storage Systems (BESS) by 2029-30.
This commitment is underscored by the Union Cabinet’s approval of viability gap funding
(VGF) amounting to ₹ 3,760 crore (US$ 453 million), covering up to 40% of the capital
Legacy companies
cost. This financial support aims to encourage private players to actively contribute to the
play a crucial role
establishment of Battery Energy Storage Systems.
in fostering the
development of Legacy companies play a crucial role in fostering the development of grid-scale storage
grid-scale storage solutions in India, and some have already taken significant strides in this direction. Notably,
solutions in India, and the Power Grid Corporation of India Limited (PGCIL) has commissioned a pioneering 1
some have already MW/0.5 MWh pilot project in Puducherry, integrating Advanced Lead-acid and Li-ion (LFP)
taken significant strides technologies.33 The National Thermal Power Corporation Limited (NTPC) has released

10 | FSG
tenders for 1,000 MWh of battery storage capacity. These endeavors by legacy companies
underscore their active engagement in contributing to the advancement of grid-scale
storage solutions in the Indian energy landscape.34

Potential of Vehicle-to-Grid storage solution35

The essence of a Vehicle-to-Grid (V2G) storage system lies in its ability to empower EV
users to contribute to grid stability. Through this system, users can permit the grid to
discharge their vehicle batteries when required, particularly during instances of a spike in
local demand. In return, users typically receive compensation, either in the form of lower
EV charging rates or direct payments for the electricity fed back into the grid. This symbiotic The Vehicle-to-Grid
relationship between EVs and the grid not only optimizes energy usage but also fosters a storage system presents
collaborative approach to addressing peak demand challenges. an enticing opportunity
for start-ups to craft
The V2G (Vehicle-to-Grid) storage system presents an enticing opportunity for start-ups innovative business
to craft innovative business models in the burgeoning energy sector. A wave of start-ups, models
both domestic and international, is actively developing grid-scale energy storage solutions,
signaling a vibrant ecosystem poised for growth.

In the Indian context, Sheru, an energy software company, stands out with its pioneering
efforts in crafting a V2G bidirectional battery-swapping system designed to balance demand
dynamics effectively.36 On the global front, a diverse array of start-ups is making significant
strides in this domain. Green Energy Wallet, a US-based startup, harnesses blockchain
technology to facilitate energy transactions. Similarly, V2G EVSE from the UK focuses on
Bi-Directional Charging Stations. Collectively, these start-ups epitomize the innovation
and potential inherent in the V2G storage system, offering a glimpse into the future of
sustainable energy solutions.37

Rising adoption and deployment of biofuels38

India’s rapid emergence as a prominent biofuels producer and consumer results from a
combination of well-coordinated policy measures, strong political support, and abundant India’s rapid emergence
feedstock availability. The National Biofuels Policy of 2018 comprehensively covers as a prominent
various aspects of the biofuels field and sets a vision for developing the sector. Multiple biofuels producer
initiatives like the ethanol blending program for 1G ethanol, the Pradhan Mantri Jaiv and consumer results
Indhan - Vatavaran Anukool fasal awasesh Nivaran Yojana (PM JI-VAN) for 2G ethanol, the from a combination
biodiesel purchase policy for biodiesel, and the Sustainable Alternative Towards Affordable of well-coordinated
Transportation (SATAT) scheme for compressed biogas (CBG) are actively promoting biofuel policy measures, strong
political support, and
production and utilization in the country.
abundant feedstock
availability

INDIA’S GREEN REVOLUTION 2.0 | 11

 The International Energy Agency (IEA) projects that by 2028, global biofuel demand will
reach 200 billion liters. Renewable diesel and biojet fuel are expected to contribute nearly
half of this growth, with the remainder coming from ethanol and biodiesel.

The launch of the Global Biofuels Alliance (GBA) on September 9, 2023, on the sidelines
of the G20 summit, further underscores India’s commitment to biofuels. Initiated by India,
the alliance includes Singapore, Bangladesh, Italy, the US, Brazil, Argentina, Mauritius, and
the UAE as founding members. As of January 2024, the GBA has expanded to include 22
member countries and 12 international organizations. The GBA’s primary goal is to expedite
the adoption of sustainable biofuels, aligning with international and domestic efforts to
expand sustainable biofuel supplies to stay on track with a net-zero trajectory.

Opportunity to harness India’s offshore wind energy potential

India's extensive India is gearing up to harness 140 GW of installed wind energy capacity by 2030, with a
coastline offers significant portion (30 GW) coming from offshore wind.39 The extensive 7,600 km coastline
potential for 195 GW offers potential for 195 GW of offshore wind energy, with an ability to provide utilization
of offshore wind energy factors of more than 50-55%. The government’s push for offshore wind energy is evident
from the Ministry of New and Renewable Energy’s announcement regarding the launch of a
4GW tender for offshore wind power off the coasts of Tamil Nadu and Gujarat.40 As declared
in the interim Union Budget FY25, the government aims to provide viability gap funding
(VGF) for 1GW of offshore wind power.41

India currently relies India currently relies on fossil fuels for 57% of its energy but aims to reduce this to 32%
on fossil fuels for 57% by 2030 (see Figure 4). The nation has set ambitious targets, including lowering carbon
of its energy but aims intensity by 45%, achieving 50% renewable electric power by 2030, and reaching net-zero
to reduce this to 32% carbon emissions by 2070. The goal is to install 500 GW of renewable energy capacity by
by 2030 2030.44

FIGURE 4: INDIA’S CURRENT42 AND PROJECTED43 ENERGY MIX (2023- 2030)

India’s energy mix, 2023 (in GW) India’s energy mix, 2030 P (in GW)
Nuclear Waste to Energy Nuclear Waste to Energy
Others Others
Wind 4% 2% Hydro 3% 2%
0.1% 1%
10% 9%

Solar
36%
Hydro 11%
417 GW Wind 17% 832 GW
(Total installed (Total installed
capacity) capacity)
57% Fossil fuel

16%
Solar

32%
Fossil fuel

12 | FSG
The government’s emphasis on wind energy is catalyzing a strategic shift among legacy
energy companies towards leveraging wind power. Tata Power has unveiled plans for
a substantial investment of ₹ 750 billion (US$ 9 billion) in wind energy infrastructure.45
Meanwhile, the Adani group, through its subsidiary Adani Wind Energy, stands as India’s
leading wind energy player, boasting a portfolio of 20 GW.46

Wind energy presents a compelling and lucrative market opportunity for investors, as
evidenced by the burgeoning market growth and the influx of current investments. Over the
next five years, the market is poised to witness the installation of 0.85 to 1.75 GW of wind
power capacity.47 The industry anticipates attracting investments ranging from ₹ 10,000-
15,000 crore (US$ 1.2 – 1.8 billion) solely for enhancing equipment manufacturing capacity.
This investment is projected to catalyze an additional influx of ₹ 70,000-80,000 crore (US$
8.4 - 9.6 billion) into complementary sectors such as transmission, storage, and services.48

Enhancing the efficiency of waste-to-energy plants using advanced technologies

like plasma gasification, hydrothermal carbonization (HTC), and refuse-derived
fuel49

Among technologies that can increase the efficiency of waste-to-energy plants, plasma
gasification stands out for its ability to handle various waste types, including hazardous
waste, while significantly reducing waste volume. A plasma-gasification-based hazardous
WTE plant in Pune with a capacity of 700 TPD showcases the commercial use of this
technology for waste disposal.
Advanced technologies
Similarly, hydrothermal carbonization (HTC) can process diverse waste types, reduce waste like plasma gasification,
volume, and generate fuel for boilers or gasifiers. However, research and development (R&D) hydrothermal
regarding the effective implementation of HTC in India is still underway. carbonization, and
refuse-derived fuel can
Refuse-derived fuel (RDF), produced by the shredding and drying of municipal solid waste enhance the efficiency
(MSW), is a fuel source for industrial processes, such as cement kilns, and power plants. of waste-to-energy
India boasts multiple RDF-based WTE plants, including Delhi’s Timarpur-Okhla Waste plants
Management Company Limited and Ghazipur WTE Power Plant, Hyderabad’s plant set up by
Greater Hyderabad Municipal Corporation (GHMC) and Ramky Enviro Engineers Limited, and
Bengaluru’s plant managed by BBMP.

The government has a pivotal role in advancing the efficiency of waste-to-energy (WTE)
plants through comprehensive measures. Its commitment is reflected in policy formulations,
exemplified by the Urban Development Policy in India, which strategically targets the
creation of garbage-free cities. Providing crucial financial support, the Ministry of New and
Renewable Energy extends central financial assistance to project developers and service
charges to implementing/inspection agencies, fostering the successful commissioning of
WTE plants.48

INDIA’S GREEN REVOLUTION 2.0 | 13

 Legacy companies, start-ups, and MSMEs collectively pave the way for the adoption of
advanced technologies in the realm of waste management. A notable example is Asia Bio-
energy Pvt Ltd (ABIL), a Chennai-based company that pioneers the application of “biogas
induced mixing arrangement (BIMA)” technology in a 5.1 MW Municipal Solid Waste
(MSW)-to-energy project. In Vadodara, UPL Environmental Engineers Pvt Ltd takes the lead
with their cutting-edge gasification technology, boasting an impressive destruction efficiency
of 99.9% and emissions well below prescribed thresholds.49

Potential for HVDC transmission to play a significant role in the adoption of

renewable energy52

On the horizon of climate-responsive technology in India’s energy landscape lies a transition

from High Voltage Alternating Current (HVAC) transmissions to High Voltage Direct Current
(HVDC) transmission systems, at least for specific use cases. This shift is underpinned by the
inherent advantages of HVDC, presenting a compelling alternative for optimizing power
transmission over long distances.
Balancing the
HVDC excels in efficiency for long-distance bulk power transmission, with lower losses
advantages of
(2-3%) than HVAC (5-10%). However, the need for terminal converter stations makes HVDC
HVDC transmission
more expensive. Balancing HVDC advantages with economic considerations will likely shape
with economic
India’s future energy transmission.
considerations will likely
shape India's future Even though the costs involved make it difficult to replace the entire HVAC transmission
energy transmission infrastructure with HVDC, the technology presents a unique opportunity for integrating
remote renewable energy into the grid with minimal losses. HVDC can quickly compensate
for fluctuations in power levels, making it the ideal technology for stabilizing irregular power
flows, such as those generated by wind farms. HVDC transmission is already being used in
Europe, the US, and other countries to connect offshore wind energy with the main grid.

Legacy companies like Hitachi Energy and General Electric (GE) T&D India are actively
exploring opportunities in the HVDC power transmission space. By 2025, four substantial
High Voltage Direct Current (HVDC) projects will be tendered: Bhadla-Fatehpuri, Leh-Ladakh,
Khavda, and Barmer-Jabalpur.53

14 | FSG
Summary of key trends in the Energy sector
• The government is actively promoting the production and use of green hydrogen (GH2)
• The government is pushing for self-sufficiency in high-efficiency solar PV module
manufacturing and rooftop solarization to transition to renewables
• Complementing the thrust on solar energy, the government is ramping up wind energy
generation for its green energy transition
• While challenges remain, the government’s promotion of energy management
digitization through smart meters is making headway, with a significant number
sanctioned, ordered, and installed across the county
• Government support for waste-to-energy initiatives is powering a shift towards circularity
in the energy sector
• Corporate commitment to emissions reduction and de-carbonization is gaining
momentum
• A major concern is the lack of reliable last-mile infrastructure for electricity transmission
to rural households

Summary of future outlook for the Energy sector

• Green Hydrogen has the potential to decarbonize multiple sectors, including
transportation, shipping, and steel
• The ToD tariff structure is set to introduce varying electricity rates in India based on the
time of day
• Several enabling factors have paved the way for the successful implementation of peer-
to-peer (P2P) energy trading in India
• With renewable energy penetration growing, the development of grid-scale storage to
enhance the flexibility of power systems is a strategic imperative
• The Vehicle-to-Grid (V2G) storage system presents an enticing opportunity for start-ups
to craft innovative business models in the burgeoning energy sector
• The production and consumption of biofuels is expected to increase as key obstacles are
addressed
• India is gearing up to harness 140 GW of installed wind energy capacity by 2030, with a
significant portion (30 GW) coming from offshore wind
• Advanced technologies like plasma gasification, hydrothermal carbonization (HTC), and
refuse-derived fuel can increase the efficiency of waste-to-energy plants
• A transition from High Voltage Alternating Current (HVAC) transmissions to High Voltage
Direct Current (HVDC) transmission systems presents a unique opportunity for integrating
remote renewable energy into the grid with minimal losses

INDIA’S GREEN REVOLUTION 2.0 | 15

 2 Mobility and Transport
The mobility and transport sector in India has become a focal point of climate-tech
innovation and investment. With a burgeoning population and rapid urbanization, the
demand for efficient, sustainable transportation solutions has grown rapidly in the country.
This is reflected in investor affinity for green solutions in mobility and transport.

EV manufacturing has In our analysis of funding within the sector, we have segmented the funding into three
consistently attracted sub-categories – Electric Vehicle (EV) manufacturers like Ola Electric and Mahindra
substantial investments, Electric Automobile Ltd, supporting infrastructure developers such as Battery Smart and
typically accounting SUN Mobility for EV charging, and service providers including start-ups like FleetX for EV
for around 70-80% of fleet management. EV manufacturing has consistently attracted substantial investments,
climate-tech funding typically accounting for around 70-80% of climate-tech funding for mobility and transport
for mobility and solutions. The only exception was in 2020, wherein companies offering services for EVs
transport solutions received a majority (~54%) of the climate-tech funding in mobility and transport, and EV
manufacturers received relatively lower funding, potentially on account of the COVID-19
pandemic.

Investments in the Mobility and Transport sector

While growth in the mobility and transport space in India’s climate-tech sector has been
robust, it faced a setback when investments fell by 54% between 2019 and 2020 (see
Figure 5). A broader reduction in global funding on account of the COVID-19 pandemic was
one of the key drivers, which led to smaller investments and fewer mega deals.

Apart from the There was a resurgence in 2021 on the back of a few major deals – Ola Electric raised
pandemic-induced over US$ 300 million, and GMW and Sun Mobility raised US$ 50 million each. These deals
slump in 2020, climate- accounted for over half of the domestic funding in 2021, leading to a 192% increase over
tech funding in India's the preceding slump year.
mobility and transport
The trend continued in 2022 as funding surged to new heights of US$ 2,010 million on
sector has largely
the back of multiple high-value deals, led by Tata Passenger Electric Mobility securing US$
witnessed steady
500 million. Similarly, by the end of November 2023, India’s mobility and transport sector
growth year-over-year,
had already secured 86% of the record funding it had raised the previous year with Ola
with a peak in 2022
Electric raising 40% of the funding, signaling a trend similar to the previous year despite the
headwinds in the funding space.

16 | FSG
Climate-tech funding in India’s mobility and transport sector has largely witnessed steady
growth year-over-year, aside from the pandemic-induced slump in 2020, culminating in
a peak in 2022. In contrast, globally, funding in this segment has experienced notable
volatility, with downturns in both 2020 and 2022 punctuated by a record investment of
US$ 41 billion in 2021. The significant decline in 2022 was a consequence of the global
economic challenges, including inflation, declining valuations, and rising interest rates, along
with geopolitical conflicts, all of which had a considerable impact on private markets.

