By Amit Kapoor and Darshana Gauratra
A decade after the Paris Agreement was adopted, climate ambition has reached its ‘test decade’. It began in 2015 as an international accord to rein in emissions, has turned into a restructuring of economies. The discourse has changed from temperature goals to just transition plans, from accounting for emissions to allocating capital. India, which was one day making the case for carbon space, is now designing the very architecture of low-carbon growth. Energy transition has become the country’s second economic reform.
During this time, the world has witnessed emissions levelling along with tripling of investment in clean technology. World renewable energy investment had exceeded USD 1.8 trillion by the year 2024, and solar energy is currently the lowest-cost source of new electricity in most markets. India’s own path has been impressive. It has cut its emissions intensity of GDP by 33% from the 2005 level, achieved 220 GW of renewable installed capacity which is approximately 49% of total installed power and exceeded its first Paris goal of 40% non-fossil capacity nine years early.
The success, of course, is only half the story. The tougher question these days is whether India can keep this momentum going in a socially inclusive and economically efficient manner.
India’s green revolution is already remapping the economic landscape. But every megawatt of solar power built in Gujrat hides a miner’s story in Jharkhand. The lion’s share of renewable investment (approximately 80%) has been in Gujarat, Maharashtra, and Tamil Nadu. These are states that have industrial ecosystems and grid infrastructure which are well-developed. Coal-based states such as Jharkhand, Chhattisgarh, and Odisha, on the other hand, remain dependent on traditional sectors for revenue and employment. The outcome is a two-speed transition with one speeding ahead with capital and innovation and the other restricted by dependence and inertia. Unless reversed, this divergence can recreate the regional disparities of the past.
If the 1990s economic reforms opened up markets, the Paris decade has started opening up investment reasoning itself. If each dollar spent on renewables yields 1.1 to 1.7 times more output than one spent on fossil fuels, these multipliers are what make the spending on climate an economic stimulus and not environmental spending. India already draws about USD 20 billion per year in renewable investment. However, to achieve the 2030 goal of 500 GW of non-fossil capacity, USD 68 billion will be needed each year, and to reach net zero in 2070, investments of approximately USD 10 trillion would be required.
Economics of clean capital are daunting, and the size is overwhelming, but the composition is more important than the sum. The investments in industry, grid modernisation, and circularity of supply chains are necessary while also ensuring regional spillovers in sectors like metals, logistics, services and inclusive labour market transitions. Yet, India still does not have a rich economic model to capture these spillovers quantitatively. A finer knowledge of supply chain connections would allow policymakers to craft incentives that double growth as well as resilience.
Already, the renewable energy industry supports over a million jobs, with forecasts predicting potentially 35 million by 2047. However, the problem is not employment creation but employment translation. Majority of India’s labour force, more than 80% is informal. The transition risks leaving behind those outside the scope of transition policies and strategies. Relocation of workers from weakening sectors into new ones without sacrificing income security is crucial. This demands reskilling systems linked to local economies, wage insurance for dislocated labour, and social protection that accompanies the worker, not the workplace. If implemented effectively, India’s demographic dividend could be a decarbonisation dividend
On the financial front, transition finance is emerging as a new policy frontier. The RBI’s green deposit scheme, SEBI’s sustainable bond framework, and the draft taxonomy for climate finance are early steps in building the domestic foundation for green capital flows. India’s green bond issuance now exceeds USD 25 billion, yet public finance still bears the bulk of risk.
World experience demonstrates that properly designed public finance can mobilize private flows by three to four factors. For India, the design of instruments that merge concessional capital with commercial returns can amplify thin fiscal resources. State governments’ roles will also be imperative ranging from harmonizing industrial incentives and power reform with the national net-zero strategy to making the transition more integrated, just and less capital-intensive.
The larger lesson of the last decade is that transition economics cannot be divorced from its logic of distribution. Only inclusive growth will be politically sustainable and social legitimacy without sustainability is an unstable balance. India has demonstrated its ability to construct the hardware of a green economy including the turbines, the panels, the industrial parks. The work in front of us is to construct the software, the skills, the safeguards, and fiscal frameworks that make the transition sustainable.
The first decade of Paris was about commitments, the next should be about inclusive growth. India’s green transformation has shifted from rhetoric to realignment. The country has realised that it cannot stay linear in model or policy. The next wave will be less about megawatt goals and more about institutional capability, to coordinate between stakeholders, reconcile fiscal incentives with social objectives, and get the regions and communities bypassed by the fossil age into the green one. India’s success should be more about how livelihoods renew in this transition. The Paris Agreement had perhaps started out as a climate treaty, but for India, its second decade is one when it can re-write the very definition of development itself.
The article was published with Business World on December 20, 2025.
(Amit Kapoor is chair and Darshana Gauratra is researcher at Institute for Competitiveness).
