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India Projects $2.5 Trillion Climate Finance Need by 2030; Releases Draft Taxonomy Framework

India will require an estimated $2.5 trillion in climate finance by 2030 to support its energy transition goals and progress toward its net-zero emissions target by 2070, according to a draft taxonomy paper released by the Department of Economic Affairs (DEA) on May 7. The taxonomy aims to guide the flow of capital toward climate-friendly technologies and activities, ensuring more effective, credible investments while curbing “greenwashing.”

The draft “India’s Climate Finance Taxonomy” defines criteria for identifying and classifying sustainable investments, covering mitigation and adaptation sectors. Power, mobility, and buildings will be included under climate mitigation, while agriculture, food, and water security will be covered under adaptation and resilience. The framework also plans to integrate hard-to-abate sectors such as iron, steel, and cement, facilitating their decarbonisation through measures like GHG avoidance, energy efficiency gains, and emission intensity reduction.

Notably, the draft does not propose any specific tax incentives or fiscal policy changes to spur green investments. The absence of tax-related provisions may be a gap in terms of immediate financial levers, but the taxonomy is expected to evolve with stakeholder feedback. Public input on the draft is invited until June 25, 2025.

The government underscores that a robust taxonomy will help attract long-term, affordable, and transparent capital, both domestic and international, to finance India’s massive clean energy and climate resilience needs. The framework is viewed as a foundational step toward formalising the country’s climate finance architecture and enhancing investor confidence in green projects.