FIGURE 5: INDIAN AND GLOBAL FUNDING LANDSCAPE FOR THE MOBILITY AND TRANSPORT
SECTOR, FOR CALENDAR YEARS 2019-23

122

111

$2,010M
7%
12% $1,723M
11%
No. of 63 deals 62 62 15%
disclosed
deals

$766M 81%
$574M 13%
18% 74%
2%
22%
Indian funding $262M Legend:
(in US$) 76% 17% 69% Services
29%
54% Supporting infra
2019 2020 2021 2022 2023 (Up to Manufacturer
November 30)

Average Indian
deal size $16.47M $27.79M
(in US$)
$9.10M $4.23M $6.90M

Global funding Data not

$17B $15B $41B $18B
(in US$) available

Source: FSG Analysis based on Tracxn (FY19-23), Dealroom data

While the mobility and

Amid this global economic uncertainty, India demonstrated remarkable economic resilience, transport sector garners
successfully sustaining its growth trajectory despite global headwinds. This indicates a about 29% of the total
resilient expansion in this segment of India’s climate-tech sector outside of pandemic climate-tech funding in
influences, while the global trend shows greater susceptibility to fluctuations. India, its contribution
to GHG emissions
While the mobility and transport sector in India’s climate-tech landscape has attracted
is relatively lower,
significant investments, accounting for about 29% of the total climate-tech funding in at 9-10% of India's
the country, its contribution to GHG emissions is relatively lower, at 9-10% of India’s total total emissions
emissions. This disparity suggests a potential misalignment between the substantial funding
this sector receives and the pressing need for emissions reduction in sectors with higher
emissions.

INDIA’S GREEN REVOLUTION 2.0 | 17

 Key trends in the Mobility and Transport sector

From the surge in electric vehicle adoption to government initiatives promoting

electrification, the rise of shared mobility, and the transition towards electric last-mile
delivery, several key trends are redefining the future of mobility and transport in India and
propelling the growth of climate-tech.

The increasing adoption of EVs, led by two-wheeler (2W) and three-wheeler

(3W) vehicles, is at the forefront of the mobility and transport sector’s sustainability
With a projected
transition in India. With a projected 49% compound annual growth rate (CAGR)
49% CAGR between
between 2022 and 2030, the domestic EV market is targeting 10 million annual EV
2022 and 2030, the
sales by the decade’s end,54 the majority of which will be 2W and 3W vehicles. For
domestic EV market
the calendar year 2023, 5% of the total 2W vehicles sold and 53% of the total 3W
is targeting 10 million
vehicles sold were electric, as opposed to ~1.8% in the 4W segment55 (see Figure 6).
annual EV sales by
This increase in the adoption of 2W and 3W electric vehicles is driven by factors such
the decade's end, the
majority of which will as highly competitive total costs of ownership (TCOs) and the minimal requirement for
be two-wheeler and public charging infrastructure, as home charging is sufficient for everyday use. Creative
three-wheeler vehicles and compelling EV options that match the performance of internal combustion engine
vehicles (e.g., horsepower, acceleration), and early logistics and delivery fleet adoption
due to Government of India incentives are also key drivers of adoption.56

FIGURE 6: PENETRATION OF 2W AND 4W EVS IN THE INDIAN MARKET52

Total 2-Wheeler sales1 split by electric / Total 3-Wheeler sales1 split by electric / Total 4-Wheeler sales1 split by electric /
non-electric in India, 2020-2023 non-electric in India, 2020-2023 non-electric in India, 2020-2023
(in US$ Million) (in US$ Million) (in US$ Million)

Two-wheeler EVs Three-wheeler EVs Four-wheeler EVs

Two-wheeler non-EVs Three-wheeler non-EVs Four-wheeler non-EVs

17M
5%
15.6M
4% 1.1M
14.3M
0.2% 13.9M
1% 4.8M
1.8%
4.4M
0.9%
53% 3.7M
0.69M 0.4%
3.1M
95% 0.1%
100% 96%
99% 52%
0.4M 98.2%
0.39M 99.1%
22% 99.6%
40% 99.9%
47%
78% 48%
60%
Beyond their use in
2020 2021 2022 2023
passenger mobility, 2020 2021 2022 2023 2020 2021 2022 2023

Note: 1. Each registration in the Vahan Sewa database has been considered as a sale; 2. Each category includes vehicles used for public, personal, and commercial usage
adoption of EVs in last- Source: FSG Analysis based on Vahan Sewa Dashboard, Ministry of Road Transport and Highways, Government of India

mile delivery, especially

two-wheelers, has been Beyond their use in passenger mobility, adoption of EVs in last-mile delivery57 -
increasing in India especially two-wheelers - has also been increasing. India aims to achieve a 30%

18 | FSG
 adoption rate of EVs among private cars, 70% among commercial vehicles, and 80%
among two- or three-wheelers by 203058 . By 2025, EVs could constitute approximately
25-30% of all last-mile delivery fleets in India. The private sector will have a crucial
role in this transition, and several major companies are actively electrifying their
fleets. Amazon India plans to have 100,000 EVs in its delivery fleet by 2030, Zomato
has announced 100% fleet electrification by 2030, and Big Basket aims for 70%
electrification by 2024. This presents a significant market opportunity for the EV
ecosystem.

The rise of shared mobility has also emerged as a key driving factor for sustainability The rise of shared
in the sector. With increasing adoption among consumers, the shared mobility market mobility has emerged
is expected to reach US$ 42.85 billion by 2027 from US$ 11.05 billion in 2021, as a key driving factor
expanding at a CAGR of 25.3%.59 Driven by factors like growing disposable income, for sustainability in the
inadequate public transport infrastructure, and the demand-supply gap, India’s shared mobility and transport
mobility sector is expected to reach nearly 15 crore users by 2025.60 sector

Complementing this market-driven momentum, government-led electrification

of mobility is also fostering an environment for widespread adoption of EVs. The
Government of India aims to electrify 30% of the country’s vehicle fleet by 2030,
with significant budget allocation towards promoting clean energy vehicles. The FY24
Union Budget has allocated ₹ 51.72 billion (approximately US$ 631 million) towards
its FAME-II scheme to subsidize and promote the adoption of clean energy vehicles,
representing an 80% increase in budget allocation from previous years.61

Zooming out to the bigger picture, the government’s push on smart cities with
smart mobility is making headway. Aiming to develop 109 cities as smart cities,
the Government of India launched the Smart City Mission (SCM) in June 2015.62
The defining feature of a smart city is smart mobility – an approach marked by The government is
high flexibility, convenience, and clean and green technologies, promising citizens pushing for smart cities
affordable, multiple modes of transportation, including rapid mass transit systems, with smart mobility,
on-demand mobility solutions, ride-sharing, vehicle-sharing, electric vehicles, biking, an approach marked
by high flexibility,
walking, and more. The government is promoting smart mobility through key initiatives
convenience, and clean
like rail-based mass rapid transport systems (MRTS), light rail urban transit systems
and green technologies
or Metrolite, bus rapid transport systems (BRTS), electric vehicle adoption, a national
common mobility card (NCMC), and on-demand personalized rapid transport (PRT).63

Future outlook for the Mobility and Transport sector

As India forges ahead in its commitment to sustainable development, the future outlook
for climate-tech in the realm of mobility and transport appears promising, with a series of
transformative trends poised to redefine the space.

INDIA’S GREEN REVOLUTION 2.0 | 19

 These advancements will likely have varied impacts across different stakeholders, benefiting
some while presenting challenges for others— while manufacturers may see new
opportunities for innovation, and consumers could enjoy more choices and efficiency,
traditional industries may need to adapt to the shifting landscape to stay relevant.

Middle-mile and long-haul electrification to lower the logistics industry’s carbon

footprint

An intriguing shift on the horizon is the focus on middle-mile electrification. While many
companies have set targets to employ net-zero fleets by 2030, middle-mile logistics, often
overlooked due to current EV constraints, is expected to gain significant attention. Notably,
Heavy Goods Vehicles (HGVs), accounting for 2% of the total vehicles, are responsible for
43% of GHG emissions in the transportation sector.64

India's shift to freight electrification, with a focus on electric vehicles for logistics, has wider
implications –the government is likely to develop policies that adapt to and support this
green transition. NITI Aayog has already set up e-FAST, a platform designed to promote
collaboration among government entities and private sector partners to develop strategies
and actions for large-scale freight electrification. Meanwhile, the Ministry of Road Transport
and Highways (MoRTH) plans to develop EV-friendly highways with extensive charging
Companies that are
infrastructure across the country.
poised to be early
adopters of middle- Companies that are poised to be early adopters have a significant opportunity to leverage
mile electrification can the market sentiment towards electrification and set themselves up in a pole position
leverage the market in the market. While some companies like Tata, Ashok Leyland, Infraprime, etc., have
sentiment towards already launched electric freight trucks65, other players, ranging from legacy companies
electrification and set
like Mahindra to newer entrants such as Triton, are gearing up to introduce their own
themselves up in pole
models.66 Although widespread retail availability and significant commercial transactions are
position in the market
anticipated within the next couple of years, Eicher has already secured a notable agreement
with Amazon to supply up to 1,000 trucks over the next five years.67

However, adoption is hindered by inadequate charging infrastructure – India significantly

lags other geographies on charging infrastructure, with roughly 200+ EVs per commercial
charging point, as compared to ~20 in the US and less than 10 in China.68 The ecosystem
suffers from a variety of issues, ranging from a lack of standardized charging protocols,
leading to incompatibility between EVs and charging stations, to security and maintenance
challenges at public chargers. Widespread use of the Bharat DC-001 standard, incompatible
with current EV models, is resulting in underutilized charging facilities.69 Companies like
ElectricPe, developing EV charging platforms, will have to build scaled partnerships with key
stakeholders, and greater capital and financing will have to be directed towards the same.

20 | FSG
Potential of new business models like Mobility as a Service

One of the most promising prospects for the future of mobility in India is the adoption of
Mobility as a Service (MaaS), which integrates various forms of mobility services into a single,
user-friendly platform.70 It can not only curb emissions but also alleviate other negative
externalities, such as congestion, air pollution, social exclusion, and excess consumption of
space.71

The key driver behind MaaS’s readiness in India is the widespread growth of smartphone
adoption and mobile internet usage. With an estimated 1,341 million smartphone users by
2030, India presents a large potential market for MaaS.

The start-up ecosystem is poised for a boom in innovation, with MaaS offering fertile ground
for developing new technologies and services. India already has a significant number of start-
The start-up ecosystem
ups in the landscape, ranging from ride-hailing apps like Ola, Rapido and Blusmart, to other
is poised for a boom
novel applications such as Bounce, a dockless bike rental start-up, and carpooling services
in innovation, with
like Quickride. Start-ups are expected to develop new business models and applications and
Mobility as a Service
lead the way in app development, data analytics, and user interface design, which are vital
(MaaS) offering fertile
components of a successful MaaS platform.
ground for developing
The Government of India is actively supporting MaaS development. It is not only providing new technologies and
financial incentives for deploying electric and hybrid vehicles, and investing in developing services
smart city infrastructure68, but also aims to directly integrate MaaS into existing transport
networks, ensuring it complements public transportation systems. Towards this end, the
Ministry of Housing and Urban affairs has collaborated with the government of Germany
and set up a framework for implementing MaaS in Indian cities.72

Multiple cities and municipal transport operators have incorporated elements from MaaS
ecosystems into their mobility networks. For example, Surat has launched an “Intelligent
Transit Management System” (ITMS) to efficiently manage its transportation network. ITMS
combines the Bus Rapid Transit System (BRTS), city bus services, a Vehicle Location System
(VLS), and a Passenger Information System (PIS).67

Sustainable fuel alternatives to replace conventional fossil fuels73

The government has
The Indian government is taking several proactive steps to reduce emissions from fossil fuels.
rolled out several
This includes targets for blending 20% ethanol in gasoline and 5% biodiesel in diesel. Such
initiatives aimed at
initiatives aim to reduce the carbon intensity of traditional fuels, promoting more sustainable
reducing the carbon
alternatives.
intensity of traditional
Moreover, India’s green hydrogen and ammonia policy aims to scale up green hydrogen fuels, promoting more
production to 5 million metric tons (MMT) by 2030, offering the potential for a cleaner sustainable alternatives

INDIA’S GREEN REVOLUTION 2.0 | 21

 energy source and reduced carbon emissions. The government has also introduced a biofuel
policy which aims to enhance biofuel availability, boost domestic production, establish 2G
bio refineries, develop new biofuel feed stocks and technologies, and integrate biofuels with
mainstream fuels.74

This transition must be supported by industry, with companies manufacturing and deploying
vehicles that can run on alternative fuels, complemented by companies that process and
manufacture the said fuel. We are already witnessing the first foray – vehicle manufacturers,
like Maruti Suzuki and Ashok Leyland in collaboration with IIT Delhi and IOC, are focusing on
flex-fuel vehicles that can run on various blends of gasoline and ethanol.75 Similarly, legacy
energy firms like Indian Oil are pivoting towards an increased focus on established alternative
fuels like CNG76, while a range of start-ups like Jap Innogy and Aganvay Technologies are
exploring novel composition and production processes.77

Greater adoption of four-wheeler (4W) EVs

While four-wheelers are significantly behind two-wheelers in the EV adoption curve, they
Falling production costs are expected to experience accelerated adoption, increasing penetration ten-fold in the next
due to a maturing seven years.52
manufacturing
The factors contributing to this increased adoption of 4W EVs will be falling production
ecosystem,
costs due to a maturing manufacturing ecosystem, technological progress, and rising
technological progress,
income levels. This trend will likely be particularly pronounced in premium segments such
and rising income
as compact SUVs, which are gaining popularity over other segments due to their superior
levels will contribute to
drivability on varied road conditions, enhanced comfort, and advanced digital connectivity.
increased adoption of
While entry-level hatchbacks are likely to lose some market share to these more premium
four-wheeler EVs
models, the overall demand for hatchbacks is expected to remain robust, buoyed by
affordability. Other key factors, including reliance on localized automotive components,
advancements in road infrastructure, and increased penetration of credit facilities, will
support the expected growth in the 4W segment.78

Reduction in emissions through smart vehicles and autonomous vehicles79

Smart vehicles comprise connected vehicles enhanced with Internet of Things (IoT) features
enabling real-time data exchange with other vehicles, infrastructure, and systems, and
Enhanced efficiency autonomous or self-driving vehicles. These solutions offer a promising means to reduce
of autonomous and emissions and foster sustainable transportation practices. In India, the connected car
connected vehicles market is expected to reach US$ 32.5 billion by 2030, with an estimated CAGR of 22.2%.80
directly translates to Meanwhile, the autonomous vehicle market is expected to grow at a robust CAGR of 21.5%
lower emissions
between 2023 and 2028.81

22 | FSG
By harnessing smart mobility solutions such as GPS, traffic data, and vehicle-to-vehicle (V2V)
communication, autonomous and connected vehicles enhance safety and streamline daily
commutes by optimizing routes, significantly reducing travel time and congestion. This
enhanced efficiency directly translates to lower emissions - connected vehicles constituting
20% of the vehicles on city roads can reduce greenhouse gas emissions by up to 18%.82
Connected vehicles
Indian firms are making significant forays in the connected vehicles space. The start-up constituting 20% of the
FleetX provides fleet management systems that integrate functionalities like vehicle tracking, vehicles on city roads
routing, reporting and alerts, maintenance, driver behavior analytics, and so on, towards can reduce greenhouse
optimizing fleet efficiency.83 Similarly, other start-ups like CarIQ, Trak N Tell, and Flux Auto, gas emissions by up
among others, are developing novel applications in vehicle connectivity and telematics. to 18%

Legacy companies in India set the trajectory for progress in the autonomous vehicles space.84
Mercedes-Benz Research and Development India (MBRDI) is engaged in cutting-edge work
in areas related to autonomous driving. Additionally, Tata Motors’ introduction of India’s first
Advanced Driver Assistance System (ADAS) signals a significant leap forward.

