India’s updated NDC raises pressure on power and industry: The Union Cabinet’s approval of India’s updated Nationally Determined Contribution for 2031–2035, to be submitted to the UN Framework Convention on Climate Change, marks a significant shift in climate policy. The revised commitments, aligned with the net-zero goal for 2070, raise the ambition on emissions reduction and clean energy adoption. They also push climate policy deeper into the heart of industrial strategy.
India’s updated NDC commits to reducing the emissions intensity of GDP by 47% from 2005 levels by 2035, up from the earlier 45% target for 2030. It also aims to raise the share of installed electricity capacity from non-fossil fuel sources to 60%, from the earlier 50% target for 2030. The carbon sink target has also been raised, from 2.5–3 billion tonnes of CO₂ equivalent to 3.5–4 billion tonnes.
India’s record gives these targets some credibility. Between 2005 and 2020, emissions intensity fell by about 36%. By 2026, non-fossil fuel sources accounted for more than 52% of installed power capacity, or over 220 GW. Renewable energy capacity alone crossed 180 GW, including more than 80 GW of solar and around 45 GW of wind. That suggests India is likely to outperform its earlier commitments ahead of schedule.
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Power sector decarbonisation will drive transition
The power sector, which accounts for nearly 40% of India’s CO₂ emissions, will determine whether the new targets are met. India is expected to need 500–600 GW of non-fossil fuel capacity by 2035. That implies annual additions of 25–30 GW for the next decade, alongside investment of $300–400 billion in generation, transmission and storage.
Storage will be central. Battery storage capacity, now below 20 GWh, is projected to rise to 200–250 GWh by 2035 to manage the intermittency of solar and wind. Green energy corridors and smart grids will be equally important. Thermal power, still responsible for about 70% of electricity generation, will decline only gradually. That leaves utilities with the task of diversifying without compromising grid stability.
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Heavy industry faces an unavoidable shift
Steel, cement, aluminium and chemicals together account for nearly 30% of India’s emissions. These sectors cannot decarbonise through efficiency gains alone. They will need technological change, capital expenditure and policy support.
Steel illustrates the scale of the challenge. India emits around 2.5 tonnes of CO₂ per tonne of crude steel, well above global best practice. Green hydrogen-based direct reduced iron could cut emissions by 80–90%, but only if hydrogen costs fall below $2 per kg from the current $4–6 range.
Cement faces a similar transition. Responsible for about 7% of India’s emissions, the sector will need wider use of blended cements, alternative fuels and carbon capture. These shifts may raise production costs by 10–20% in the near term. But the cost of inaction could be higher as export markets begin to enforce carbon border adjustment measures.
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Transport, batteries will shape the next phase
Transport contributes about 13–14% of India’s greenhouse gas emissions and will become a larger source as urbanisation accelerates. Electric vehicles account for only 6–7% of total vehicle sales today, but that share could rise to 30% by 2030 and above 50% by 2035 if policy support holds.
That transition will demand scale in charging and manufacturing. India may need more than 2 million public charging points, along with a strong domestic battery ecosystem. The Production Linked Incentive scheme is meant to support 50 GWh of annual battery manufacturing capacity in the near term. If the shift gathers pace, it can cut emissions and reduce oil imports, which still cost the economy more than $150 billion a year.
Carbon sink targets will test forestry, rural policy
India’s plan to create a carbon sink of up to 4 billion tonnes of CO₂ equivalent will depend heavily on forestry and agroforestry. Forest and tree cover now accounts for about 24.6% of the country’s geographical area. Moving closer to 30% will require sustained land-use policy, state-level execution and credible monitoring.
Agroforestry could help by sequestering 1–1.5 tonnes of CO₂ per hectare each year while generating additional income for farmers. Carbon markets may eventually widen those income streams. But those gains will depend on whether rural producers can access carbon finance, measurement systems and functioning market platforms.
NDC, climate finance and MSME support
The financing requirement is formidable. India may need cumulative green investment of more than $10 trillion by 2070, with a substantial share required well before 2035. Annual green investment could rise to $150–200 billion, far above the current $40–50 billion range.
That makes finance architecture as important as technology. Sovereign green bonds, sustainability-linked loans and blended finance will have to expand quickly. India has already issued sovereign green bonds worth over ₹20,000 crore, but public finance alone will not be enough. Private capital and international climate finance will have to fill much of the gap.
MSMEs remain the most vulnerable part of this transition. They account for nearly 30% of GDP and 45% of exports, yet many lack the capital and technical capacity to comply with low-carbon production standards. Without targeted support, they risk being pushed out of export supply chains that are becoming more climate-sensitive. Subsidised finance, technology upgradation and cluster-based support will be essential. So will digital traceability systems that help firms prove compliance.
India’s updated NDC is not just a climate pledge. It is a statement about the future structure of the economy. It ties emissions reduction to power, industry, transport, land use and finance. That makes the agenda harder to execute, but also more consequential. If policy, capital and industrial adaptation move in step, India could emerge as a serious player in green manufacturing and clean technology. If they do not, the gap between targets and delivery will widen quickly.
Suresh P Singh is Advisor, VeK Policy Advisory & Research.