Asia’s green finance ecosystem is accelerating, most notably in India—a nation driving the region’s climate investment boom while the United States, once the global anchor of sustainable finance, slows under Trump’s administration.
With the landscape of climate capital being redrawn, India has emerged as a pivotal force—leading innovation, mobilising investments, and setting standards that will shape green finance across Asia and beyond.
Since the reelection of President Trump, the United States has pulled back from global climate finance efforts. Rollbacks of transition finance (which enables high emitting industries such as cement or steel to decarbonise) and frequent reversals of ESG mandates have left US green bond issuance nearly stagnant. While federal agencies scale back climate disclosure rules and influential states ban ESG considerations from pension funds, the US presence in global climate finance negotiations has waned. This retreat has left international capital markets wary and fragmented—spurring a search for new leadership.
India’s Green Finance Transformation
India, meanwhile, has seized this moment with a transformative surge in green finance. In 2024, India’s sustainable debt market crossed $ 55.9 billion, up nearly 186% since 2021. Green bond issuances have been rising, driven by a new climate finance taxonomy—a framework that defines which investments genuinely aid the environment, ensures credible climate financing, and sets strict standards to prevent false claims of sustainability, known as greenwashing. Domestic funding dominates, comprising about 83% of green finance flows, with the private sector contributing almost two-thirds of capital and the balance coming from central and state government budgets.
Behind these numbers is a clear policy ambition: India aims for net zero by 2070, but this decade is about hitting bold intermediate targets. Recent years have seen the country’s green finance flows jump 20%, to US$ 50 billion (INR 3.7 trillion) annually, spanning everything from utility-scale solar and wind projects to urban electric mobility, industrial energy efficiency, and climate-smart agriculture. Major players such as Indian Renewable Energy Development Agency (IREDA), National Investment and Infrastructure Fund (NIIF) and large corporates are rapidly issuing ESG bonds, while cities like Delhi and Hyderabad are pushing municipal sustainability bonds.
India’s rise isn’t just about national ambition. Its policy and market innovations have made it the linchpin of Asia’s collaborative green finance frameworks. The Green Finance Facility (IGFF), launched in partnership with the World Bank, ADB (Asian Development Bank), and the Green Climate Fund, channels billions into clean energy and climate-resilient infrastructure, focusing especially on supporting hard-to-abate sectors like cement, steel, and energy storage. India’s approach—blending international resources with domestic capital and local innovation—has become a template adopted by neighbouring Asian countries.
India’s leadership in initiatives like the International Solar Alliance and its role as an accelerator for blended finance (using government capital, guarantees, and subsidies to mobilise large private investments in sectors that are critical for sustainable development but often considered high-risk or with long payback periods by purely commercial investors) and risk-sharing platforms (that help in mitigating risks associated with large investment projects) further highlight its position as a builder of transnational green investment ecosystems. While countries such as Singapore, Japan, and Korea push their green finance agendas, India often serves as a partner or model for emerging Asian economies outside China.
Sectoral Transformation: Clean Energy to Climate Resilience
India’s policies are translating finance into tangible climate solutions. At the end of September 2025, the country’s installed renewable energy capacity hit 247.3 GW, comprising 50.1% of the total installed power generation capacity. This surpasses the COP26 goal to reach 50% non-fossil fuel-based capacity by 2030 ahead of the target. The new taxonomy (a classification system that defines and standardises what types of investments activities qualify climate-friendly) ensures finance flows into clean energy, urban mobility, building retrofits, and climate-resilient agriculture. Adaptation finance—covering disaster risk management, flood control, and resilient farming—has nearly tripled, largely supplied by domestic sources but boosted by multilateral institutional partnerships.
Key Challenges and the Road Ahead
India’s clean energy momentum does not mean the path is easy. Fragmented regulatory structures, patchy sectoral standards, and risks of greenwashing persist. Achieving the Paris climate targets will require an estimated $2.5 trillion by 2030. New Delhi must deepen transparency, standardise reporting, and push for interoperability of green finance frameworks—the ability of different taxonomies and reporting systems to work together seamlessly, enabling clear, consistent, and comparable climate finance data across markets. Continued reforms and capacity building—especially among local financial institutions and project developers—will be crucial for sustained global credibility.
To conclude, as the US turns inward and global climate finance risks fragmentation, India is forging an ambitious new green finance blueprint—backed by cross-sector innovation, policy reforms, and public-private collaboration. The locus of climate capital is shifting east, and India isn’t just participating—it is architecting the future of sustainable development in Asia.
As the region evolves, India’s combination of urgency, scale, and collaboration presents valuable lessons and opportunities for the wider world. In this era of climate capital, Asia’s future is increasingly shaped by developments in New Delhi and across India’s renewable energy landscape—reflecting a broadening participation in climate finance and governance globally.
(Ritesh Kumar Singh is a business economist and CEO, Indonomics Consulting Private Limited. His X account @RiteshEconomist. Steven Raj Padakandla is a faculty member at IMT, Hyderabad. His X account @pstevenraj1.)
Views are personal, and do not represent the stand of this publication.
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