India's climate-tech sector's 2023 investment only 57% of 2022, just $2,853 million

By Ayman Ujjainwala*
While investments in India's climate-tech sector grew significantly in previous years due to increasing interest from domestic and international investors, the funding momentum waned by the end of November 2023, reveals consulting firm FSG's new report 'India's Green Revolution 2.0 – Trends Shaping India's Climate-Tech Sector'. According to the report, the sector attracted US$ 2,853 million till November 30, 2023, representing only 57% of the total investment garnered in 2022.
FSG's analysis shows that investment activity has been driven primarily by significant funding in the 'mobility' and 'energy' sub-sectors, which collectively secured over 94% of the total climate-tech investments in India from 2019 till the end of November 2023. This dominant trend underscores the critical focus on these areas within the broader climate technology field.
The report also highlights a dissonance between the emissions contributions of individual sub-sectors and the amount of climate-tech funding they receive. The ‘energy' sector accounts for approximately 38% of total emissions, however, it secured an outsized 74% share of climate-tech investments, on average, between 2019 and 2022. Meanwhile, though the 'industry, manufacturing, and resource management' sector and the 'food, agriculture, and land use' sector account for approximately 30% and 20% of total emissions, respectively, they collectively received only about 4-5% of the total investments over the analysis years. To limit global warming to 1.5◦C, investors should correct this dissonance by realigning their investment focus.
FSG's report tracks the trajectory of investments in India's climate-tech sector since 2019, 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.

Commenting on the release of the report, Rishi Agarwal, MD, Head-Asia, said, “As India prepares for the upcoming general elections, this report couldn’t be more timely. It highlights the role climate innovation and sustainable practices play in our nation’s future, underscoring the importance of prioritizing climate solutions in our national agenda. As political parties draft their manifestos, they should incorporate policies that support and accelerate the adoption of climate-tech solutions, demonstrating a commitment to a greener and more sustainable future.”

Investment trajectory

According to the report, India's climate-tech sector attracted investments totaling US$ 3,931 million in 2019, US$ 2,291 million in 2020, US$ 4,218 million in 2021, US$ 5,077 million in 2022, and US$ 2,853 million till November 30, 2023.
It reveals that 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, India's climate-tech sector has demonstrated resilience, registering an overall funding increase of 29% from 2019 to 2022. 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 overall investment growth in the climate-tech sector in recent years 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,' the report states.

"Despite short-term fluctuations, the long-term growth trajectory of India's climate-tech sector remains promising, underpinned by increasing awareness and government incentives. The recent decline in late-stage investments reflects a sharper investor focus on profitability. While this may cause short-term deceleration, it also indicates a maturing market where investors are seeking sustainable and financially viable solutions. The slowdown also highlights the need for climate-tech companies to demonstrate clear paths to profitability to maintain investor interest in the long term," said Agarwal.

Deep dive into sub-sectors

While the general trajectory of India's climate-tech sector shows an upward trend, there are distinct variations within specific sub-sectors, which are explored in detail in the report.
FSG's analysis shows that investment activity has been driven primarily by significant funding in the 'mobility' and 'energy' sub-sectors, which collectively garnered over 94% of the total climate-tech investments in India from 2019 till the end of November 2023.
These sub-sectors 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, both 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' and 'climate change management and reporting' are nascent sub-sectors that received a negligible share of the investment pie.

Emissions realities and funding disparities

According to the report, '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 38% of total emissions. Between 2019 and 2022, it secured an average 74% share of climate-tech investments. 'While this outsized investment favors the energy sector, it leaves other emissions-intensive sectors lacking adequate funding', the report states.
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.
For climate action to stay on track to limiting global warming to the 1.5◦C threshold, investors should correct this dissonance by realigning their investment focus.
"The notable disparity between sectors' contributions to GHG emissions and their share of climate-tech investments underscores the urgency for strategic realignment. While investments in the energy sector dominate India's climate-tech landscape, there is a pressing need to diversify funding towards sectors like industry, manufacturing, and agriculture, which contribute significantly to emissions. This diversification will be key to achieving meaningful reductions in greenhouse gas emissions," said Agarwal.

---

*With Vivaa Consulting

Comments

A comrade in culture and controversy: Yao Wenyuan’s revolutionary legacy

By Harsh Thakor* This year marks two important anniversaries in Chinese revolutionary history—the 20th death anniversary of Yao Wenyuan, and the 50th anniversary of his seminal essay "On the Social Basis of the Lin Biao Anti-Party Clique". These milestones invite reflection on the man whose pen ignited the first sparks of the Great Proletarian Cultural Revolution and whose sharp ideological interventions left an indelible imprint on the political and cultural landscape of socialist China.

Two more "aadhaar-linked" Jharkhand deaths: 17 die of starvation since Sept 2017

Kaleshwar's sons Santosh and Mantosh Counterview Desk A fact-finding team of the Right to Feed Campaign, pointing towards the death of two more persons due to starvation in Jharkhand, has said that this has happened because of the absence of aadhaar, leading to “persistent lack of food at home and unavailability of any means of earning.” It has disputed the state government claims that these deaths are due to reasons other than starvation, adding, the authorities have “done nothing” to reduce the alarming state of food insecurity in the state.

