India's climate-tech sector's 2023 investment only 57% of 2022, just $2,853 million

By Ayman Ujjainwala*
While investments in India's climate-tech sector grew significantly in previous years due to increasing interest from domestic and international investors, the funding momentum waned by the end of November 2023, reveals consulting firm FSG's new report 'India's Green Revolution 2.0 – Trends Shaping India's Climate-Tech Sector'. According to the report, the sector attracted US$ 2,853 million till November 30, 2023, representing only 57% of the total investment garnered in 2022.
FSG's analysis shows that investment activity has been driven primarily by significant funding in the 'mobility' and 'energy' sub-sectors, which collectively secured over 94% of the total climate-tech investments in India from 2019 till the end of November 2023. This dominant trend underscores the critical focus on these areas within the broader climate technology field.
The report also highlights a dissonance between the emissions contributions of individual sub-sectors and the amount of climate-tech funding they receive. The ‘energy' sector accounts for approximately 38% of total emissions, however, it secured an outsized 74% share of climate-tech investments, on average, between 2019 and 2022. Meanwhile, though the 'industry, manufacturing, and resource management' sector and the 'food, agriculture, and land use' sector account for approximately 30% and 20% of total emissions, respectively, they collectively received only about 4-5% of the total investments over the analysis years. To limit global warming to 1.5◦C, investors should correct this dissonance by realigning their investment focus.
FSG's report tracks the trajectory of investments in India's climate-tech sector since 2019, analyzing funding stock and flows across the sub-sectors in climate-tech. Exploring emerging trends and potential business models in the sector, it also offers insight into the future outlook for each sub-sector and delves into the implications for key stakeholders such as start-ups, legacy companies, government, and investors.

Commenting on the release of the report, Rishi Agarwal, MD, Head-Asia, said, “As India prepares for the upcoming general elections, this report couldn’t be more timely. It highlights the role climate innovation and sustainable practices play in our nation’s future, underscoring the importance of prioritizing climate solutions in our national agenda. As political parties draft their manifestos, they should incorporate policies that support and accelerate the adoption of climate-tech solutions, demonstrating a commitment to a greener and more sustainable future.”

Investment trajectory

According to the report, India's climate-tech sector attracted investments totaling US$ 3,931 million in 2019, US$ 2,291 million in 2020, US$ 4,218 million in 2021, US$ 5,077 million in 2022, and US$ 2,853 million till November 30, 2023.
It reveals that despite a temporary setback in 2020 due to the economic disruptions induced by COVID-19, which led to a 42% reduction in funding compared to 2019, India's climate-tech sector has demonstrated resilience, registering an overall funding increase of 29% from 2019 to 2022. This growth culminated in a record total investment exceeding US$5 billion in 2022, a milestone signifying a robust vote of confidence in the sector's potential for impact.
The overall investment growth in the climate-tech sector in recent years can be attributed to several key factors. 'Primarily, there has been a significant rise in awareness among citizens, businesses, and governments regarding the importance of embracing sustainable practices. Additionally, the government has steadily enhanced incentives in the sector, sparking interest among investors,' the report states.

"Despite short-term fluctuations, the long-term growth trajectory of India's climate-tech sector remains promising, underpinned by increasing awareness and government incentives. The recent decline in late-stage investments reflects a sharper investor focus on profitability. While this may cause short-term deceleration, it also indicates a maturing market where investors are seeking sustainable and financially viable solutions. The slowdown also highlights the need for climate-tech companies to demonstrate clear paths to profitability to maintain investor interest in the long term," said Agarwal.

Deep dive into sub-sectors

While the general trajectory of India's climate-tech sector shows an upward trend, there are distinct variations within specific sub-sectors, which are explored in detail in the report.
FSG's analysis shows that investment activity has been driven primarily by significant funding in the 'mobility' and 'energy' sub-sectors, which collectively garnered over 94% of the total climate-tech investments in India from 2019 till the end of November 2023.
These sub-sectors are followed by the 'industry, manufacturing, and resource management' sub-sector, garnering close to 2% of total investments over the same period, and the 'built environment' and 'food, agriculture, and land use' sub-sectors, both of which secured slightly over 1% of the total funding. The 'financial services' sub-sector received less than 1% of the total climate-tech funding. 'Greenhouse gas (GHG) capture, removal, and storage' and 'climate change management and reporting' are nascent sub-sectors that received a negligible share of the investment pie.

