India's Green Energy Sector Attracts ₹7.16 Trillion in Investments Over Five Years

India's renewable energy sector has witnessed a substantial influx of capital, with cumulative investments reaching approximately ₹7.16 trillion (around $79.13 billion) over the last five financial years, spanning from FY 2021 to FY 2025. This significant financial commitment has come from a diverse range of sources, including public sector banks, government-owned and controlled financial institutions, and considerable foreign direct investments (FDI).

Investment Growth and Key Contributors

The investment trajectory in India's green energy landscape has shown remarkable growth. Funds allocated to the sector escalated from ₹660 billion (approximately $7.29 billion) in FY 2021 to a substantial ₹2.68 trillion (around $29.6 billion) in FY 2025. This data was officially presented in Parliament by Shripad Yesso Naik, the Minister of State for New and Renewable Energy.

Key financial institutions that have played a pivotal role in this funding include:

• Indian Renewable Energy Development Agency (IREDA)
• Power Finance Corporation (PFC)
• Rural Electrification Corporation (REC)
• Small Industries Development Bank of India (SIDBI)
• India Infrastructure Finance Company Limited (IIFCL)
• National Bank for Financing Infrastructure and Development (NaBFID)

Government Initiatives to Boost Funding

The Indian government has implemented several policy measures to attract and facilitate investments in the renewable energy sector. These initiatives aim to create a conducive environment for both domestic and international investors:

• 100% Foreign Direct Investment (FDI): The government permits 100% FDI in the renewable energy sector under the automatic route, simplifying the investment process for foreign entities.
• Sovereign Green Bonds: Funds have been raised through the issuance of sovereign green bonds, providing a dedicated channel for financing green projects.
• Enhanced Priority Sector Lending: The Reserve Bank of India (RBI) has increased the eligibility limit for priority-sector classification of bank loans for renewable energy-based power projects, allowing loans up to ₹350 million to be categorized under this scheme, thereby improving access to credit.
• Inter-State Transmission System (ISTS) Charges Waiver: A waiver of ISTS charges for inter-state sale of solar and wind power has been implemented for projects commissioned by June 30, 2025, further incentivizing renewable energy development.

Future Outlook and Targets

India has set ambitious targets for its clean energy transition, aiming to achieve 500 GW of non-fossil fuel-based power capacity by 2030. To meet this goal, an estimated ₹30.5 trillion (approximately $337 billion) in investment will be required between FY 2024 and FY 2030.

While significant progress has been made, with India's total clean energy capacity (including large hydropower and nuclear) surpassing that of fossil fuels for the first time, and 50% of installed electricity capacity now from non-fossil fuel sources as of June 2025, the Ministry of New and Renewable Energy has highlighted the need for greater investment in emerging areas. These critical sectors include energy storage, green hydrogen, offshore wind projects, and the expansion of transmission infrastructure.