What's behind Donald Trump's 'narco-state' accusation against Venezuela

By Manolo De Los Santos The US government has revived its campaign to label Venezuela a "narco-state", accusing its top leadership of drug trafficking and slapping hefty bounties on their heads for capture. This campaign, which only momentarily took a backseat, is a strategic fabrication, not a factual assessment. This accusation, particularly amplified under the Trump Administration, is a calculated smokescreen to justify a long-standing agenda: the overthrow of the Venezuelan government and the seizure of its vast oil and mineral resources. A closer examination of the facts reveals a country that has actively fought drug trafficking on its own terms and a US government with a clear and consistent history of destabilizing independent countries in Latin America.

Epic war against caste system is constitutional responsibility of elected government

Edited by well-known Gujarat Dalit rights leader Martin Macwan, the book, “Bhed-Bharat: An Account of Injustice and Atrocities on Dalits and Adivasis (2014-18)” (available in English and Gujarati*) is a selection of news articles on Dalits and Adivasis (2014-2018) published by Dalit Shakti Prakashan, Ahmedabad. Preface to the book, in which Macwan seeks to answer key questions on why the book is needed today: *** The thought of compiling a book on atrocities on Dalits and thus present an overall Indian picture had occurred to me a long time ago. Absence of such a comprehensive picture is a major reason for a weak social and political consciousness among Dalits as well as non-Dalits. But gradually the idea took a different form. I found that lay readers don’t understand numbers and don’t like to read well-researched articles. The best way to reach out to them was storytelling. As I started writing in Gujarati and sharing the idea of the book with my friends, it occurred to me that while...

New RTI draft rules inspired by citizen-unfriendly, overtly bureaucratic approach

By Venkatesh Nayak* The Department of Personnel and Training , Government of India has invited comments on a new set of Draft Rules (available in English only) to implement The Right to Information Act, 2005 . The RTI Rules were last amended in 2012 after a long period of consultation with various stakeholders. The Government’s move to put the draft RTI Rules out for people’s comments and suggestions for change is a welcome continuation of the tradition of public consultation. Positive aspects of the Draft RTI Rules While 60-65% of the Draft RTI Rules repeat the content of the 2012 RTI Rules, some new aspects deserve appreciation as they clarify the manner of implementation of key provisions of the RTI Act. These are: Provisions for dealing with non-compliance of the orders and directives of the Central Information Commission (CIC) by public authorities- this was missing in the 2012 RTI Rules. Non-compliance is increasingly becoming a major problem- two of my non-compliance cases are...

N-power plant at Mithi Virdi: CRZ nod is arbitrary, without jurisdiction

By Krishnakant* A case-appeal has been filed against the order of the Ministry of Environment, Forest and Climate Change (MoEF&CC) and others granting CRZ clearance for establishment of intake and outfall facility for proposed 6000 MWe Nuclear Power Plant at Mithi Virdi, District Bhavnagar, Gujarat by Nuclear Power Corporation of India Limited (NPCIL) vide order in F 11-23 /2014-IA- III dated March 3, 2015. The case-appeal in the National Green Tribunal at Western Bench at Pune is filed by Shaktisinh Gohil, Sarpanch of Jasapara; Hajabhai Dihora of Mithi Virdi; Jagrutiben Gohil of Jasapara; Krishnakant and Rohit Prajapati activist of the Paryavaran Suraksha Samiti. The National Green Tribunal (NGT) has issued a notice to the MoEF&CC, Gujarat Pollution Control Board, Gujarat Coastal Zone Management Authority, Atomic Energy Regulatory Board and Nuclear Power Corporation of India Limited (NPCIL) and case is kept for hearing on August 20, 2015. Appeal No. 23 of 2015 (WZ) is filed, a...

1857 War of Independence... when Hindu-Muslim separatism, hatred wasn't an issue

"The Sepoy Revolt at Meerut", Illustrated London News, 1857 By Shamsul Islam* Large sections of Hindus, Muslims and Sikhs unitedly challenged the greatest imperialist power, Britain, during India’s First War of Independence which began on May 10, 1857; the day being Sunday. This extraordinary unity, naturally, unnerved the firangees and made them realize that if their rule was to continue in India, it could happen only when Hindus and Muslims, the largest two religious communities were divided on communal lines.

Ground reality: Israel would a remain Jewish state, attempt to overthrow it will be futile

By NS Venkataraman* Now that truce has been arrived at between Israel and Hamas for a period of four days and with release of a few hostages from both sides, there is hope that truce would be further extended and the intensity of war would become significantly less. This likely “truce period” gives an opportunity for the sworn supporters and bitter opponents of Hamas as well as Israel and the observers around the world to introspect on the happenings and whether this war could have been avoided. There is prolonged debate for the last several decades as to whom the present region that has been provided to Jews after the World War II belong. View of some people is that Jews have been occupants earlier and therefore, the region should belong to Jews only. However, Christians and those belonging to Islam have also lived in this regions for long period. While Christians make no claim, the dispute is between Jews and those who claim themselves to be Palestinians. In any case...

Fate of Yamuna floodplain still hangs in "balance" despite National Green Tribunal rap on Sri Sri event

By Ashok Shrimali* While the National Green Tribunal (NGT) on Thursday reportedly pulled up the Delhi Development Authority (DDA) for granting permission to hold spiritual guru Sri Sri Ravi Shankar's World Culture Festival on the banks of Yamuna, the chief petitioners against the high-profile event Yamuna Jiye Abhiyan has declared, the “fate of the floodplain still hangs in balance.”

Counterview

Search This Blog