Emissions realities and funding disparities

According to the report, 'Aligning climate-tech investments with the need for emissions reduction in sectors contributing significantly to greenhouse gas emissions offers the potential for both environmental impact and economic growth.'
The energy sector is the largest contributor to GHG emissions in India, accounting for approximately 38% of total emissions. Between 2019 and 2022, it secured an average 74% share of climate-tech investments. 'While this outsized investment favors the energy sector, it leaves other emissions-intensive sectors lacking adequate funding', the report states.
Following closely, the 'industry, manufacturing, and resource management' sector contributes around 30% of GHG emissions, while 'food, agriculture, and land use' accounts for approximately 20% of emissions. However, despite these sectors' significant contributions to GHG emissions, they have received only a small proportion of climate-tech investments, collectively representing about 4-5% of the total investments over the analysis years.
For climate action to stay on track to limiting global warming to the 1.5◦C threshold, investors should correct this dissonance by realigning their investment focus.
"The notable disparity between sectors' contributions to GHG emissions and their share of climate-tech investments underscores the urgency for strategic realignment. While investments in the energy sector dominate India's climate-tech landscape, there is a pressing need to diversify funding towards sectors like industry, manufacturing, and agriculture, which contribute significantly to emissions. This diversification will be key to achieving meaningful reductions in greenhouse gas emissions," said Agarwal.

---

*With Vivaa Consulting

Comments

Defeat of martial law: Has the decisive moment for change come in South Korea?

By Steven Lee Late at night on December 3, soldiers stormed into South Korea’s National Assembly in armored vehicles and combat helicopters. Assembly staff desperately blocked their assault with fire extinguishers and barricades. South Korea’s President Yoon Suk Yeol had just declared martial law to “ eliminate ‘anti-state’ forces .”

70,000 migrants, sold on Canadian dream, face uncertain future: Canada reinvents the xenophobic wheel

By Saurav Sarkar* Bikram Singh is running out of time on his post-study work visa in Canada. Singh is one of about 70,000 migrants who were sold on the Canadian dream of eventually making the country their home but now face an uncertain future with their work permits set to expire by December 2024. They came from places like India, China, and the Philippines, and sold their land and belongings in their home countries, took out loans, or made other enormous commitments to get themselves to Canada.

Govt of India asked to work for release of 217 Indian fishermen detained in Pakistan since 2021

By A Representative Members of the fishing communities from Gujarat and Diu, Union Territory, held a press conference in Ahmedabad, urging the Union Government to take proactive measures to secure the release of Indian fishermen currently detained in Pakistan. Presently, 217 Indian fishermen, mostly from Gujarat and Diu, are held in Pakistan’s Malir Jail. Of these, 53 have been incarcerated since 2021 and 130 since 2022.

This book examines dialectics of complex caste and class relationship

By Harsh Thakor* In Caste and Revolution by N. Ravi, the author addresses questions raised by Dalit and Bahujan intellectuals inspired by revolutionary parties. These questions center on caste issues and seek to formulate a profound diagnosis to chart a path toward the annihilation of caste. The book explains how caste-based feudalism and comprador bureaucratic capitalism intertwine to perpetuate the caste system. It asserts that only the path of a New Democratic Revolution can eradicate caste. The book delves into the need for an equal position for oppressed castes in all layers of society to abolish caste discrimination and oppression. It offers an analytical diagnosis, a penetrating navigation, and a detailed account of the dialectics of caste and class across diverse spheres. Annihilation of Caste and the New Democratic Revolution A revolutionary party develops a perspective document on the caste question, integrating its understanding of caste and the program for caste annih...

How Amit Shah's statement on Ambedkar reflects frustration of those uncomfortable with Dalit assertion, empowerment

By Vidya Bhushan Rawat* Dr. B.R. Ambedkar remains the liberator and emancipator of India’s oppressed communities. However, attempts to box him between two Brahmanical political parties betray a superficial and self-serving understanding of his legacy. The statement by Union Home Minister Amit Shah in the Rajya Sabha was highly objectionable, reflecting the frustration of those uncomfortable with Dalit assertion and empowerment.

