What can India do to fast-track climate-tech funding?
The Sustainability Tech sector in India comprises 11.9K companies, including 1.98K funded companies having collectively raised $29.9B in venture capital money and private equity. Out of these, 454 are Series A+ funded, and 3 have achieved unicorn status. This sector includes companies that provide tech-enabled solutions and hardware which enable sustainability- environmental, social and economic.
Tracxn’s other key findings include:
- The Sustainability Tech sector in India has seen 110 acquisitions and 69 IPOs.
- Climate Fintech is also emerging with 33 startups.
- Bengaluru leads with 40.8% of environmental tech companies, followed by Delhi (18.5%) and Mumbai (14.0%)
Tracxn was founded by private equity professionals Neha Singh and Abhishek Goyal in 2012. It is a publicly traded company listed on the NSE and BSE since October 20, 2022. The firm has said that it serves over 1,500 clients in 50+ countries.
The founders’ found that there was a huge gap in data and analysis available between public and private markets and they are trying to serve this need. It raised additional Series A funding from prominent angel investors, including Ratan Tata, Nandan Nilekani, and was featured in Forbes’ ‘Top 100 Analytics Startups of 2015’.
Why Climate-tech Funding is Poor
- Seed funding for climate-tech is vibrant in India but the appetite for growth stage funding is very weak for multiple reasons.
- Climate tech involves hardware, infrastructure, and deep tech like clean fuels, industrial decarbonisation, green materials. They require large upfront investment and long development timelines before commercial returns.
- A lack of clear, standardized frameworks for climate impact measurement, regulatory incentives, and risk disclosure makes it harder for investors to assess and price risk.
- Commercial adoption of proven technologies in India is slow.Customers and industries are slow to adopt without subsidies, financing support, or proof of cost savings.
Way Forward
- Create a National Climate Blended-Finance Platform
India has subsidies and schemes, but no single risk-absorbing anchor.
The government, World Bank, ADB, need to provide First-loss capital and guarantees. Solar scaled because of government subsidies, the same is needed for promoting green material, industrial decarbonisation and agri-clime-tech. India does this piecemeal, it needs to do it systematically.
- Shift subsidies from inputs to outcomes
- Turns climate tech from “pilot projects” into infrastructure-like assets
This would be a game-changer for Industrial heat, Storage, Waste-to-valueand Carbon removal
- Mandate climate procurement by government & PSUs at least up to 10%
India is one of the world’s largest buyers, but barely uses that power. This creates early demand and helps startups.
A credible carbon price improves unit economics, makes long-term investment financeable and it enables revenue-backed project finance.
- Enhance Funding Options
Let pension funds and insurers invest in climate infra. Relax norms so that EPFO, NPS, insurers can invest in Green infra funds, Climate transition bonds and Asset-backed climate vehicles.
Climate tech needs patient capital. India has this but is locked out by unimaginative regulation.
India doesn’t have a climate tech innovation problem, it has a capital architecture problem.
