India’s clean industry transition: India is among the few major economies pursuing ambitious goals for clean energy and industrial decarbonisation. As the world’s third-largest energy consumer, the country cannot afford to delay its green transition. Despite its intent, India’s clean-industry pipeline is stalling under the weight of outdated rules, high financing costs, and fragmented policy frameworks. According to the Mission Possible Partnership (MPP), India has 53 clean-industry projects under development — part of the new industrial sunbelt of renewables-rich economies critical to global decarbonisation. But none of these projects have reached a final investment decision in 2024.
The reasons are structural. Outdated construction norms prevent cement producers from using low-carbon technologies such as calcined clay or blended cement. Regulatory clearances take too long, and access to transmission infrastructure remains uncertain. As a result, even projects with committed buyers and partial funding are stuck in limbo. The report identifies 70 projects outside China as “poised” for investment, representing a $140 billion opportunity. China alone accounted for 12 of the 19 clean-industry final investment decisions globally this year. India’s absence from that list reveals a widening gap between ambition and execution.
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Integrating green hydrogen into industrial policy
The next phase of India’s transition must extend beyond renewable power generation to decarbonising heavy industries such as steel, cement, and fertilisers. The National Green Hydrogen Mission provides a natural bridge. Green hydrogen can replace coal and gas as industrial feedstock, but this requires coordinated investment in electrolysers, storage, and cross-sector infrastructure like pipelines.
Aligning hydrogen production hubs with industrial clusters — especially in Gujarat, Odisha, and Maharashtra — would allow India to scale demand and cut costs. Without such integration, India risks creating a parallel clean-energy ecosystem detached from its industrial needs.
Clean industry transition: The financing bottleneck
Financing remains a critical constraint. Clean-industry projects in India face capital costs 200–300 basis points higher than in advanced economies, owing to perceived policy and currency risks.
The Reserve Bank of India has classified renewable energy under priority sector lending, but high-emission industries remain excluded. Extending concessional green credit lines to steel, cement, and chemical sectors could change this equation. Blended finance models, co-funded by multilateral institutions like the Green Climate Fund or the World Bank’s Climate Investment Funds, can help de-risk early projects.
Other countries are showing the way. Indonesia and South Africa have secured concessional funding through Just Energy Transition Partnerships (JETPs), combining public and private capital to accelerate clean transitions. India should pursue similar arrangements to unlock affordable capital for industry.
Technology transfer and domestic innovation
India’s industrial transition also depends on technological self-reliance. Most low-carbon manufacturing technologies — such as carbon capture, direct reduced iron, or electric kilns — are still imported. This dependence inflates costs and limits scalability.
A targeted policy push for domestic innovation under the Production Linked Incentive (PLI) framework could change that. Incentives for indigenous development of electrolysers, green cement technologies, and carbon-capture systems would lower costs and create export opportunities. India can also deepen cooperation with partners like Japan, the EU, and the United States under initiatives such as the Indo-Pacific Economic Framework (IPEF) to enable technology sharing and R&D partnerships.
Regulatory agility and market creation
Regulatory agility will determine how fast clean-industry projects move from concept to commissioning. Several green-steel and clean-cement projects remain trapped in bureaucratic loops—awaiting environmental clearances, construction code revisions, or clarity on carbon-capture rules. A single-window clearance system for low-carbon industrial technologies could address these delays.
The demand side is equally critical. Without markets for low-carbon materials, investors will hesitate. Green procurement policies, carbon pricing, and labelling standards can help. The European Union’s Carbon Border Adjustment Mechanism (CBAM) is already reshaping trade by favouring cleaner materials. India must respond by setting clear domestic standards; otherwise, its exporters could face penalties in global markets.
Policy coherence and state-level alignment
India’s decarbonisation effort spans multiple ministries—Power, New and Renewable Energy, Heavy Industries, Steel, and Environment—each with its own mandate. The lack of a unified industrial transition framework fragments policy action.
Equally important is state-level capacity. Industrial clearances, land use, and energy infrastructure fall largely under state governments. States such as Gujarat and Tamil Nadu have advanced clean-energy policies, but others lag behind. A national framework that aligns central and state priorities—offering fiscal incentives for decarbonisation—would improve coordination and speed of execution.
Reforming carbon pricing and trade strategy
The newly launched Carbon Credit Trading Scheme (CCTS) is a step forward, but its success depends on creating predictable and internationally comparable price signals. A robust carbon market could attract investors and reward industries that cut emissions early.
India also needs a coherent green trade strategy. The proliferation of carbon-linked tariffs such as CBAM poses new risks to India’s export competitiveness. New trade partnerships must therefore include climate clauses on carbon accounting, emissions verification, and market access for green products to prevent “green protectionism.”
Skilling India’s workforce for a just transition
Industrial decarbonisation will reshape the workforce. Workers in coal, cement, and steel sectors risk job losses unless retraining and social protection are built into transition plans. According to the ILO, India could create over 3 million new green jobs by 2030 with targeted skilling programmes.
The Skill India Mission and industrial training institutes can anchor this shift by designing curricula for hydrogen engineers, energy auditors, and carbon-accounting specialists. A just transition is not just a moral imperative—it is an economic necessity.
The global race toward clean industry is accelerating, and India cannot afford to trail behind. If its 53-project pipeline remains stalled, the country risks losing the next wave of manufacturing competitiveness.
Unlocking investment will require more than declarations—it demands coordinated execution, financing reform, and institutional agility. India’s experience in scaling solar power and digital infrastructure shows that once aligned, policy and market forces can deliver rapid transformation. The same clarity of purpose is now required to lead the new industrial revolution—one that combines economic strength with climate responsibility.