Will India’s New Draft Climate Rules Deliver the $2.5 Trillion It Needs?

India estimates a $2.5 trillion financing need by 2030 for its climate transition to achieve net-zero emissions by 2070. The government has released a draft climate finance taxonomy to help channel resources towards green technologies and prevent greenwashing.

Finance Minister Nirmala Sitharaman first announced the initiative during the Union Budget 2024-25 presentation on July 23, 2024, stating, “We will develop a taxonomy for climate finance for enhancing the availability of capital for climate adaptation and mitigation. This will support achievement of the country’s climate commitments and green transition,” said Finance Minister.

The overall objective of the framework is to enable greater capital flow to climate-friendly technologies and mitigation efforts, while also ensuring long-term access to reliable and affordable energy.

The finance ministry has sought public feedback on the draft until June 25, 2025, after which it will finalise the taxonomy.

“The taxonomy shall be consistent with the developmental goal of ‘Viksit Bharat’ to be achieved by 2047,” said the 32-page draft. It also underscored the requirement of billions of dollars annually in India for climate adaptation and energy transition.

It also estimated that that about $206 billion (at 2014-15 prices) will be required from 2015 to 2030 to implement adaptation actions in agriculture, forestry, fisheries, infrastructure, water resources and ecosystems.

“Meeting its updated NDC targets requires an estimated $2.5 trillion (at 2014–15 prices) by 2030. To bridge this significant financing gap, access to affordable finance and advanced technology—particularly from developed countries, as stipulated under the UNFCCC and the Paris Agreement—is critical for sustaining and scaling India’s climate efforts,” stated the report.

Clarity Key to Climate Funding

Experts say that the India’s climate finance taxonomy could provide the clarity needed to attract private investors and avoid greenwashing. Without well-defined accountability and support mechanisms, the funding gap could widen, especially for adaptation projects that often receive less attention than mitigation in global climate finance flows.

The taxonomy is seen as a critical tool to align financial activities with national climate goals and ensure equitable access to funds. According to Mongabay, experts believe such clarity is essential for scaling both domestic and international climate investments.