INDIA’S GREEN REVOLUTION 2.0 | 23

 Summary of key trends in the Mobility and Transport sector
• The increasing adoption of EVs, led by two-wheeler (2W) and three-wheeler (3W) vehicles,
is at the forefront of the mobility and transport sector’s sustainability transition in India
• Adoption of EVs in last-mile delivery - especially two-wheelers - has been increasing
• Government-led electrification of mobility is fostering an environment for widespread
adoption of EVs
• Adoption of shared mobility solutions has seen a spike, and India’s shared mobility sector
is expected to reach nearly 15 crore users by 2025
• The government’s push on smart cities with smart mobility is making headway

Summary of future outlook for the Mobility and Transport sector

• Middle-mile and long-haul electrification can lower the logistics industry’s carbon footprint
• Adoption of Mobility as a Service (MaaS) can not only curb emissions but also alleviate
congestion, air pollution, social exclusion, and excess consumption of space
• Sustainable fuel alternatives are expected to replace conventional fossil fuels
• While four-wheelers are significantly behind two-wheelers in the EV adoption curve, they
are expected to experience accelerated adoption, increasing penetration ten-fold in the
next seven years
• Smart vehicles and autonomous vehicles offer a promising means to reduce emissions and
foster sustainable transportation practices

24 | FSG
3 Food, Agriculture,
and Land Use
Climate-tech in the Indian food, agriculture, and land use sector is gaining prominence,
fueled by increased government initiatives, investor confidence, technological interventions,
product and business model innovation, and a heightened focus on agri-carbon practices.
The sector’s response to consumer awareness and its commitment to environmental
sustainability contribute to its emergence as a key player in the global agricultural landscape.
These multifaceted developments position the sector for continued growth, adaptation to
market dynamics, and resilience in the face of evolving challenges.

Investments in the Food, Agriculture, and Land Use sector

Climate-tech investments in India’s food, agriculture, and land use sector experienced
consistent growth from 2019 to 2022, driven by government initiatives, infrastructural
development, and a global shift towards sustainable food systems.

Despite a global 46% decline in climate-tech investments in the sector from 2021 to 2022,
India showcased remarkable growth of 89%, marking 2022 as a record year with US$
87 million in funding (see Figure 7). Noteworthy factors for the global slump included a
rise in global interest rates and heightened investor caution amid prevailing uncertainty.
Meanwhile, the investment surge in India was propelled by significant funding rounds for
CropIn, Ecozen Solutions, and String Bio, which garnered 83% of the domestic sector’s
funding that year. Despite a decrease in the number of deals in the sector between 2021-22,
the average deal size in 2022 surpassed those of previous years, making it a record-breaking Food, agriculture, and
year in terms of total investments for the sector. land use contribute
19% to the total GHG
However, 2023 has been a tough year for the sector, with only one disclosed deal worth US$
emissions in India, but
1 million, raised by Satyukt, till the end of November.
the sector receives a
Food, agriculture, and land use contribute a substantial 19% to the total GHG emissions in meager 1% of climate-
India. However, this sector receives a disproportionately low share of climate-tech funding, tech investments in
garnering a meager 1% of investments in the country’s broader climate-tech sector. As the country
India navigates the intersection of emissions reduction and climate-tech funding in the
food, agriculture, and land use segment, the need for recalibrating investment strategies is
apparent.

INDIA’S GREEN REVOLUTION 2.0 | 25

 FIGURE 7: INDIAN AND GLOBAL FUNDING LANDSCAPE FOR THE FOOD, AGRICULTURE, AND
LAND USE SECTOR, FOR CALENDAR YEARS 2019-23

31

26

$86.7M
No. of
disclosed 22 deals
deals 20

$45.9M
$39.9M

$23.4M
Indian funding
(in US$) 1
$1.2M
2019 2020 2021 2022 2023 (Up to
November 30)

Average Indian
deal size $4.33M
(in US$)
$1.06M $1.29M $1.77M $1.21M

Global funding Data not

$2.09B $4.81B $8.60B $4.61B
(in US$) available

Source: FSG Analysis based on Tracxn (FY19-23), Dealroom data

Key trends in the Food, Agriculture, and Land Use sector

The food, agriculture, and land use sector is undergoing dynamic transformations influenced
by pivotal trends stemming from farmers, consumers, and government initiatives. Trends
such as the growing demand for animal protein and heightened awareness of the benefits
of organic food shape the sector’s landscape. Crucially, government efforts in promoting
sustainable and good agricultural practices and mechanizing and digitizing farms are
steering the sector towards environmental consciousness in tune with evolving consumer
preferences.

Rising demand and consumption of animal protein along with growing GDP
The methane emissions
(see Figure 8) poses its own set of challenges, particularly concerning the associated
associated with the
methane emissions.85 In 2018-19, the country’s milk production reached 187.7
rising demand for and
million tonnes, showing a growth of 6.5% from the previous year. The per capita
consumption of animal
availability of milk also increased to 394 g/ day during the same period. The dairy
protein is a concern
industry is currently grappling with the dual challenges of rising demand for animal
protein and declining dairy productivity, which create a significant strain on the sector.

26 | FSG
Notably, the digestive processes of cattle account for a significant 7.85% of total GHG
emissions – contributing 223 million metric tons of carbon dioxide equivalent (CO2e)
of the overall emissions tally of 2.8 billion metric tons of CO2e. This highlights the
environmental impact of heightened animal protein consumption and emphasizes the
need for sustainable practices in the livestock sector.

FIGURE 8: SHARE OF CALORIES FROM ANIMAL PROTEIN V/S GDP PER CAPITA
12%
Hong Kong
Share of calories from

10%
animal protein (%)*

Argentina Australia
8% Albania Japan
Myanmar China BrazilRussia United States
Peru Canada
6% Jamaica
Pakistan South Korea
South Africa
4% Saudi Arabia
Turkey
Uganda Ghana
2% Liberia Kenya India P
Niger
Bangladesh India
0%
500 1000 2000 4000 8000 16000 32000 64000

GDP per capita (US$)

Note: The data presented is as of 2018. 'India P' is the projected situation of India in 2030, calculated by taking CAGR from 2013 and
2018 data, annual GDP growth rate of 6.3% as per IMF data, and annual population growth rate of 0.8% as per World Bank data.
Source: FSG Analysis based on World Bank – WDI; UN FAO; Maddison Project Database 2020 (Bolt and van Zanden (2020); compiled by
OurWorldInData.org

On a positive note, an increasing awareness of the benefits of organic food is

driving a significant shift in consumer preferences.86 Projections for the organic food
market indicate an expected growth from US$ 1.6 billion in 2023 to US$ 9 billion
by 2032, with an impressive CAGR of 21%. This robust expansion underscores
consumers’ changing mindset towards prioritizing healthier and environmentally
conscious dietary choices. The organic food market is poised to play a pivotal role in
shaping the evolving dietary landscape.

The government is mechanizing farms to reduce agricultural emissions.

The need for increased mechanization stems from a decrease in the working-age
population engaged in agriculture. The Pradhan Mantri Krishi Sinchayee Yojana
The government is
(PMKSY), launched on July 1, 2015, covers the subsidy for micro-irrigation.87 When
laying emphasis on
compared to other irrigation practices, micro-irrigation in specific crops has the
mechanizing farms,
potential to reduce per-yield soil carbon dioxide emissions by 59%, nitrous oxide by
owing to the shortage
38%, and nitric oxide by 20%.88
of agricultural labour
Meanwhile, the Agriculture Ministry is offering grants up to ₹ 10 lakh (US$ 12,050) and decrease in the
to agricultural institutes for the purchase of drones.89 Drones play a crucial role in working-age population
minimizing the overall carbon footprint of farming by optimizing input applications. engaged in agriculture
They can precisely target areas that require treatment, thus minimizing excess use

INDIA’S GREEN REVOLUTION 2.0 | 27

 of fertilizers and chemicals. In plant protection operations, substituting traditional
machines with drones can result in a reduction of carbon emissions by 51.45 kg CO2e
(carbon dioxide equivalent) per hectare.90

Responding to these challenges and opportunities, the government is facilitating

digitization in agriculture by developing Digital Public Infrastructure (DPI).91
Key government-led initiatives are steering the country towards a digital future
in agriculture marked by transparency and greater resource-efficiency – thereby
The government is
contributing to emissions reduction. These include Agristack, a unified database linking
facilitating digitization
in agriculture to farmers to their land holdings, and Geographic Information System (GIS) signature
reduce emissions captures to demarcate farm boundaries and establish a link between land records and
through greater subsequent farm-related data. GIS plays a crucial role in precision agriculture by actively
resource-efficiency and collecting and interpreting extensive field data for informed decision-making.92 The
transparency utilization of high-tech equipment in precision agriculture practices reduces agricultural
inputs through site-specific applications. This technology enables a more accurate
targeting of inputs to meet the spatial and temporal needs of the fields, ultimately
leading to lower greenhouse gas emissions.93

Future outlook for the Food, Agriculture, and Land Use sector

As we gaze into the future, a wave of climate-conscious trends is set to transform the
landscape of the food, agriculture, and land use sector in India, with implications for legacy
companies, start-ups, and the government. Progressive agricultural advancements such as
sustainable inputs, novel in-farm farming technologies, traceability, and agri-carbon will be
instrumental in shaping the sector’s trajectory. Evolving food preferences will further expand
opportunities for innovation in the industry.

Decarbonization of fertilizer supply chain through innovation in sustainable inputs

Nitrogen fertilizers contribute to greenhouse gas (GHG) emissions in two ways. Firstly, during
the production of fertilizers, chemical reactions and fossil fuel usage lead to the production
of carbon dioxide (CO2) and nitrous oxide (N2O). Secondly, after the fertilizer is applied on
the farm, microbiological processes convert it into N2O. In 2020-21, India produced 15.3
million MT of ammonia, primarily used in urea production, and imported an additional 2.6
million MT of ammonia to produce various grades of other fertilizers. Currently, most of this
production relies on fossil fuel usage to produce hydrogen, an essential raw material, which
results in increased emissions from the process.94

The Government of India’s Green Hydrogen Mission is expected to address this by supplying
the raw material for green ammonia production, reducing the environmental impact of
production and the dependency on fossil fuel imports.

28 | FSG
In the field of sustainable inputs, global investments are driving innovation in genomics,
gene editing, and precision breeding for enhanced seed traits. The sphere of innovation
extends to biological seed treatments, including herbal or organic growth promoters,
herbicides, and fungicides. This surge in research and development signifies a promising
frontier for environmentally conscious solutions in agriculture.

Legacy companies can enhance their capabilities in biological treatments through corporate
venturing. Multinational agrochemical firms with significant R&D budgets lead in chemical
solutions and RNA-based seed modifications. For instance, in 2020, Bayer, Syngenta,
Corteva, and BASF collectively invested over US$ 5 billion in new product development,
overshadowing the US$ 1.6 billion raised by biotechnology start-ups.88

The government is actively fostering sustainable agriculture through a range of initiatives. It

is promoting natural farming, utilizing local bio-inputs, with a dedicated budget allocation
of US$ 55.4 million. The Prime Minister-Programme for Restoration, Awareness Generation,
Nourishment and Amelioration of Mother Earth (PM-PRANAM) Yojana incentivizes states to
use alternative fertilizers, aiming to reduce reliance on chemical fertilizers. Additionally, the
Green Credit Program awards tradable green credits for eco-friendly actions. In the pursuit of
fertilizer self-sufficiency,
However, the focus of the government is on self-sufficiency in fertilizers, shown by its
the government is
significant investments in the production of nano-urea and nano-DAP (Di-Ammonium investing significantly
Phosphate), developed by the Indian Farmers and Fertilizer Cooperative (IFFCO). The goal is in the production of
to gradually reduce dependence on imported urea, replacing it with domestically produced nano-urea and
nano-urea fertilizers by 2025. This involves a major transition from 8.5 million tonnes of nano-DAP
conventional urea to 170 million bottles of nano urea. This strategic pivot can help boost
domestic production and potentially reduce the subsidy bill of nearly ₹ 2.25 lakh crore (US$
27 Bn) for conventional fertilizers in 2022-23.

Innovations and inclination towards in-farm and novel farming solutions (including
precision agriculture solutions)

The agricultural landscape is witnessing a surge in innovations and a growing preference

for in-farm and novel farming solutions. On a global scale, technological advancements in
the in-farm category are centered around farm automation, precision agriculture, remote
sensing, advisory services, and farm management. These innovations harness the power of
robotics, artificial intelligence (AI), the Internet of Things (IoT), and data analytics to enhance
efficiency and productivity in modern farming practices.

The greenhouse gas emissions from the biological conversion of fertilizers to nitrous oxide
(N2O) account for almost 50-80% of the emissions from fertilizers. Practices like precision
agriculture, which uses inputs from various constituent technologies like geographic

INDIA’S GREEN REVOLUTION 2.0 | 29

 information systems, satellite positioning, remote sensing, and yield monitoring to optimize
Practices like precision yields, can reduce the environmental impact of fertilizers by helping farmers use the right
agriculture can reduce amount of fertilizers at the right time. This reduces wastage and decreases the emissions
the environmental from the microbiological process. Precision agriculture also results in higher yields with
impact of fertilizers greater efficiency, reducing the land required and stopping deforestation. It also leads to
by helping farmers greater food security for the populace.95
use the right amount
Companies like Absolute, an agriculture hardware and software provider; Pixxel, a
of fertilizers at the
hyperspectral imaging solution provider; BharatAgri, a farm advisory solutions provider; and
right time
Fasal, a precision irrigation advisory firm, have already raised more than US$ 185 million in
2021-22 and are doubling down on the opportunities in the precision agriculture space.96

Each of the four Both start-ups and multinational corporations have the opportunity to cultivate in-house
leading agrochemical capabilities and strategically invest in this dynamic space. Recognizing the vast potential,
companies has each of the four leading agrochemical companies has undertaken development of in-house
undertaken digital farming solutions. Examples include BASF’s xarvio software, Bayer’s Climate FieldView,
development of along with its partnership with Microsoft, Syngenta’s AgriEdge/FarmShots, and Corteva’s
in-house digital Granular. This dual approach of internal development and strategic investments reflects a
farming solutions collective industry recognition of the transformative power and possibilities within the digital
farming landscape.

Growing demand for traceability is spurring agri-carbon innovation

The significance of traceability and its demand in the food industry is on the rise. Projections
indicate that the global food traceability market, valued at US$ 16.8 billion in 2020, is poised
to reach US$ 26.1 billion by 2025.97 This growth is attributed to the expanding consumer
base in the Asia Pacific region and a heightened demand for traceable, high-quality fresh
produce. As consumers increasingly prioritize transparency and quality assurance, the
importance of traceability in the food supply chain is becoming a pivotal factor driving
industry dynamics. Traceability in agriculture promotes agri-carbon innovations by fostering
transparency and enabling strategic measures to minimize the carbon footprint of the entire
agricultural supply chain.

