"The cost of carbon-based energy production is increasing, and if companies become more efficient and reduce energy costs there is a chance of higher profitability," said Ashishkumar Chauhan, BSE's deputy chief executive officer.
"There are many socially aware investors willing to pay a premium to invest in green companies in the hope of getting better returns," he added.
The index can be used to develop green financial products including mutual funds, exchange-traded funds and structured products, the BSE said.
