October 07, 2025Green Finance in India is accelerating with ESG led investments, green bonds, government schemes and SIDBI initiatives. It is unlocking sustainable capital for corporates driving India’s path too 500 GW renewables by 2030 and net zero by 2070.
Green Finance is gaining strong momentum in India as the country moves towards balancing economic growth with the environmental responsibility. Green Finance means providing funds and support to businesses and projects which have environmentally sustainable offerings such as renewable energy, clean transportation, energy efficiency, pollution control and sustainable use of natural resources.
With the global economy and developed nations moving towards the net zero emissions, India has also set an ambitious target of reaching 500 GW of renewable energy capacity by 2030 and net zero emission by 2070. At the same time, Environmental, Social and Governance considerations are becoming a major focus for businesses and investors. In 2022, ESG based assets crossed USD 5 billion in India, with expectations of rapid growth in the coming years.
This shift is rebuilding how companies access capital and manage risk leading to creation of a new financial ecosystem where green bonds, sustainability-linked loans and ESG funds are emerging as preferred tools. As India’s green financing market expands, companies that adopt sustainability will gain a better access to global investors and financing at competitive terms.
India’s financial system is undergoing a transformation as sustainability becomes a major factor of investment decisions. This shift is supported by a combination of push from policies, rising interest from investors and growing corporate responsibility.
Policy and Regulatory Push: With the push from the Indian government sustainability has become a national priority. Various programs have been launched showing a clear commitment to channel funds into green projects such as the National Solar Mission, production linked incentives for renewable manufacturing and the issuance of sovereign bonds worth INR 16,000 cr in 2023.
Global Influence and Capital Flows: International investors are moving their capital towards companies with strong ESG performance. India has grown participation in green bond markets, with cumulative issuances crossing USD 30 billion by 2023, led by sectors such as renewable energy, transport and water management.
Corporate Adoption and Market Maturity: Indian corporates are beginning to view green finance not only as a mandatory compliance but as a strategic advantage. Many of the financial institutions have launched green financing products, while corporates such as Reliance, Adani Green and ReNew Power have raised significant funding through green instruments. Along with the large corporates these instruments have been helping the MSMEs have access to sustainable finance more efficiently.
While the green finance is a still a new method of financing compared to the traditional methods, still a lot of large companies are raising green finance. But it is not meant that green finance is just for big companies but is meant for anyone who wants to make their business, project or community more sustainable.
Those who should consider applying are:
Project Developers to fund big renewable energy projects, green hydrogen plants and large-scale clean technology.
MSMEs and Manufacturing Units for upgrading energy machines, rooftop solar, waste to energy plants or clean production methods.
Startups in Clean Technology especially those working on EVs, battery storage, recycling, biofuels and new green solutions.
Farmers and Rural Groups to install solar pumps, set up small solar plants and adopting cleaner technologies.
Municipalities and Urban Bodies to finance sewage treatment, clean water, solid waste management and renewable energy for cities.
Banks and Financial Institutions to create new green loan products, green deposits and financing options for businesses and individuals.
A diverse range of green finance instruments has emerged, each being unique and offering strategic benefits depending on the company’s size, sector and growth ambition. Understanding and utilizing these options is important to lowering the cost of capital.
India is the second largest emerging market issuer of green bonds, with Indian conglomerates and emerging startups successfully attracting investors focused on ESG portfolios, especially in global markets.
This helps them gain access to long term and low-cost capital from international investors.
Unlike the traditional loans, SLLs tie the interest rate to achieving sustainability KPIs or goals such as emission reduction, renewable energy share.
JSW Steel and Ultratech Cement have raised multi-billion SLLs to finance their transition.
Development banks such as World Bank, ADB, IFC and Indian institutions like SIDBI and IREDA offer concessional financing, and credit guarantees for new sectors like green hydrogen, storage and EV Infra.
Global PE funds and infrastructure investors are building renewable energy platforms in India to help corporates raise equity capital without over-leveraging balance sheets.
India is rolling out a Carbon Credit Trading Scheme, which will allow companies to monetize emission reductions which will create an additional revenue stream for corporates investing in clean energy and efficiency projects.
Green deposits launched by Indian banks to invest retail and corporate funds into sustainable projects.
Transition finance is supporting sectors like steel, cement, oil & gas in moving toward greener technologies.
The State bank of India is one of the largest public sector bank in India and has taken the lead in offering green finance solutions. These instruments are aimed at businesses, corporates and MEMEs that are setting up renewable or sustainable projects.