In terms of traceability, companies like BASF and Corteva offer a restricted range of ‘farm-to-
retail’ solutions primarily focused on specific crops like cotton and oilseeds. There is room for
traditional companies to enhance their innovation and investment efforts to further improve
traceability in the agricultural supply chain. Start-ups across the world are taking the lead in
innovating comprehensive ‘seed-to-fork’ traceability solutions. French start-up Connecting
Food, for example, offers a third-party food transparency platform. This platform seamlessly
connects farmers, food producers, manufacturers, and distributors, utilizing blockchain
technology to establish an unalterable record across all production stages.88

30 | FSG
Notably, major agrochemical multinational corporations have initiated pilot carbon farming
Start-ups have the
projects, such as the Bayer Carbon Initiative, Corteva Carbon Initiative, BASF’s Global
opportunity to
Carbon Farming Program, and Syngenta’s Good Growth Plan. Meanwhile, start-ups have
innovate in agri-
the opportunity to innovate in agri-carbon by developing robust verification mechanisms,
carbon by developing
ensuring transparency, and offering educational and operational support to farmers. For robust verification
reliable verification, solutions developed by Agreena, Hummingbird Technologies, and Nori mechanisms, ensuring
use multi-source remote sensing, ground data validation software, and satellite imagery. transparency, and
Indigo provides educational and operational support to farmers through digital tools, offering educational
personalized agronomic assistance, and direct market access. and operational support
to farmers
Modified animal feed to reduce emissions from cattle98

Modifying animal feed with additives like linseeds and seaweed offers a dual advantage:
it significantly reduces emissions from cattle (12-64% decrease in methane emissions) and
enhances yields, with up to an 8% increase in milk production.

Government support for research and development (R&D) related to modified animal feed
will be critical to emissions reduction goals. While the government has taken steps in this
direction, further intervention is crucial to foster advancements in this field. Currently, the
National Livestock Mission provides comprehensive training on animal husbandry practices,
including feed production, and a 50% capital subsidy to support the establishment of
feed/fodder value addition units. Additionally, the Food Safety and Standards Authority
of India (FSSAI) plays a pivotal role by mandating compliance with BIS specifications for all
commercial feeds intended for meat and milk-producing animals.99,100
Modifying animal
The animal feed space represents a lucrative opportunity for start-ups. To maximize this feed with additives like
potential, they should invest in R&D for innovative feed formulations, collaborate with linseed and seaweed
research institutes, employ data analytics for impact optimization, and conduct awareness reduces emissions from
cattle and enhances
campaigns. Krimanshi Technologies in Jodhpur demonstrates this approach by creating a
yields
new value chain using food waste to produce highly nutritious feeds.101

Traditional companies in the animal agriculture sector should explore partnerships or

acquisitions with start-ups specializing in innovative feed technologies. Another avenue
is adapting existing product lines to incorporate sustainable features. For example, Cargill
collaborated with TREES Consulting, resulting in a Gold Standard-approved methodology for
measuring methane emissions reduction in the beef industry. This involved incorporating the
feed supplement SilvAir into beef cattle diets.102

INDIA’S GREEN REVOLUTION 2.0 | 31

 Alternative protein and meat substitutes offer consumers a responsible choice to
mitigate emissions

Consumers are increasingly embracing plant-based options, not only for ethical reasons but
also to actively contribute to emissions reduction. The environmental benefits are significant,
as the production of plant proteins emits 30-90% less greenhouse gases compared to
conventional meat.103

As part of the shift towards a more sustainable and eco-conscious global food industry,
the vegan food market is poised for substantial growth, projected to surge at a CAGR of
11.32% from 2023 to 2027.98 Within this segment, the plant-based meat and dairy markets
are set to experience even more impressive expansion, with expected CAGRs of 25% and
20.7%, respectively, during the same period.105

Entrepreneurs can tap into the rising demand for plant-based and cell-based options by
creating innovative products and technologies. Indian start-ups are already making headway
– Phyx44 is developing cow milk using microbe-created proteins and fats, ProMeat offers
Established companies high-protein plant-based meats from indigenous crops, and Naya M!lk focuses on plant-
can strategically based paneer with properties akin to dairy-based versions.106
expand their product
portfolios to embrace Established companies can strategically expand their product portfolios to embrace the
the growing market growing market for alternative proteins and meat substitutes, a move that some FMCG
for alternative proteins giants are undertaking. Tata Consumer Product Ltd (TCPL) has entered the plant-based meat
and meat substitutes, a products category with the introduction of four variants under the new brand ‘Tata Simply
move that some FMCG Better’.107 Additionally, ITC has launched plant-based protein products under its `ITC Master
giants are undertaking Chef Incredible’ brand.

32 | FSG
Summary of key trends in the Food, Agriculture, and Land Use sector
• Rising demand and consumption of animal protein poses its own set of challenges,
particularly concerning the associated methane emissions

• An increasing awareness of the benefits of organic food is driving a significant shift in

consumer preferences

• The government is mechanizing farms to reduce agricultural emissions

• The government is facilitating digitization in agriculture by developing digital public

infrastructure

Summary of future outlook for the Food, Agriculture, and Land Use sector
• Innovation in sustainable inputs has the potential to decarbonize the fertilizer supply chain

• The agricultural landscape is witnessing a surge in innovations and a growing preference

for in-farm and novel farming solutions (including precision agriculture solutions)

• The growing demand for traceability is spurring agri-carbon innovation

• Modifying animal feed with additives can reduce emissions from cattle

• Alternative protein and meat substitutes offer consumers a responsible choice to mitigate
emissions

INDIA’S GREEN REVOLUTION 2.0 | 33

 4 Industry, Manufacturing,
and Resource
Management
The industry, manufacturing, and resource management sector is experiencing robust
growth propelled by technological advancements and rapid industrial development.
However, this expansion raises concerns about increased emissions and environmental
impact. Recognizing these challenges, various stakeholders, including government bodies,
established companies, start-ups, and investors, are actively taking measures to render the
sector more environmentally sustainable. Technological progress is not only driving the
sector’s growth but is also being harnessed to ensure its alignment with climate-friendly
practices.

Investments in the Industry, Manufacturing, and Resource Management

sector

The sector experienced an impressive 122% growth in investments from 2019 to 2020,
driven largely by the contributions of four key companies – Nepra, Wabag, Antony Waste
Rapid industrial Handling, and Lohum. These companies collectively accounted for 71% of the total funding
development and in 2020.
growth of the
Globally, the sector demonstrated a remarkable 140% growth from 2020 to 2021,
manufacturing sector
contrasting sharply with India’s contraction of 59% during the same period. The global
raises concerns about
upswing can be attributed to factors such as industries adapting resiliently to the challenges
increased emissions and
posed by the COVID-19 pandemic, ongoing technological advancements, and rapid digital
environmental impact
transformations across various sectors. In contrast, in India, despite an increase in the overall
number of deals, the investment per deal remained comparatively low compared to 2020.

While global investments remained stagnant between 2021 and 2022, the domestic sector
experienced a spectacular 318% growth in investments with US$ 184 million in funding (see
Figure 9). This notable funding surge was largely propelled by major contributions from key
players, with Shriram EPC securing US$ 43 million, Detect Technologies obtaining US$ 29.6
million, and Recykal receiving US$ 29.3 million. Together, these three companies collectively
represent a substantial 55% share of the total funding in the sector for the year.

However, 2023 saw the sector struggling with only US$ 40 million raised by the end of
November, a 78% decrease from the peak in 2022.

34 | FSG
FIGURE 9: INDIAN AND GLOBAL FUNDING LANDSCAPE FOR THE INDUSTRY, MANUFACTURING,
AND RESOURCE MANAGEMENT SECTOR, FOR CALENDAR YEARS 2019-23

57

48 $183.7M
Despite contributing
29% of India's total
38 GHG emissions,
the industry,
No. of
disclosed 31 deals $106.7M manufacturing, and
deals resource management
20
sector receives a
$47.9M $43.8M
disproportionately low
$40.1M
Indian funding
share of climate-tech
(in US$) sector funding; i.e. 2%
2019 2020 2021 2022 2023 (Up to
November 30)

Average Indian
deal size $2.81M $3.22M $2.00M
(in US$)
$1.55M $0.91M

Global funding Data not

$2.52B $4.86B $11.88B $11.79B
(in US$) available

Source: FSG Analysis based on Tracxn (FY19-23), Dealroom data

Despite contributing 29% of India’s total greenhouse gas emissions, the industry,
manufacturing, and resource management sector receives a disproportionately low share
of climate-tech sector funding, i.e. 2%. Addressing this misalignment will be critical for
achieving comprehensive and effective solutions to combat climate change.

Key trends in the Industry, Manufacturing, and Resource Management sector

The industry, manufacturing, and resource management sector is witnessing dual trends.
On the one hand, there are positive shifts like the government’s promotion of green
steel, FMCG brands adopting sustainability, and increased consumer preference for eco-
friendly products. On the other, challenges arise from rising emissions in sectors like iron,
The government is
steel, cement, ammonia, and chemicals. The government, start-ups, investors, and legacy actively promoting
companies must address these emissions for sustainable industry growth. decarbonization
of `hard-to-abate'
To curb emissions in the sector, the government is actively promoting
sectors such as steel
decarbonization of `hard-to-abate’ sectors such as steel and cement through
and cement through
a series of policies. In alignment with environmental goals, the Ministry of Steel has
policy support
committed to achieving net-zero status by 2070. The Steel Scrap Recycling Policy of

INDIA’S GREEN REVOLUTION 2.0 | 35

 2019 and the Motor Vehicles Rules from September 2021 work together to enhance
scrap availability in the steel sector, reducing coal consumption.108 Moreover, India is a
part of the new Industrial Deep Decarbonization Initiative (IDDI), which pledged to buy
low-carbon steel and concrete from heavy industries that manufacture them.109 Given
the impact of the Carbon Border Adjustment Mechanism (CBAM) on the steel industry,
green steel adoption is expected to pick up in the near future, with the government
coming up with policy instruments to help domestic steel producers adopt green
standards.110

Meanwhile, with the rise of conscious consumerism in India, FMCG brands are
With the rise of
actively pursuing sustainable practices that are in line with the global shift towards
conscious consumerism
environmentally responsible operations. Indian consumers are exhibiting a growing
in India, FMCG brands
preference for sustainability in their purchasing decisions. Over the past two years
are actively pursuing
sustainable practices in India, 48% of consumers have embraced sustainable product choices, with 20%
that are in line with the prioritizing environmental and social benefits and 49% emphasizing health benefits.111
global shift towards Keeping pace with this change in customer preferences, FMCG brands are pursuing
environmentally sustainable practices. For example, ITC aims for 100% reusable, recyclable, and
responsible operations optimized plastic packaging. Similarly, P&G has committed to using 100% renewable
or recycled materials, striving for zero waste to landfills.112

FIGURE 10: EMISSIONS FROM IPPU (INDUSTRIAL PROCESSES AND PRODUCT USE SECTOR)
IN INDIA, 2018113
Others
1%
Glass Ammonia
Production Lubricant Production
6% Use
1% 12%
Non-Energy
Products from Ethylene
Fuels and Oxide
Solvent Use Chemical 4%
1% Industry
23% Others
7%

Aluminium
212.53 Mt CO2e Production
(7.20%) 3%
Metal
Mineral Industry
Industry 14% Iron
62% and Steel
Production
11%
Cement
Production
55%

However, the expected growth in India’s manufacturing sector sparks concern

about a surge in emissions. Cement and steel, responsible for 15-20% of India’s
emissions, heavily rely on fossil fuels114. From 2005 to 2018, GHG emissions almost

36 | FSG
 doubled, reaching 212 Mt CO2e in 2018 from 100 Mt CO2e in 2005. Manufacturing Addressing emissions
of iron, steel, and cement contributed to 65% of the emissions from the industrial from the manufacturing
processes and product use (IPPU) sector in 2018. The cement industry alone of iron, steel, and
contributed 54% of the sector’s emissions that year (see Figure 10). Addressing cement is imperative
emissions from these sectors is imperative as the manufacturing industry expands. as the manufacturing
industry expands
Future outlook for the Industry, Manufacturing, and Resource Management
sector

As India charts a course towards a more sustainable and climate-resilient economic

landscape, a confluence of green technologies, sustainable material innovations, and
digital transformations is emerging as a catalyst for a sustainability pivot in the industry,
manufacturing, and resource management sector.

Transition from conventional Ordinary Portland Cement (OPC) to greener

alternatives

Green cement, manufactured through techniques minimizing carbon emissions, stands out
against Ordinary Portland Cement (OPC). It consumes 60% less thermal energy, resulting
in a 60% reduction in carbon emissions intensity. The primary contributors to emissions in
cement production are the energy-intensive kiln heating and chemical processes converting
limestone into calcium oxide. To reduce emissions from production, companies are adopting
innovative technologies such as Waste Heat Recovery (WHR) systems, reduction or cessation
of fossil fuel use, incorporation of solar energy, and the transformation of existing fossil-fuel-
based facilities into renewable biomass fuel-based units.
Companies must
Apart from green cement, other alternatives, such as pozzolanic cement, hempcrete, prioritize green steel
ashcrete, fiber cement, ferrock, etc., are also emerging as sustainable alternatives to OPC. manufacturing,
These materials have properties similar to conventional cement but are sustainable, with emphasizing the
carbon footprints as low as 99% compared to OPC.15,116 recycling and reuse of
by-products to produce
Corporates must prioritize green steel manufacturing, emphasizing the recycling and reuse
green cement
of by-products to produce green cement and its alternatives like ferrock. For example,
companies like JSW Cement utilize blast-furnace slag, a by-product generated during the
iron-making process in integrated steel plants, to produce environmentally friendly, low-
carbon green cement.117

The government should actively promote OPC alternatives by implementing policies and
initiatives and fostering collaboration with other nations to enhance global adoption. A
collective effort is crucial, and governments worldwide should unite against environmental
challenges. Under the Industrial Deep Decarbonization Initiative (IDDI), the governments

INDIA’S GREEN REVOLUTION 2.0 | 37

 of the United Kingdom (UK), India, Germany, the United Arab Emirates, and Canada
announced a pledge in November 2021. This commitment involves the intention to purchase
low-carbon steel and concrete from heavy industries, encouraging the production of eco-
friendly materials on a global scale.118

Potential to replace conventional plastic packaging with bio-based plastics or

compostable packaging119,120,121

Bio-based plastics, Bio-based plastics, derived from renewable sources like vegetable fats, oils, starch, wood,
derived from renewable and food waste, offer a sustainable alternative to conventional plastics. In India, the bio-
sources like vegetable plastics market, valued at US$ 447.25 million in 2023, is projected to reach US$ 1809.51
fats, oils, starch, wood, million by 2030, with an impressive CAGR of 22.1%.
and food waste, offer a
sustainable alternative The government can play a pivotal role in fostering such innovation, with a notable example
to conventional plastics being the approval of a start-up loan of ₹ 1.15 crore (US$ 0.14 million) given to TGP
Bioplastics for advancing the commercialization of “compostable” plastic.

Start-ups play a crucial role in driving innovation, particularly in the development of eco-
friendly products. Some start-ups are focusing on creating bioplastics from organic waste.
International examples include Bioelektra Group (Poland), Bio-On (Italy), and TerraCycle
(US), while in India, EviGreen is actively contributing to the bioplastic sector. These start-ups
exemplify the diverse and impactful initiatives that emerging companies can undertake on a
global scale, highlighting the significance of their contributions to sustainable practices.