34 Dalit families in IIT Kanpur without toilets in Open Defecation Free India

By Sandeep Pandey When Indian Institute of Technology at Kanpur was set up in 1959, two villages were uprooted. The farmers were given meagre compensation for the standing crop. No compensation was given for the land to build this institute of national importance. Each family was promised a job but what was not told to them was that one would require specialised skills to get a job at IIT. Some members of these families were, of course, absorbed for menial work. Some washerfolk families were also invited from outside to live on campus to take care of the laundry needs of students, staff and faculty members. One of these men was cajoled by IIT authorities then to forego a regular employment at IIT and instead take up clothes washing work.

Balod tech fest tests students’ interest in innovative ideas in the fields of science, engineering, start-ups

By A Representative A techno fest scheduled on December 20 and 21 in Balod district of Chhattisgarh will test the innovative ideas of school students in the fields of science, engineering and start-ups. For this two-day fest organised at Maheswari Bhawan of the district, a total of 824 models made by students were initially registered. Out of those, a selection committee chose 200 models from several schools spread over five blocks of Balod. These will be on display on these two days from 10am to 4.30pm. Out of many ideas, one of the most interesting models is a smart glove which can be used by children with impairments and disabilities. For those who cannot speak at all or have speech difficulty, they can ask for help from caregivers by pressing their fingers on the glove after wearing it. This will attract attention.

प्राकृतिक संसाधनों के दोहन करने की प्रतिस्पर्धा: बढ़ रही पर्यावरणीय और सामाजिक चुनौतियां

- राज कुमार सिन्हा प्राकृतिक संसाधनों और कॉमन्स, जैसे सामुदायिक भूमि, वन, चारागाह और जल निकाय स्थानीय समुदायों के लिए महत्वपूर्ण हैं जो इन संसाधनों पर निर्भर हैं और उनके सतत् उपयोग एवं संरक्षण के लिए पीढ़ियों से प्रयासरत हैं। कॉमन्स न केवल हमारी पारिस्थितिकी को संतुलित रखते हैं, बल्कि ग्रामीण आजीविका, जैव विविधता, और जलवायु अनुकूलन के लिए भी महत्वपूर्ण हैं। दुर्भाग्यवश, हर साल इन संसाधनों में 4% की कमी आ रही है, जिससे पर्यावरणीय और सामाजिक चुनौतियां बढ़ रही हैं। इन कॉमन्स के संरक्षण और पुनरुद्धार के लिए दीर्घकालीन योजना पर कार्य करने की आवश्यकता है। जिससे एक बेहतर, समान और टिकाऊ भविष्य का निर्माण हो सके।

Sylvester Clarke: The forgotten force of West Indies fast bowling

By Harsh Thakor* December 4th marked the 25th anniversary of Sylvester Clarke's untimely death due to a heart attack at the age of 45, just weeks after the passing of Malcolm Marshall. This year also commemorated what would have been his 70th birthday on December 11.

બેટ દ્વારકામાં માત્ર મુસ્લિમ ઘરો અને ધાર્મિક સ્થળો પર બુલડોઝર કાર્યવાહી: તાત્કાલિક રોકવાની માંગ

- પ્રતિનિધિ દ્વારા બેટ દ્વારકામાં મુસ્લિમ સમુદાયના ઘરો અને ધાર્મિક સ્થળો પર તંત્ર દ્વારા થયેલી બુલડોઝર કાર્યવાહી સામે સામાજિક આગેવાનો અને નાગરિકોમાં ભારે વિરોધ જોવા મળી રહ્યો છે. સ્થાનિકોમાંથી કેટલાક દ્વારા ગુજરાતના મુખ્યમંત્રીને લેખિતમાં રજૂઆત કરવામાં આવી છે, જેમાં આ કાર્યવાહી તાત્કાલિક રોકવાની માંગ ઉઠાવવામાં આવી છે.

Search This Blog