Who Can Apply: Corporates, MSMEs and project developers working in solar, wind, biomass, energy efficiency, electric vehicles or pollution control.
What Support is Offered: SBI offers term loans, working capital support, and project financing at competitive interest rates for projects that qualify as “green projects”.
Various Schemes: SBI offers various schemes such as Surya Shakti – Solar Finance, Compressed Biogas (CBG) under SATAT Scheme, Biofuel Projects Financing and SBI EV Mitra – Electric Vehicle Charging Infrastructure
How It Works: SBI evaluates the project on environmental as well as financial grounds. Borrowers need to show that how their project promotes clean energy or reduces carbon emissions. Funds can be released like normal loans but can also be linked to achieving certain sustainability goals.
Additional Benefits: SBI with international credibility has tie up with global funds and agencies eventually indirectly helping borrowers gain access to international green capital.
This is a scheme which has been designed and launched to help farmers shift from diesel pumps towards solar energy.
Who Can Apply: Individual farmers, farmer groups, cooperatives and panchayats.
What Support is Offered:
How It Works: Farmers can apply through their state nodal agencies or DISCOMs. Once they approve of it, the central and state governments bear most of the cost through subsidies, while farmer pays only a small share.
One of the major schemes launched by the Indian government is the FAME scheme to promote electric mobility and reduce air pollution from transport.
Who Can Apply:
What Support is Offered
How It Works: Charging companies and manufacturers apply for support through the government’s implementing agencies meanwhile EV buyers get the incentive directly at the time of purchase, making vehicles more affordable.
Scheme Name |
Objective |
Loan/Support Amount |
Interest Rate / Benefits |
Eligibility / Notes |
Green Finance Scheme (GFS) |
Promote green projects in MSMEs |
Up to INR 20 crore |
7.6% – 9.4%, up to 80% of project cost |
MSMEs involved in environmentally sustainable projects |
4E Financing Scheme (End-to-End Energy Efficiency) |
Support energy efficiency projects |
INR 10 lakh – INR 5 crore |
6.4% – 7.5%, up to 90% project cost financing |
MSMEs implementing energy-efficient solutions |
GIFT (Green Investment & Financing for Transformation) |
Encourage adoption of clean technologies |
Term loans up to INR 2 crore |
2% interest subvention per annum for 5 years; risk sharing facility |
Udyam-registered MSMEs in manufacturing & services; renewable energy, energy efficiency, waste/water management |
SPICE (Promotion & Investment in Circular Economy) |
Promote circular economy practices |
Credit-linked capital subsidy up to 25%, max INR 12.5 lakh |
Subsidy on plant & machinery |
Brownfield MSMEs |
2. Diversify Financing Mix
3. Strengthen ESG Disclosures and Governance
4. Leverage Partnerships
The coming decade is very crucial for green finance in India, instruments like green bonds and sustainability linked loans will be mainstream, blended finance will be drawing global capital into new sectors such as green hydrogen and regulatory reforms ensuring greater transparency.
Companies with strong ESG practices will enjoy a clear cost of capital advantage, while India sets itself to emerge as a major hub for sustainable investment flows. For corporates the opportunity is to act now and secure long-term competitiveness in a sustainability driven world.
At ILO Consulting, we partner with businesses to unlock growth through sustainable finance and ESG-driven strategies.
Sustainability Strategy: Build clear roadmaps aligned with global ESG practices and business goals.
Green Capital Solutions: Advise on raising funds via green bonds, loans, and innovative financing.
Compliance & Reporting: Support in meeting disclosure norms and building transparent ESG reports.
Operational Efficiency: Integrate energy savings, carbon reduction, and sustainable supply chains.
ESG in Transactions: Conduct ESG due diligence, risk assessment, and deal structuring support.
Future-Ready Growth: Identify opportunities in renewables, mobility, and emerging green sectors.
With our global experience and local expertise, we help companies turn sustainability into a competitive advantage.
Strategic Collaboration: European Patented Nanotechnology Solar Glass Manufacturing Company
Strategic Collaboration: Setting up Green Hydrogen Plant in India
Investment Opportunity: Scalable Solar Energy Project in Colombia
Investment Opportunity: Ultra-Fast EV Charging Network in Poland
Thank you for your interest. Write to us with your enquiries, questions or request a meeting with an expert to discuss your potential project. Our team will review and revert back shortly.
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