Adoption of new sustainable fibers122,123,124

The adoption of innovative sustainable fibers is reshaping the future of fashion and
textiles. Among these advancements, Lyocell Fiber stands out as a synthetic yet eco-friendly
alternative, derived from pulped wood in sustainably managed forests. Another example is
Mylo Unleather, a vegan leather alternative crafted from mycelium, the underground root-
The opportunity to like system of mushrooms. There are many other fibers, like Circulose, Agraloop Biofibre,
embrace sustainability and AirCarbon, that are leading the way in terms of innovation in sustainable materials and
is prompting both reducing pollution from textiles.
established legacy
The opportunity to embrace sustainability is prompting both established legacy firms and
firms and agile start-
agile start-ups to diversify their product offerings, with a notable focus on introducing
ups to diversify their
innovative and eco-friendly fibers. For example, Aditya Birla Group’s Birla Cellulose, a
product offerings, with
prominent player in man-made cellulosic fibers, has achieved a milestone by successfully
a notable focus on
piloting Lyocell Fiber containing 20% microbial cellulose from Nanollose Limited. Meanwhile,
introducing innovative
with increasing interest in cruelty-free and sustainable fashion, start-ups are also playing a
and ecofriendly fibers
pivotal role in driving transformative change within the industry. For example, biotechnology

38 | FSG
company BoltThreads has caught the attention of major fashion brands like Stella
McCartney, Lululemon, and Adidas with its vegan leather alternative Mylo. As both legacy
and emerging entities seize the opportunity, the textile landscape is witnessing a noteworthy
shift towards sustainability-driven innovation.

Digitization of manufacturing industries using Industry 4.0125

The Indian manufacturing sector is undergoing substantial digital transformation with

investments ranging from US$ 5.5-6.5 billion in cutting-edge technologies like IoT platforms,
cloud computing, data analytics, artificial intelligence, machine learning, augmented reality, The Indian
and virtual reality. These technologies have a great potential in reducing the wastage and manufacturing sector
carbon emissions from various industries. For example, automation of cutting process in textile is undergoing a digital
industry through design technology reduces the wastage of material from factories. IoT devices transformation with
and data analytics can optimize the energy usage in factories thereby reducing the emissions investments in a
associated with power generation through fossil fuels. Fueled by both government policies range of cutting-edge
and private sector investments, this concerted effort aims to position digital technologies technologies like IoT
platforms, AI, machine
as a cornerstone for the sector. This strategic push signifies a pivotal moment for Indian
learning, augmented
manufacturing, embracing technological advancements to enhance efficiency, productivity, and
reality and virtual reality
consequently reduce environmental impact.

INDIA’S GREEN REVOLUTION 2.0 | 39

 Summary of key trends in the Industry, Manufacturing, and Resource
Management sector
• The government is actively promoting decarbonization of ‘hard-to-abate’ sectors such as
steel and cement through a series of policies
• With the rise of conscious consumerism in India, FMCG brands are actively pursuing
sustainable practices
• The expected growth in India’s manufacturing sector sparks concern about a surge in
emissions

Summary of future outlook for the Industry, Manufacturing, and Resource

Management sector
• Transitioning from conventional Ordinary Portland Cement (OPC) to greener alternatives
can reduce carbon emissions intensity significantly
• Bio-based plastics or compostable packaging offer a sustainable alternative to
conventional plastic packaging
• The adoption of innovative sustainable fibers is reshaping the future of fashion and
textiles
• The Indian manufacturing sector is undergoing a digital transformation with investments
in cutting-edge technologies like IoT platforms, cloud computing, data analytics, artificial
intelligence, machine learning, augmented reality, and virtual reality

40 | FSG
5 Built Environment
As India undergoes rapid urbanization and demographic expansion, the domestic built
environment sector is experiencing substantial growth, driven by a blend of environmental,
economic, and technological factors. This growth is underpinned by an emphasis on
sustainable and energy-efficient practices in building and urban planning, crucial for tackling
India’s urban environmental challenges and guiding investment and policy towards a
sustainable urban landscape. Reflecting this evolving trend, there has been a significant shift
in investment patterns – more capital is being directed towards green buildings, smart city
projects, and sustainable infrastructure, signaling growing investor confidence in the sector’s
potential for unlocking economic value.

Investments in the Built Environment sector

An analysis of climate-tech investments in the built environment sector reveals a stark

contrast between the global and Indian funding landscapes – while the domestic sector While the domestic
exhibits a top-heavy funding structure, where a few large deals determine the funding levels sector exhibits a
for the year, the funding is distributed more evenly in a global context. Consequently, this top-heavy funding
leads to a lot of volatility with respect to year-on-year changes in funding levels in India as structure, where a few
compared to the linear growth exhibited by the global landscape. large deals determine
the funding levels for
Volatility notwithstanding, the sector in India has witnessed a remarkable trajectory of the year, the funding is
funding growth over recent years, starting from a modest base of approximately US$ 20 distributed more evenly
million in 2019. While there was no significant change in 2020, the sector saw a dramatic in a global context
hike in investment in 2021, reaching a peak of around US$ 81 million. This impressive
growth was primarily driven by two large deals – with Transcon and Atomberg’s series B and
C funding rounds, respectively, accounting for about 76% of the funding in 2021.

However, following this period of exponential growth, there was a steep reduction, with
the overall funding plummeting to US$ 1.3 million in 2022 (see Figure 11). This decline was
driven by broader economic turmoil affecting markets globally, including a downturn in
climate-tech funding across various geographies.

In 2023, the sector experienced a remarkable resurgence, achieving its highest funding
levels since 2019. By the end of November, it had amassed approximately US$ 91 million in
funding. This surge can largely be credited to Atomberg’s notable marquee Series C deal,

INDIA’S GREEN REVOLUTION 2.0 | 41

 which alone represented about 95% of the sector’s total funding for the year till the end of
November. It also drove the average deal size that year to a record high, as the total number
of deals was comparatively low.

FIGURE 11: INDIAN AND GLOBAL FUNDING LANDSCAPE FOR THE BUILT ENVIRONMENT
SECTOR, FOR CALENDAR YEARS 2019-23

21

More capital is being No. of

directed towards disclosed
deals 16 $90.7M
green buildings, 17 deals
$80.6M
smart city projects,
and sustainable
infrastructure, signaling
growing investor
confidence in the
6 6
sector's potential for $20.0M $19.0M
Indian funding
unlocking economic (in US$)
$1.3M
value
2019 2020 2021 2022 2023 (Up to
November 30)

Average Indian
deal size $15.12M
(in US$)
$1.17M $1.18M $3.84M $0.22M

Global funding Data not

$1.22B $2.35B $3.99B $4.72B
(in US$) available

Source: FSG Analysis based on Tracxn (FY19-23), Dealroom data

The pronounced fluctuations in the funding raised by the sector over these five years are
primarily due to the two whopping deals secured by Transcon and Atomberg in 2021 and
The built environment 2023, respectively.
sector in India was
responsible for In the context of climate action, it is important to assess these funding dynamics against the
approximately 4% sector’s environmental implications. The built environment sector in India was responsible
of the national GHG for approximately 4% of the national greenhouse gas emissions from 2019 to 2022 but
emissions from 2019 received only 0.82% of the climate-tech investments during the same period. However,
to 2022 but received there has been a notable change of late, as evidenced by the sector’s increased share of
only 0.82% of climate- climate-tech investments, rising to 3.18% by the end of November 2023. This underscores
tech investments in the a significant opportunity to implement more impactful emissions reduction strategies. By
same period better aligning investments with the sector’s environmental impact, India can pursue its

42 | FSG
environmental objectives more effectively. The shift in funding dynamics observed in 2023
indicates a promising step towards this alignment.

Key trends in the Built Environment sector

The built environment in India is witnessing a significant shift towards sustainable practices,
driven by several key factors such as conscious consumerism, policy measures rolled out
by the government, technological innovation by start-ups, and a growing commitment to
sustainability among larger and more established players in the market.

While the Indian green building market was sized at $20 billion in 2021 and has
historically grown at a CAGR of ~7% between 2017 to 2021, it is expected to
While the Indian green
compound as we move forward.126
building market has
Government is driving the uptake of green solutions through building historically grown at a
standards and incentives such as tax benefits, fast-track approvals, and CAGR of around 7%
low-interest loans. The Eco Niwas Samhita (ENS) and the Energy Conservation between 2017 and
Building Code (ECBC) are at the forefront of this push. The ENS, a residential energy 2021, it is expected
conservation building code, and the ECBC, which sets minimum energy standards to compound as we
for new commercial buildings, represent a significant step towards reducing the move forward
environmental impact of new constructions and promoting energy efficiency.127

Along with these building codes, the government has implemented a range of national
incentives to encourage green construction. Developers of LEED-certified buildings
enjoy tax benefits under the Income Tax Act, allowing them to claim up to 100%
depreciation on the cost of green building assets. Additionally, low-interest loans
are available through the Indian Renewable Energy Development Agency (IREDA) for
projects with green certifications. To set an example, the government mandates that
all new government buildings meet green building standards. Moreover, certified
green buildings benefit from fast-track approvals, expedited inspections, and reduced
building fees, further incentivizing sustainable development.128

Accelerating the green transition in the sector, India is witnessing considerable start- Accelerating the green
up-led innovation towards developing affordable solutions that are scalable in transition in the sector,
the prevailing socio-economic context. For example, Agrocrete, made from agricultural India is witnessing
residues, and Geopolymer Concrete Blocks, an eco-friendly alternative to traditional considerable start-up-
walling, are redefining building materials. Technologies such as the Textile Reinforced led innovation towards
Concrete Prototyping Technology (TRCPT) are enabling new construction methods. developing affordable,
Additionally, the AVATAR Small Wind Turbine is expanding the accessibility of wind scalable solutions
energy.129

INDIA’S GREEN REVOLUTION 2.0 | 43

 Indian start-ups are also developing recycling processes – Carbon Tile, produced from
upcycled carbon waste, and RecycleX’s building materials, made from 100% recycled
content, including paver blocks and tiles, focus on minimizing waste.

Driven by the long-term economic advantages of sustainable building practices and a

growing social awareness of climate change, consumers are increasingly favoring
Consumers are sustainable building solutions, propelling large developers to lead the way
increasingly favoring with LEED-certified and net zero buildings. People are choosing sustainable
sustainable building options, recognizing that while these might entail a higher initial investment —
solutions, prompting typically around a 2% increase in construction costs — they offer substantial savings in
large developers to lead the long term — reduction in operational expenses by 14%-19% over the lifespan of
the way with LEED- a building.130 The significant impact of traditional construction practices on emissions
certified and net-zero is also behind this shift in consumer behavior. Almost half of all mineral resources
buildings extracted globally are used in housing and infrastructure development. Moreover, due
to minimal end-of-life repurposing, building materials account for half of the solid
waste generated worldwide.131

Godrej Properties, a pioneer in green building practices, has developed over 100 LEED-
certified projects.132 Similarly, Mahindra Lifespaces has made significant strides and
developed India’s first net-zero energy residential building. Over 80% of Tata Housing
Development Corporation’s portfolio meets the certification requirements of the IGBC/
USGBC, and more than half is IFC-EDGE Zero Carbon certified.133 L&T Realty, in its
commercial ventures, ensures that all developments are LEED Certified Gold Rated
buildings. These projects emphasize sustainability through various means, including
solar energy harnessing, energy-efficient water pumps, and rainwater harvesting.134

Smaller developers However, smaller developers and retail consumers lag in the adoption of green
and retail consumers practices in construction. While large builders have access to significant capital and
lag in the adoption the economies of scale required to make long-term investments, mid-scale, small,
of green practices in and retail developers are facing considerable challenges. Retail consumers encounter
construction several demand-side challenges in this fragmented market. These include the lack
of integrated shopping solutions, uncertainty around the availability of products, a
predominant presence of unbranded products due to the unorganized market, and
inconsistent product pricing.

On the supply side, resellers and retailers are grappling with their own set of
challenges. They often need multiple sources to procure a variety of green products,
highlighting a lack of aggregators or cross-value chain producers. Large Minimum
Order Quantities (MoQs) imposed on contractors and resellers create additional
hurdles. Further, they also face inconsistent delivery schedules and a poor penetration
of digital solutions, which hampers the efficiency of unassisted buying processes for
such green products.135

44 | FSG
Future outlook for the Built Environment sector

As India strides forward in its sustainable development journey, innovations in sustainable

building materials, smart infrastructure, and circular construction practices can help create
green, resilient, and healthy living spaces. As the sector evolves, the government and
businesses will have compelling opportunities to drive sustainability in construction.

Increased adoption of building management and IoT solutions among advanced

industry 4.0 applications

Building management systems are expected to be an integral component of the built

environment, helping India achieve its emissions reduction goals. The sector is set to
embrace advanced industry 4.0 applications, wherein automation and inter-device
connectivity, driven by IoT (Internet of Things) solutions, are integrated into buildings,
marking a significant shift toward enhanced efficiency. Technologies such as low-energy The built environment
HVAC systems, hybrid ventilation, dedicated outdoor air systems, hydronic cooling is set to embrace
systems, demand-controlled ventilation, and fault detection and diagnostics with predictive advanced industry 4.0
maintenance are poised to play central roles in this evolution.136 applications, wherein
automation and inter-
This presents a major investment opportunity for businesses in this space. While legacy device connectivity
manufacturers like Voltas, Blue Star and Daikin have already started the transition towards are integrated into
high-tech HVAC systems, they are being complemented by a surge of new entrants in the buildings, marking a
form of service providers dealing with end-to-end design, customization, and outfitting, significant shift towards
and software platform management. This includes companies such as TheSmartHVAC, enhanced efficiency
which specializes in design engineering for custom HVAC solutions; Falcon Labs, known for
their IoT-based digitization solutions aimed at enhancing energy and operational efficiency;
Clairco, which offers tailored fittings for indoor air purification; among several others.
In addition to residential and commercial applications, companies such as Messung are
leading the way in providing solutions in industrial use cases, ranging from development of
integrated hardware for manufacturing processes to management platforms that enable
remote monitoring and control.

Potential for start-ups to bring new and emerging technologies to India

Technologies such as cool roofs, storm water management, and geothermal heating, among
others, are starting to make their way from countries like the US and the UK to India. Some
Indian start-ups are already leveraging these technologies to develop innovative business
models (see Figure 12).

INDIA’S GREEN REVOLUTION 2.0 | 45

 FIGURE 12: ILLUSTRATIVE LIST OF EMERGING TECHNOLOGIES AND START-UPS
OPERATING IN THE BUILT ENVIRONMENT SECTOR IN INDIA AND GLOBALLY
Indian start-ups
Emerging technologies in built environment in the sector Global Start-ups

Cool Roofs – includes technology designed to offer

increased solar reflectance to reduce the heat
transfer to the rooms
Storm Water Management – includes systems such as
grass paving, rainwater reservoirs, etc., to manage
surface runoff and conserve water
Technologies such as Geothermal Heating – includes technology that
cool roofs, storm water utilizes geothermal energy for energy generation and
heat storage
management, and
Electrochromic Smart Glass – includes switchable
geothermal heating, glass technology that helps reduce energy costs by
among others, are varying the access to sunlight
Low-energy HVAC Systems – includes various energy-
starting to make their efficient cooling and ventilation appliances used at
way from countries homes and offices
like the US and the UK Hybrid Ventilation Systems – includes systems that
use both natural and mechanical solutions to increase
to India efficiency and comfort
Dedicated Outdoor Air Systems – includes systems
that use conditioned outdoor air for HVAC NA
applications
Green Insulation– includes insulation material made
from sustainable sources such as cellulose, glass wool, NA
aerogel, hemp, etc.

