Green finance the backbone of resilient economies, says environment minister Bhupender Yadav

New Delhi: India’s environment, forest and climate change minister Bhupender Yadav on Thursday said green finance—investments directed towards projects or companies that have a positive environmental impact—was no longer a niche sector as it now forms the “backbone of resilient, competitive economies”. He acknowledged India’s climate transition would demand massive funding.

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Highlighting the green finance gap, Federation of Indian Chambers of Commerce & Industry’s (Ficci’s) president Harsha Vardhan Agarwal said global green investments had crossed $1.8 trillion in 2023. Yet, emerging economies such as India had received less than a quarter of this funding, Agarwal said. This financing gap threatens to undermine the climate commitments of developing nations at a critical juncture for global emissions reduction.

“Green finance is about restructuring the flow of capital so that every investment in infrastructure, industry, transport or agriculture contributes to sustainability rather than undermines it,” the environment minister said at Ficci’s Leads 2025 conference.

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He said a collaborative effort among governments, industry, regulators, global financial institutions, and citizens is key to meeting the challenge of climate change while ensuring inclusive economic development.

Yadav said green finance will play a crucial role in unlocking investments across sectors such as solar and wind power, green hydrogen, sustainable agriculture, and a climate-resilient infrastructure. These areas hold the potential to generate millions of jobs, strengthen competitiveness, and secure India’s energy future, he added.

On this, Ficci’s Agarwal noted that Indian companies are already “tapping green bonds to fund solar parks in Rajasthan and building advanced recycling ecosystems in automotive supply chains”, proving that profitability and sustainability can thrive together.

According to Yadav, India has already demonstrated strong investor confidence through its sovereign green bonds programme, which attracted substantial international investment. He, however, added that public funding alone cannot meet the challenge. “Fiscal space is tight,” he said. “The role of public budgets and concessional finance is to de-risk, crowd in and set rules that unlock private capital.”

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The minister outlined India’s three-pronged approach under Prime Minister Narendra Modi’s leadership: treating climate finance as development finance, positioning early green investors to own tomorrow’s value chains, and acknowledging that developed countries must substantially increase their financial commitments to developing nations.

Central to India’s strategy is the recently revised Green Credit Programme, launched in October 2023. The updated methodology, notified on 29 August, introduces direct participation by private entities and minimum restoration commitments, aimed at mobilizing private capital for climate action.

The programme represents part of India’s broader push beyond implementation of Article 6 of the Paris Agreement that enables international cooperation on carbon markets.

Yadav also underscored the role of innovation in financing, stressing that financial technology, digital platforms, and AI-led approaches can make green financing more efficient, transparent and scalable.

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