Climate finance biggest hurdle to India’s energy transition, says Economic Survey 2026

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• Climate finance is the main barrier for India's renewable energy expansion
• India's renewable capacity rose from 76.38 GW in 2014 to 253.96 GW in 2025
• Survey calls for global finance reforms and a national climate finance platform.

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Climate finance remains the binding constraint. The gap between global capital availability and climate investment needs in developing countries reflects structural weaknesses in the international financial architecture rather than a lack of ambition or bankable projects,  the Economic Survey 2025-26, tabled in Parliament on January 29, has said.

The findings come as India targets to reach 500 giga watt (GW) of renewable capacity by 2030. As of November 2025, total renewable energy (RE) capacity witnessed a more than threefold increase over the last decade, surging from 76.38 GW in March 2014 to 253.96 GW.

However, the survey flags weak foreign funding for renewable and power projects amid high global interest rates, raising project costs.

The Survey noted that India’s experience underscores the role of strong domestic financial markets, development banks, municipal finance systems and credible regulatory frameworks in mobilising capital. However, it cautioned that domestic resources alone are insufficient to meet the scale of investment required for climate action.

To lower the cost of capital and attract private investment, the Survey called for reforms in multilateral development banks, wider use of risk-sharing and blended finance instruments, recalibration of credit rating practices, and more predictable concessional finance flows.

"Raising climate ambition in India—especially on mitigation—without corresponding support in finance and technology is neither realistic nor equitable. A credible and orderly transition from fossil fuels depends on the timely availability of reliable, non-fossil energy sources such as nuclear power, alongside a well-defined peak-emissions pathway," the survey said.

It suggested exploring the creation of a national climate finance platform, backed by predictable international funding, to develop climate projects, improve their bankability and support both mitigation and adaptation efforts, while balancing climate goals with the need for energy security.