Offsite manufacturing and modular construction’s potential to curb emissions

In parallel, offsite manufacturing and modular construction is expected to transform

construction methodologies. By shifting construction to controlled factory environments, this
technology promises faster project delivery, reduced costs, and a smaller ecological footprint
through waste minimization and standardized processes. This approach is anticipated to
reduce overall costs by over 20%, shorten construction periods by 60%, and require 75%
fewer operatives on-site.137
Offsite manufacturing
and modular While significant growth within prefabricated construction is expected, it will be confined
construction promises to specific niches and consumer segments, serving areas that align closely with the inherent
faster project delivery, strengths of prefabricated construction, such as standardization and at-scale production of
reduced costs, and constituent parts and building, rather than achieving universal application in all construction
a smaller ecological domains as modular construction limits customizability.
footprint through
waste minimization and Emergence of sustainable, energy-efficient, passive design and structural
standardized processes alternatives like timber, hempcrete, etc.

Passive design is a methodology that uses natural resources to reduce a building's energy
consumption and create a comfortable indoor environment. This approach is grounded in

46 | FSG
the principle of leveraging natural environmental forces to provide ventilation, cooling,
and optimized heating, in contrast to active design which uses technologies such as solar
panels, heat recovery systems or wind turbines. Examples of passive design strategies include
planned orientation of buildings and use of sunscreens to provide maximum exposure
to sunlight, inclusion of spill-out areas to facilitate fresh air circulation, and hollow brick
masonry and insulated panels to regulate the heat. The implications of passive design are
far-reaching, as evidenced by its potential to reduce active energy requirements associated
with key building functionalities such as space cooling, lighting, and appliances by up to
40%, according to some projections.

Structural alternatives like timber, hempcrete, and other innovative materials are also
Though limited in
becoming increasingly important in reducing the built environment’s carbon footprint.
scope, the current
These materials are environmentally friendly and contribute to energy savings and optimized
market for pollution-
resource utilization.138
reducing construction
Though limited in scope, the current market for pollution-reducing construction materials is materials is anticipated
anticipated to witness growth, particularly in urban centers with pronounced air pollution to witness growth,
issues. This expected growth is underscored by government action, including temporary bans particularly in
on construction practices that contribute significantly to pollution.139 urban centers with
pronounced air
This scenario presents a unique opportunity, particularly for large-scale developers, to pollution issues
integrate sustainable design and structural alternatives into their offerings. While niche
developers have been pioneers in using sustainable materials, their limited scale constrains
widespread impact. In contrast, larger developers, with more substantial resources, have the
potential to drive significant change across the industry.

Retrofitting old buildings to reduce climate impact

Retrofitting is emerging as another area for impactful climate-tech innovation in the sector,
Retrofitting is emerging
driven by the prevalence of mid-lifecycle buildings constructed without green practices.
as another area for
Retrofitting these structures is essential for reducing their carbon footprint and enhancing impactful climate-tech
operational efficiency. Depending on the building, retrofitting can lead to a 33% reduction innovation in the built
in operational emissions on account of reduced energy consumption. This has given rise to environment, driven
a substantial global market for energy-based retrofitting, valued at $161 billion in 2023. It is by the prevalence of
further projected to grow at a CAGR of 6.8%, growing to US$ 272 billion by 2032.140 mid-lifecycle buildings
constructed without
The current market fragmentation and limited consumer awareness present a significant
green practices
opportunity for companies to establish a strong foothold. By developing expertise in this
under-served sector, businesses can capitalize on the potential to shape and lead the
market, especially given the current landscape of medium and small businesses with modest
expertise.141

INDIA’S GREEN REVOLUTION 2.0 | 47

 Summary of key trends in the Built Environment sector
• The Government is driving the uptake of green solutions through building standards and
incentives such as tax benefits, fast-track approvals, and low-interest loans
• Accelerating the green transition in the sector, India is witnessing considerable start-up-
led innovation towards developing affordable, scalable solutions
• Consumers are increasingly favoring sustainable building solutions, prompting large
developers to lead the way with LEED-certified and net-zero buildings
• Smaller developers and retail consumers lag in the adoption of green practices in
construction

Summary of future outlook for the Built Environment sector

• The sector is set to embrace advanced industry 4.0 applications, wherein automation and
inter-device connectivity are integrated into buildings, resulting in enhanced efficiency
• New technologies such as cool roofs, storm water management, and geothermal heating,
among others, are starting to make their way from countries like the US and the UK to
India
• Offsite manufacturing and modular construction promises faster project delivery, reduced
costs, and a smaller carbon footprint through waste minimization and standardized
processes
• The emergence of sustainable, energy-efficient, passive design and structural alternatives
like timber, hempcrete, etc. are reducing the built environment’s environmental footprint
• Retrofitting is emerging as another area for impactful climate-tech innovation in the
sector, driven by the prevalence of mid-lifecycle buildings constructed without green
practices

48 | FSG
6 Financial Services
The journey towards a net-zero future entails high capital investments in the climate-tech
sector. In this context, financial services, encompassing funding, investment management,
and financial consultancy, are becoming increasingly tailored to support the unique needs of
innovative climate technologies. This trend is underpinned by the increasing involvement of
Financial services
specialized financial services that recognize both the potential for significant returns and the encompassing
imperative for environmental stewardship. funding, investment
management, and
Consequently, specialized financial service providers and instruments have become a
financial consultancy
fundamental aspect of a robust climate tech ecosystem. It is crucial to acknowledge that
are becoming
these service providers, in turn, need substantial funding to initiate and continue operations.
increasingly tailored
This financial backing enables them to mobilize and allocate resources effectively across the
to support the unique
entire climate-tech ecosystem.
needs of innovative
Investments in the Financial Services sector climate technologies

Raking in a modest US$ 3.3 million in 2019, financial services for climate-tech has
conventionally been a niche space in India. However, with the broader funding ecosystem
expanding, the need for targeted financial instruments and corollary service providers has
risen proportionally, leading to an increase in funding across the board for such service
providers.

This has led to exponential year-on-year funding growth since 2019, increasing over 2400%
(a 24-fold rise) in a three-year span to US$ 85 million in 2022. While this is a result of an
increase in funding across the ecosystem, it must be noted that a single company – Jai
Kisan, a financial service provider catering to the underserved rural farmer population – was
responsible for raising the highest quantum of funding every single year. It was responsible
for about 59% of the overall funding raised in the entire ecosystem in 2022. In 2023, only
US$ 12.5 million had been raised by the end of November; most of it by Aerem (52%) and
Unnati (28%), which accounted for 80% of the funding.

While not as pronounced as the staggering growth rate experienced by the Indian
ecosystem, global climate-tech funding in financial services has also experienced impressive
growth – investments have risen by 960%, from US$ 280 million in 2019 to US$ 2.96 billion
in 2022 (see Figure 13).

INDIA’S GREEN REVOLUTION 2.0 | 49

 FIGURE 13: INDIAN AND GLOBAL FUNDING LANDSCAPE FOR THE FINANCIAL SERVICES
SECTOR, FOR CALENDAR YEARS 2019-23
12
11

$85.1M

6 7

No. of $44.9M
disclosed deals 5 deals

$12.5M
Indian funding $7.9M
(in US$) $3.3M

2019 2020 2021 2022 2023 (Up to

November 30)

Average
Indian deal $7.49M $7.09M
size
(in US$) $0.67M $0.71M $1.78M

Compared to the Global funding Data not

$0.28B $0.63B $1.31B $2.96B
(in US$) available
broader global context,
Source: FSG Analysis based on Tracxn (FY19-23), Dealroom data
India lags considerably
in the proportion
However, compared to the broader global context, India lags considerably in the proportion
of climate-tech
of climate-tech funding directed at financial services. Between 2019 and 2022, 2.7% of the
funding directed at
overall global funding in climate-tech went into financial services, as opposed to just 0.72%
financial services
in India.

Key Trends in the Financial Services sector

As climate-tech gains prominence on the financial stage, the financial services sector in India
is being shaped by an interplay of several discernable trends – a strategic focus on aligning
venture capital investments with sustainability, the advent of green financing mechanisms
and sustainable funding avenues, and a collaborative effort at mobilizing capital for green
initiatives.

Agriculture companies, Agriculture companies, collaborating with insurance and financial players,
collaborating with are pioneering innovative agri-financing solutions. These include parametric
insurance and financial
insurance, protecting farmers and seed breeders against losses in seed costs, and seed
players, are pioneering
germination insurance that protects farmers in case of seed failure. For instance, Upaj
innovative agri-
by Absolute collaborated with Digisafe to launch the ‘Seed Germination Protection
financing solutions
Cover’, which entitles farmers to receive a predetermined payment if the germination
rate of the seed is below a certain threshold. Along with its farm advisory services, it

50 | FSG
includes insurance advice to protect farmers against losses. Platforms like WRMS and
Gramcover are empowering farmers with information, advice, and a quick and easy
While venture capital
means to obtain insurance coverage for any losses incurred from crop failure.
focuses on early- to
While venture capital focuses on early- to mid-stage entities, larger organizations are mid-stage entities,
relying on green bonds, as they become a significant financial instrument in India’s larger organizations are
climate tech funding landscape, with over US$ 21 billion raised as of mid-2023.142 In relying on green bonds
early 2023, in a significant development for the sector, the Indian government issued that are becoming a
significant financial
sovereign green bonds worth US$ 1.95 billion.142 Additionally, local governments
instrument in India's
like Ghaziabad Nagar Nigam and Indore Municipal Corporation have raised US$ 20
climate-tech funding
million and US$ 87 million, respectively through green bonds.142 Corporates are also
landscape
embracing this trend, with ReNew Energy, AzurePower, and Tata Power collectively
raising over US$1 billion, underscoring green bonds’ increasing role in India’s climate-
tech funding.143, 144, 145

Besides these investment and debt-based financing mechanisms being used across the Carbon trading plays
ecosystem, the government has forayed into instituting carbon trading as a way a role in offsetting
emissions from vital but
to mobilize funds. Not only does this play a role in offsetting emissions from vital but
polluting industries,
polluting industries, it also makes capital available for green interventions. The Carbon
and also makes capital
Credit Trading Scheme is set to be finalized soon. It will set up standards and policies
available for green
for a voluntary carbon trading market in India146, which, while currently valued at US$
interventions
150 million147, is poised to grow at a CAGR of 16% till 2027.148

FIGURE 14: GREEN FINANCE MILESTONES IN INDIA

Reserve Bank of India
(RBI) issues a notification
on “Corporate Social Creation of the Government of
Responsibility and Non- Climate Change SEBI publishes its India issues its
financial Reporting – Role Finance Unit within official green bonds first tranche of
of Banks” in the context of the Ministry of requirements for sovereign green
sustainable development Finance Indian issuers bonds
2007 2011 2016 2023

2008 2015 2021

Development of Yes Bank issues RBI joins the
National Action India’s very first Network for
Plan on Climate green bonds to Greening the
Change raise US$ 160M Financial System
(NGFS)
The government took
a significant leap by
India has undergone a significant journey in the realm of green finance over the years. issuing its inaugural
Green finance first took root in the country in 2007 when the RBI emphasized the tranche of sovereign
role of banks in sustainable development. Moving forward to 2023, the government green bonds in 2023
took a substantial leap by issuing its inaugural tranche of sovereign green bonds (see
Figure 14).

INDIA’S GREEN REVOLUTION 2.0 | 51

 Since green investments often require large-scale financing, partnerships and
collaborations toward targeted large-scale liquidity injections are taking center
stage. For example, the Macquarie Group’s blended finance platform aims to mobilize
US$ 1.5 billion for electric vehicle adoption. Tata Motors, targeting a US$ 2.4-3 billion
market by 2030, collaborates with banks for electric vehicle financing. Tata Group and
Larsen & Toubro are developing Public-Private Partnership structures that could unlock
US$ 2 billion by 2030 at the municipal level, which would aid in waste management
and infrastructural development. Additionally, Kotak Mahindra Bank is leading a
pooled funding initiative to raise US$ 100 million for green infrastructure. These steps
represent a significant move towards sustainable investments and environmental
commitment.149

Future outlook for the Financial Services sector

The rise of green asset-backed securities and the strategic adoption of blended finance
structures are emerging as cornerstones of the future evolution of the financial services
Green-asset backed sector. As policies align with global sustainability goals, India is poised to unlock
securities and strategic significant credit availability for private entities, navigate the complexities of emerging
adoption of blended financial instruments, and usher in a new paradigm that marries economic growth with
finance structures environmental responsibility.
are emerging as
Green asset-backed securities (ABSs) are emerging as a key financial tool
cornerstones of the
future evolution of the Green asset-backed securities (ABS) are financial instruments that are backed by a pool of
financial services sector loans or leases related to environmentally sustainable assets. These can include loans for
renewable energy projects, energy-efficient buildings, or low-emission transportation.

These instruments are being adopted globally. For instance, the Dutch lender Obvion issued
the Green Storm RMBS in 2021, a Residential Mortgage-Backed Security underpinned
by energy-efficient Dutch properties, all rated A for energy efficiency. Similarly, the UK’s
Kensington Mortgages launched the Green Finsbury Square RMBS, focusing on financing
For investors, asset- properties with low emissions.150
backed securities offer a
While the securitization market in India is relatively underdeveloped,151 it is highly beneficial
structured opportunity
for a variety of stakeholders and is expected to expand rapidly. The government has already
to contribute to
issued its first tranche of Sovereign Green Bonds (SGB) in 2023 and has developed a
sustainable projects,
framework for future issues. For investors, ABS offers a structured opportunity to contribute
diversifying their
to sustainable projects, diversifying their portfolios with assets that align with environmental
portfolios with
goals. However, it necessitates thorough due diligence to assess the environmental impact
assets aligned with
accurately, adding complexity to investment decisions.
environmental goals

52 | FSG
Simultaneously, the regulatory bodies overseeing these securities must balance encouraging
green finance growth with stringent oversight to prevent ‘greenwashing’, ensuring that the
environmental benefits of these assets are real and measurable. Currently, India has no fixed
definitions for what constitutes a “green” security. Further, the Business Responsibility and
Sustainability Report (BRSR) has been made mandatory by SEBI, but it only applies to the top
1000 listed entities on the basis of market capitalization. This leaves the ecosystem at the
risk of being manipulated by misreported data by individual companies that can exploit the
reporting process to avail the benefits of green securities.152

Emergence of blended financing structures to manage risks

To encourage private investment, blended finance models are used to manage or offset
various risks – economic, regulatory, or market-related – that private investors might face.
This risk management shifts the burden from private investors to donors like governments
or philanthropic organizations, making it more feasible for private capital to flow into
development projects or sectors in emerging markets.153

India has witnessed a surge of blended finance projects. For example, the Fourth Partner
project, which is aimed at decarbonizing industrial power generation, utilized a senior loan The government is
of US$ 52 million from the IFC with concessional funding from international programs. exploring options
Similarly, UK’s Market Accelerator for Green Construction (“MAGC”) Program provided a to leverage blended
financing package to Home First and IIFL Home Finance Limited to assist their retail clients in financing structures
for green projects,
overcoming additional costs to obtain EDGE green-building certification and for green design
but the absence of a
features that support GHG reduction. Performance-linked incentives were a part of the
standardized blended
financing package. The government is exploring further options to leverage these financing
finance framework
structures for green projects.153
would hold back
However, the government faces a number of challenges before these structures witness large-scale adoption
large-scale adoption. These include regulatory constraints across the process, the lack of
a standardized blended finance framework and associated knowledge gaps, and the lack
of sector analytics and measurement mechanisms.153 Development finance institutions will
also play a key role going forward, disseminating best global practices and assisting the
government in curating them to the local context.

INDIA’S GREEN REVOLUTION 2.0 | 53

 Summary of key trends in the Financial Services sector
• Agriculture companies, collaborating with insurance and financial players, are pioneering
innovative agri-financing solutions
• While venture capital focuses on early- to mid-stage entities, larger organizations are
relying on green bonds
• The government has forayed into instituting carbon trading as a way to mobilize funds
• Partnerships and collaborations toward targeted large-scale liquidity injections are taking
center stage

Summary of future outlook for the Financial Services sector

• Green asset-backed securities are emerging as a key financial tool
• Emergence of blended financing structures to manage risks can encourage private
investment in green projects

54 | FSG
7 GHG Capture, Removal,
and Storage
Greenhouse gas capture, removal, and storage utilizes critical technologies aimed at
mitigating climate change by intercepting GHGs before they enter the atmosphere,
extracting them directly from the air, and safely sequestering them. Greenhouse gases
present in the atmosphere are responsible for raising the planet’s surface temperature by
absorbing the heat radiated by the earth, and include water vapor, carbon dioxide, methane,
While widely
nitrous oxide, ozone and chlorofluorocarbons. As the impacts of climate change intensify,
acknowledged as a
the importance of these technologies is growing, especially given that certain critical critical component of
industrial processes in hard-to-abate sectors cannot be decarbonized in the near future. net-zero emissions
plans set out by various
While widely acknowledged as a critical component of net-zero emissions plans set out
countries, the carbon
by various countries, the segment is nascent, with several key barriers to adoption. These
capture, removal,
include high costs associated with capture and storage technologies that are still being
and storage sector is
developed, substantial investments required for infrastructure development, the lack of
nascent, with several
adequate regulatory frameworks and incentives, the lack of a viable market for captured
barriers to adoption
carbon, and challenges in ensuring long-term storage safety and reliability.

Investments in the GHG Capture, Removal, and Storage sector

Despite the stiff challenges, the criticality of the need for GHG capture, removal, and storage
has led to a significant amount of global attention in the sector, wherein the funding has
followed a linear growth trajectory, registering over a 10-fold increase from US$ 0.33 billion
in 2019 to US$ 3.42 billion in 2022.
The limited funding
India, however, has lagged – registering only ~US$ 4.75 million worth of investments over raised in the domestic
the same period. The limited funding raised in the domestic sector has been concentrated sector has been
across just three firms – Maithri Aquatech and Vayujal, which manufacture atmospheric concentrated across just
water generators that generate clean water from water vapor, and Uravu Labs, which sells three firms
water extracted from vapor in the air.

While Vayujal raised an undisclosed amount in 2018, there was no funding for the sector in
2019 and 2020 (see Figure 15). Between 2021 and November 2023, Uravu Labs and Maithri
Aquatech raised US$ 4.2 million and US$ 0.53 million, respectively.

INDIA’S GREEN REVOLUTION 2.0 | 55

 FIGURE 15: INDIAN AND GLOBAL FUNDING LANDSCAPE FOR THE GHG CAPTURE, REMOVAL,
AND STORAGE SECTOR, FOR CALENDAR YEARS 2019-23

2 2

No. of $2.3M
disclosed 0 deals $1.9M
deals

Indian funding
(in US$) $0.5M
$0.0M 0 $0.0M
2019 2020 2021 2022 2023 (Up to
November 30)

Average Indian $0.97M $2.30M

deal size
(in US$) $0.00M $0.00M $0.26M

Global funding Data not

$0.33B $0.53B $1.14B $3.42B
(in US$) available
The lag in the segment Source: FSG Analysis based on Tracxn (FY19-23), Dealroom data
stems mainly from the
significant upfront costs
involved in carrying Globally, start-ups like See O2 Energy, Capture6 and Qaptis have developed revolutionary
out research and technologies to enable GHG capture from various sources. See O2 Energy converts the
development for the carbon dioxide and water vapor in air to hydrogen and carbon monoxide using reversible
technology and setting fuel cells to produce syngas, which can be used as a fuel. Capture6 employs direct air
up the infrastructure for capture (DAC) to remove GHG from the air and create purified water and other derivatives.
adoption Qaptis has developed a mobile carbon capture system that can capture emissions from
freight trucks and convert them into a liquid with minimal energy.

Notably, Carbon Clean, an Indian start-up set up in 2009 and now headquartered in
London, has developed a technology to extract carbon dioxide from flux gases to make
valuable chemicals. It has two CCU plants in India, but is not included in the analysis
presented in Figure 15 as it is registered in the UK and raised money overseas.

The lag in the segment stems mainly from the significant upfront costs involved in carrying
out research and development for the technology and setting up the infrastructure for
adoption.

The larger trend in India currently points towards a nascent system being driven by lone,

56 | FSG
disaggregated deals. However, given the sector’s importance in the context of achieving net
zero goals, investments are expected to pick up in the near to mid-term future.

Key trends in the GHG Capture, Removal, and Storage sector

While uptake in GHG capture, removal, and storage has been relatively slow so far, there are
a number of promising trends driving the domestic ecosystem.

Public sector undertakings (PSUs) and private players are adopting Carbon
Capture and Storage (CCS) and Carbon Capture Utilization and Storage (CCUS)
technologies, recognizing the need to stay carbon-neutral for sustainability and
competitiveness. ONGC is collaborating with Equinor and IOCL and implementing
a carbon capture project at Koyali refinery for CO2 storage at Gandhar oil field. PSUs and private players
IOCL aims to cut emissions by over 40% through CCUS and tree planting. GAIL’s are adopting CCS and
CCUS technologies,
pilot project in Uttar Pradesh employs microalgae for CO2 conversion, showcasing
recognizing the need
innovative carbon fixation methods.154 Private players are complementing these efforts
to stay carbon-neutral
by PSUs. For instance, Dalmia Cement, is targeting an ambitious 30 kgCO2/ton of
for sustainability and
cementitious material by 2040. Simultaneously, Tata Steel is planning to deploy the
competitiveness
‘HISARNA’ technology with CCS, potentially rolling it out across the company upon
successful implementation.155

To realize its net zero goal, the Indian government has actively supported the
sector through academic collaborations and market-based solutions. Though
the current efforts fall shy of global best practices –reflected in the investment figures
- the government is nonetheless implementing strategic interventions across the entire
value chain and advancing related technologies.

To this end, the government has launched two National Centres of Excellence for
Carbon Capture Utilization and Storage (CCUS) technologies at IIT Bombay and
JNCASR, Bengaluru, enhancing research and innovation in the field.156 Alongside this,
the Mission Innovation Challenge on CCUS supports 20 projects in CO2 capture and
storage, focusing on the power and industrial sectors156. To generate demand for these
initiatives, the government has also notified the process for the creation of an Indian
Credit Market, which will be instrumental in facilitating market-based solutions for
carbon capture.157

While research and development remain one of the key challenges, foreign firms
are paving the way for R&D through local partnerships. Meanwhile, domestic
R&D efforts remain limited to academic institutions. Fugro, a geotechnical
services provider from the Netherlands, has signed a Memorandum of Understanding
with IIT Bombay, committing to serve as a technical advisor.158 Similarly, AspenTech,

INDIA’S GREEN REVOLUTION 2.0 | 57

 a U.S.-based company specializing in asset optimization software for capital-intensive
industries, has identified carbon capture as a key focus area for its operations in
India.149 IIT Roorkee has signed a MoU with the Bokaro Steel Plant (BSL) to further
new solutions and develop practical applications.160 Meanwhile, IISC is developing
construction materials that can be used for carbon sequestration.161

Future outlook for the GHG Capture, Removal, and Storage sector

As India moves to finalize its Carbon Capture Utilization and Storage (CCUS) 2030 roadmap,
a number of changes are expected going forward in the domestic landscape, ranging from
transfer and development of better technologies, new business and operational models
suited to the local context, to increased governmental support, among others.
New CCUS technologies
Maturing CCUS technologies in the global landscape to make their way into India
for capturing and
utilizing atmospheric Many technologies, such as direct air capture, aqueous amine-based capture, membrane gas
or industrial carbon separation, bioenergy with carbon capture and storage, chemical looping, cryogenic capture,
will slowly move to etc., can theoretically capture and convert carbon into useful products or store it.162
India as they mature
and can catalyze the Globally, many start-ups use these technologies to capture and utilize atmospheric or
momentum in the GHG industrial carbon. Start-ups such as Greenlyte Carbon Technologies, Airhive, Airbuild, and
capture sector Carbonaide employ low-energy direct air capture, fluidization-based capture, algae-based
filters, biological fixation, conversion to concrete, etc., to capture and utilize carbon. These
technologies will slowly move to India as they mature and can catalyze the momentum in
the GHG capture sector.163

Adoption of these new technologies would be a critical enabler for tangible progress in
driving down costs in the sector. Currently, it takes ~US$ 40-120 to sequester one ton of
carbon dioxide directly from the atmosphere, and ~US$ 15-25 to capture the same from
industrial sources,164 which is not economically viable.

The Hub Model as a way forward

The Niti Aayog has proposed a hub model for Carbon Capture, Utilization, and Storage
(CCUS) near high-emission areas, which has the potential to streamline efforts from multiple
sources for greater efficiency and cost reduction. Theoretically, establishing five such hubs
near storage sites could address about 70% of India's point source emissions within a
500-kilometer radius, underscoring their efficacy and strategic importance in the nation's
climate action plan.

India boasts a theoretical carbon storage capacity ranging from approximately 395 - 614 Gt
of CO2, with the western region promising the highest capacity at 388.9 Gt of CO2 and the

58 | FSG
northern region the lowest at 7.65 Gt of CO2 (see Figure 16). This immense potential can be
strategically harnessed through the hub model.

FIGURE 16: REGION-WISE CARBON STORAGE CLUSTERS IN INDIA

Total Theoretical Storage Capacity of India = 395 – 614 Gt CO2

Northern Region: 7.65 Gt CO2 Eastern Region: 47.2 Gt CO2

67.2
7.34

0.31
2.4 0
10.98 The hub model can be
0 0
Saline ECBMR EOR Basalt 7.21 GT Saline ECBMR EOR
aquifer
Basalt used to strategically
aquifer
0.22 GT
North-Eastern Region: 47.2 Gt CO2 harness India's
Western Region: 388.9 Gt CO2 46.5 theoretical carbon
10.13 GT
304.9 16.58 GT
storage capacity of
0 0.7 0
80.8
0.9 2.3 Saline ECBMR EOR Basalt
approximately
aquifer
Saline ECBMR EOR
aquifer
Basalt 395 - 614 Gt of CO2
9.01 GT Southern Region: 76.3 Gt CO2
75.2

0.3 0.8 0
Saline ECBMR EOR Basalt
Region-wise estimated CO2 emission volumes (2030-2050) aquifer

Gt = Gigatonne
Source: Carbon Capture, Utilization and Storage (CCUS) Policy Framework and its Deployment Mechanism in India, NITI Aayog

However, with the lack of a market-based model for incentivizing investments into these
models, the government will have to initiate the push towards their development, facilitating
the mobilization of private capital.

Transport and storage operators are capitalizing on the demand for specialized CO2
handling, including transportation and injection into subsurface geologies. The business Transport and
case in the segment requires a mature market, lacking which the government has to act storage operators are
as a contractor for safe disposal, providing revenue for the transporter. This model is used capitalizing on the
in the Norway’s Longship/Northern Lights, where the government is funding 80% of the demand for specialized
investment costs and up to 95% of the operational costs for the initial transport and storage CO2 handling,
infrastructure. including transportation
and injection into
This evolving sector is particularly evident in regions like northern Europe, where dedicated subsurface geologies
carbon transport operators are emerging, suggesting potential growth and business
expansion opportunities in similar markets, including India. A number of private industry
companies, such as Antwerp@c, and public-private partnership initiatives, such as the
aforementioned Norway’s Longship/ Northern Lights have already started operating in the
space in international markets.165

INDIA’S GREEN REVOLUTION 2.0 | 59

 As the model matures, India will have a tall task ahead of it to modify and curate the
model to the local context and ensure the appropriate stakeholders are involved in their
corresponding capacities.

Increased governmental support globally for carbon capture technology adoption

While the Government of India has begun to undertake measures towards assisting
the ecosystem, there are several other avenues that are being adopted by governments
worldwide and are expected to be explored by their Indian counterparts as well.

This further support is likely through tax credits or subsidies, mirroring initiatives like
the Inflation Reduction Act in the US, which provides substantial credits for sequestered
emissions. On the demand side, measures such as public procurement of low-CO2 building
materials, transport fuels, and power, including those produced with CCUS, are expected to
be operationalized. This approach is akin to policies in Canada and the Netherlands, where
Further government
rules favor low-CO2 material inputs for construction projects.166
support through tax
credits or subsidies, Regulatory standards will also play a crucial role in the medium to long term, providing
regulatory standards, market advantages to firms implementing carbon capture technologies and regulating
and risk mitigation carbon-intensive processes. This could involve mandating the use of commodities, such
instruments would as green steel or green cement, in construction projects, similar to the European Union’s
significantly accelerate upcoming carbon border tax167 and the UK’s plan to phase out unabated gas power by
India's carbon capture 2035.168
industry
Lastly, to mitigate the risks associated with the high upfront investment of carbon capture
technologies, the government could also consider risk mitigation instruments. These might
include loan guarantees for project developers, pain-gain risk-sharing mechanisms, and CO2
liability ownership post-project closure, as seen in Australia.168

These comprehensive government support measures, if implemented, would significantly

accelerate India’s carbon capture industry, seamlessly integrating it with the global shift
towards a more sustainable future.

60 | FSG
Summary of key trends in the GHG Capture, Removal, and Storage sector
• Public sector undertakings (PSUs) and private players are adopting Carbon Capture and
Storage (CCS) and Carbon Capture Utilization and Storage (CCUS) technologies
• The Indian government has actively supported the sector through academic collaborations
and market-based solutions
• While foreign firms are paving the way for R&D through local partnerships, domestic R&D
efforts remain limited to academic institutions

Summary of future outlook for the GHG Capture, Removal, and Storage
sector
• Maturing CCUS technologies in the global landscape are expected to make their way into
India, and their adoption can drive down costs in the sector
• The hub model presents a centralized approach to Carbon Capture, Utilization, and
Storage near high-emission areas, streamlining efforts from multiple sources for greater
efficiency and cost reduction
• In line with the increased governmental support globally for carbon capture technology
adoption, further measures from the Government would significantly accelerate India’s
carbon capture industry

INDIA’S GREEN REVOLUTION 2.0 | 61

 8 Climate Change
Management and
Reporting
The climate change management and reporting sector is at a nascent stage both in India
and globally. The landscape predominantly involves start-ups and companies specializing
in emissions data monitoring, management, and reporting. Additionally, there’s a focus on
climate risk and resilience management, along with the generation of climate/earth data.

Investments in the Climate Change Management and Reporting sector

Investments in India's climate change management and reporting sector surged by a

remarkable 474% from 2019 to 2020, rising from US$ 0.5 million to US$ 2.87 million.
Notably, only four companies secured funding in 2020, with Blue Sky Analytics and Ambee
collectively capturing 92% of the total funding. However, in 2021, investments dwindled
to 64% of the previous year's funding, a trend attributed to investor caution amid the
uncertainties brought about by the COVID-19 pandemic. Encouragingly, investments
rebounded from 2021 to 2022, reaching a new high of US$ 6.64 million (see Figure 17). In
The climate change 2022, seven companies secured funding, with the start-up Varaha securing 60% and Climes
management and accounting for 18% of the total investment in the sector. In 2023, the sector witnessed a
reporting sector is at a 36% fall in funding from its peak. However, it was still a decent year compared to 2020 and
nascent stage both in 2021, with a total funding of US$ 4.21 million until the end of November. Two key players,
India and globally sentra.world and Mynzo Carbon, together secured approximately 83% of the total funding
in 2023.

Key trends in the Climate Change, Management, and Reporting sector

Key trends propelling climate change management and reporting forward include
technological innovations such as GPS and sensor-based tracking systems and the escalating
prominence of Software as a Service (SaaS) platforms. Further, there is a projected growth in
the market for emissions monitoring systems, underscoring the increasing demand for and
significance of these solutions.

62 | FSG
FIGURE 17: INDIAN AND GLOBAL FUNDING LANDSCAPE FOR THE CLIMATE CHANGE
MANAGEMENT AND REPORTING SECTOR, FOR CALENDAR YEARS 2019-23

6
$6.6M

$4.2M
No. of 3
disclosed 3
deals $2.9M

$1.8M

Indian funding
(in US$) $0.5M

2019 2020 2021 2022 2023 (Up to

November 30)

Average Indian
deal size $0.57M $0.61M $0.95M $0.70M
(in US$)
$0.18M

Global funding Data not Data not Data not

$0.8B $0.5B
(in US$) available available available

Source: FSG Analysis based on Tracxn (FY19-23), Dealroom data

Technological developments like GPS and sensor-based tracking systems are

revolutionizing emissions monitoring. GPS-based tracking systems can estimate
the emissions produced during transportation by tracking the location and movement
of vehicles. The benefits of GPS-based tracking systems include improved accuracy,
increased efficiency, and reduced costs. GPS-based tracking systems can increase
delivery efficiency by up to 30% and reduce fuel consumption by up to 20%. Sensor
technologies are used for precise greenhouse gas (GHG) emissions measurements. GPS and sensor-based
These sensors can detect pollutants like carbon dioxide and nitrogen oxides in real tracking systems,
time. Examples include onboard sensors in vehicles and stationary sensors at and the emergence
warehouses and distribution centers.169 of SaaS platforms,
are revolutionizing
In tandem, the emergence of Software as a Service (SaaS) platforms for
emissions monitoring
monitoring GHG emissions is contributing to the advancement of the sector. Several
key players have embraced this trend. SaaS platforms can play an important role
in monitoring Scope 3 emissions, which are tough to estimate through traditional
methods. For example, Accacia has a software suite that helps track Scope 1, Scope 2,

INDIA’S GREEN REVOLUTION 2.0 | 63

 and scope 3 emissions, calculate financed emissions, and set net-zero targets for real
estate companies. Varaha provides a SaaS-based Digital Monitoring, Reporting, and
Verification (dMRV) platform to quantify GHG emissions and use this data to create
carbon credits. FigBytes and StepChange have pioneered integrated SaaS platforms,
encompassing modules for Environmental, Social, and Governance (ESG) strategy
management, data handling, analytics, reporting, and stakeholder engagement. IBM's
Environmental Intelligence Suite is tailored to minimize business disruptions triggered
by severe weather and climate change. IFS expanded its Cloud platform with the IFS
Cloud Sustainability Hub, a Microsoft Teams application focused on tracking GHG
emissions and managing carbon footprints. Salesforce launched the Sustainability
Cloud in 2019 to streamline sustainability reporting processes through its SaaS
product.170

Besides the impact created by these technological innovations, deteriorating air

Deteriorating air quality
quality is driving significant expansion in the emissions monitoring systems
is driving significant
market.171,172 Since 2019, the global emissions monitoring system market has been
expansion in the
growing at a CAGR of 6%. The escalating demand for these systems, driven by
emissions monitoring
deteriorating air quality, is evident in the projected growth of the global market size
systems market
from US$ 3.2 billion in 2023 to US$ 5 billion in 2028. This reflects a substantial CAGR
of 9.3% over 2023-28.

Meanwhile, as the need for climate change mitigation takes center stage across
sectors, regulators and investors are increasingly calling for emissions tracking
at both direct and indirect levels. Notable instances include the Sustainable Finance
Disclosure Regulation (SFDR)173, which compels European fund managers to report
Scope 3 emissions in their portfolios from 2023.174 The Science Based Targets initiative
(SBTi)175 sets criteria for companies pursuing validation of Scope 3 targets, particularly
emphasizing near-term goals. Companies contributing 40% or more to the combined
total of Scopes 1, 2, and 3 must proactively establish and report Scope 3 emissions
targets to align with these evolving regulatory and investor expectations.

Though regulators India’s Ministry of Power introduced amendments to the carbon credits trading
and investors are scheme (CCTS) in December 2023, which paves the way for a carbon offset
increasingly calling market, with the Bureau of Energy Efficiency (BEE) developing the standards and
for emissions tracking registering the project under offset mechanisms. The BEE is also responsible for
at both direct and validating the carbon credits generated in the country. Experts believe that developing
indirect levels, very few new standards would save a lot of costs for the domestic companies that get their
companies effectively credits validated through global agencies under existing standards.176
measure their emissions

64 | FSG
 However, currently, very few companies effectively measure their GHG
emissions, with merely 10% comprehensively assessing both direct and indirect
emissions in 2022, a marginal increase from 9% in 2021. Notably, an average error
rate of 25-30% persists in emissions measurement practices. Surprisingly, only 12%
of organizations prioritize the assessment of indirect emissions as their top concern,
signaling a gap in addressing this crucial aspect of environmental impact within
corporate sustainability practices.177

Future outlook for the Climate Change Management and Reporting sector

While the climate change management and reporting sector is currently nascent, some
pivotal trends are moulding its future in India. Emerging global market dynamics that
necessitate emissions monitoring, the use of innovative technologies, and a heightened
focus on transparency, accountability, and sustainability are defining this evolution.

EU’s Carbon Border Adjustment Mechanism (CBAM) will drive investment in robust
data collection systems for accurate emissions tracking

Enforceable from 2026 as part of the EU Green Deal, the Carbon Border Adjustment
Mechanism (CBAM) aims to impose carbon tariffs on energy-intensive products exported
to the EU. India, with exports valued at US$ 7.4 billion to the EU in 2023, anticipates over
50% of these exports falling under CBAM. The US, the UK, Canada, and Japan are also
contemplating similar proposals.178, 179

Since CBAM requires quarterly reporting of data, Indian companies will have to invest in
setting up robust data collection systems to accurately track emissions throughout their
production processes. They will have to collaborate with technology providers to develop
software tools that can help streamline data capture and management for reporting.

To adapt to the challenge, the government should invest in green energy to reduce India’s
emissions. In response to the CBAM, India plans to introduce its own carbon tax and will
invest in green energy through this tax. Unlocking the potential
of IoT, blockchain,
Potential of IoT, blockchain and remote sensing technologies to revolutionize GHG and remote sensing
emissions tracking and carbon credit trading180, 181 technologies holds the
key to transforming
Unlocking the potential of IoT, blockchain, and remote sensing technologies holds the key
GHG emissions tracking
to transforming GHG emissions tracking and carbon credit trading. Digital Monitoring,
and carbon credit
Reporting, and Verification (dMRV) leverages remote sensing, satellite imagery, and machine
trading
learning to automate the measurement and verification of carbon-reduction projects. When
integrated with blockchain, dMRV ensures transparent, secure, and auditable records,
providing a crucial boost to Voluntary Carbon Markets, which are projected to grow to US$
10-40 billion by 2030.

INDIA’S GREEN REVOLUTION 2.0 | 65

 As India develops new standards for its carbon offset market, the reliability of these credits
will be in focus as the value of carbon credits depends a lot on who certifies them and what
standards are applied. Transparent and secure records on technologies like blockchain can
help credits generated in India be accepted in the international markets.176

Legacy companies such as nurture.farm by UPL tried to create a platform for carbon credit
generation through sustainable agriculture but saw limited uptake. Start-ups can craft
innovative business models around these technologies to revolutionize GHG emissions
management. For example, Agerpoint utilizes spatial intelligence for sustainable food
systems, disease detection, carbon sequestration estimation, biodiversity assessment, and
more through advanced technologies.

Increased adoption of Continuous Emission Monitoring Systems (CEMS) and

Predictive Emission Monitoring Systems (PEMS)

The Continuous Emission Monitoring Systems (CEMS) market, currently valued at US$ 2.72
As monitoring costs
billion in 2023, is expected to grow to US$ 4.22 billion by 2033 at a CAGR of 4.5%.182 This
rise, Predictive Emission
growth is propelled by factors like governments’ stringent emissions reduction policies, rapid
Monitoring Systems
industrialization, heightened public health concerns, and the demand for energy efficiency.
emerge as an attractive
As monitoring costs rise, Predictive Emission Monitoring Systems (PEMS) emerge as an
alternative, utilizing
attractive alternative, utilizing advanced computational models to predict emissions based
advanced computation
models to predict on variables like pressure and temperature. PEMS can cut operational costs by 50% over five
emissions based on years, eliminating the need for measurement-related hardware found in CEMS.183
variables like pressure
Legacy companies are encouraged to implement CEMS to ensure effective monitoring of
and temperature
air pollution from their operations. Noteworthy examples include Honeywell and Siemens
AG, which have successfully adopted CEMS for continuous measurement of air pollution
concentration or mass. Additionally, Predictive Emission Monitoring Systems (PEMS) offer
a valuable tool for legacy companies to predict emission concentrations based on process
Enhancing national data. While adoption of PEMS is less common, companies like Unisearch Associates Inc. and
emissions reporting Trace Environmental Systems Inc. have successfully utilized PEMS to enhance their emissions
accuracy and prediction capabilities.184, 185
pinpointing emissions
Start-ups can capitalize on this trend by establishing ventures in this domain. For instance,
hotspots, satellites
Yokogawa America provides design and fabrication services for CEMS. This highlights an
like GHGSat and
opportunity for start-ups to enter the market, offering specialized solutions and services
MethaneSAT
in the design and implementation of CEMS, catering to regulatory requirements and
measure atmospheric
contributing to the broader landscape of emissions monitoring and management.186
concentrations of
carbon dioxide
and methane

66 | FSG
Advancement in satellite technology for GHG reporting

Enhancing national emissions reporting accuracy and pinpointing emissions hotspots,

satellites like GHGSat and MethaneSAT measure atmospheric concentrations of carbon
dioxide and methane. Scientists have innovated by comparing greenhouse gas inventories
with space-based measurements, as exemplified by the Regional Carbon Assessment and
Processes (RECCAP-2) project. High-resolution greenhouse gas measures are delivered by
sentinel satellites of NASA, the European Space Agency, and the Chinese and Japanese
space exploration agencies.187, 188, 189

Legacy companies stand to gain operational insights, thereby enhancing their sustainability
efforts and bolstering their reputation. Notable examples include Chevron and Royal Dutch
Shell, both clients of GHGSat.190

Satellite technology advancements for GHG reporting offer start-ups cost-effective

monitoring and spur innovation. A prime illustration is Blue Sky Analytics, which is
developing a geospatial intelligence platform utilizing satellite data for environmental
monitoring and climate risk assessment.191
Transparent reporting
Increased emphasis on transparency in GHG reporting
empowers legacy
A heightened focus on transparency in GHG reporting is evident through the initiatives of companies to pinpoint
the United Nations Framework Convention on Climate Change (UNFCCC). The UNFCCC inefficiencies and high
has implemented robust transparency arrangements, ensuring the regular availability of data carbon intensity in their
encompassing countries’ GHG emissions, policies, progress towards targets, climate change operations, offering a
impacts, adaptation measures, support levels, and capacity-building needs. To uphold detailed understanding
transparency standards, the UNFCCC has established clear and standardized requirements of their carbon
for reporting national inventories.192, 193 footprint

Transparent reporting empowers legacy companies to pinpoint inefficiencies and high carbon
intensity in their operations, offering a detailed understanding of their carbon footprint
and uncovering opportunities for cost savings and operational enhancements. Walmart The government can
conducted a comprehensive assessment of its trucking fleet, supersize stores, and product actively implement
offerings as part of a sustainability initiative. This effort resulted in a significant reduction of policies promoting
emissions equivalent to 22 million tons of carbon dioxide by 2015.194 Likewise, Amazon sets transparent and
a goal of achieving a 50% net-zero carbon footprint in its deliveries by 2030.195 standardized disclosures
on ESG parameters, as
The government can actively implement policies promoting transparent and standardized well as sustainability-
disclosures on ESG parameters, as well as sustainability-related risks and opportunities for related risks and
listed companies in India. India has already taken steps in this direction by mandating new opportunities for listed
ESG reporting requirements for the top 1,000 listed companies by market capitalization, companies

INDIA’S GREEN REVOLUTION 2.0 | 67

 effective from FY 2022-23. These requirements encompass detailed disclosure obligations,
including GHG emissions reporting for Scope 1, Scope 2, and Scope 3 emissions (see
Figure 18).196

FIGURE 18: GHG PROTOCOL SCOPES AND EMISSIONS ACROSS VALUE CHAIN197

CO2 CH4 N 2O HFCs PFCs SF6 NF3

Scope 2 Scope 1
INDIRECT DIRECT

Scope 3 Scope 3
INDIRECT INDIRECT

Purchased Transportation
goods and and distribution
services Purchased
electricity, steam,
heating and cooling Investments
Company
for own use
Employee facilities
Capital commuting Processing of
goods sold products
Franchises

Fuel and energy Business Company

related activities Use of sold
travel vehicles Leased
products End-of-life
Waste generated assets
treatment of
in operations sold products

Upstream activities Reporting activities Downstream activities

Source: Adapted from Technical Guidance for Calculating Scope 3 Emissions, Greenhouse Gas Protocol

68 | FSG
Summary of key trends in the Climate Change Management and
Reporting sector
• GPS and sensor-based tracking systems are revolutionizing emissions monitoring
• The emergence of Software as a Service (SaaS) platforms for monitoring GHG emissions is
contributing to the advancement of the sector
• Deteriorating air quality is driving significant expansion in the emissions monitoring
systems market
• Regulators and investors are increasingly calling for emissions tracking at both direct and
indirect levels
• The carbon credits trading scheme paves the way for a carbon offset market
• Currently, very few companies effectively measure their GHG emissions

Summary of future outlook for the Climate Change Management and

Reporting sector
• EU’s Carbon Border Adjustment Mechanism (CBAM) will drive investment in robust data
collection systems for accurate emissions tracking
• IoT, blockchain and remote sensing technologies have the potential to revolutionize GHG
emissions tracking and carbon credit trading
• Adoption of Continuous Emission Monitoring Systems (CEMS) and Predictive Emission
Monitoring Systems (PEMS) is expected to increase
• Advancements in satellite technology are enhancing national emissions reporting accuracy
and enabling the pinpointing of emissions hotspots
• A heightened focus on transparency in GHG reporting is becoming evident

INDIA’S GREEN REVOLUTION 2.0 | 69

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 THIS REPORT WAS PUBLISHED IN MARCH 2024

CONTACT DETAILS
Rishi Agarwal
Managing Director, Head - Asia
[email protected]

Akshay Kohli
Associate Director
[email protected]

ACKNOWLEDGMENTS
The authors wish to express their gratitude to:
• Vishnu Rajeev, Investment Principal at Speciale Invest, and Ishwar Gawande,
Ex-Head of Strategy at India Climate Collaborative, for their invaluable inputs

• Sai Naga Pranai Kakarlapudi, Kriti Chaturvedi, Tanmay Juyal, and Sakshi Rai from
FSG, for their research support, and other FSG colleagues for their thoughtful inputs

• Sagnik Chowdhury, Ganesh Borhade, and Shania Pereira from FSG, for their support
in producing this white paper

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