Page 26 - Banking Finance October 2025

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support and innovative regulatory mechanisms. Key policies Decarbonizing Transport
include: Transport accounts for 18% of India's greenhouse gas
Renewable Purchase Obligations (RPOs): Mandating emissions. The government is promoting a multi-pronged
industries and power distribution companies (DISCOMs) approach:
to procure a fixed percentage of power from renewable Electrification of Vehicles: The PM E-DRIVE scheme,
sources. incentives for EV adoption, and expansion of charging

Emission Trading Systems (ETS): Market-based infrastructure aim for 30% electric vehicle penetration
mechanisms to incentivize emissions reduction. by 2030.
Biofuel Blending Mandates: The National Policy on Ethanol Blending: Mandates for 20% ethanol blending
Biofuels requires 20% ethanol blending in petrol by in petrol by 2035 reduce reliance on fossil fuels and
2030, while thermal power plants must co-fire 5% support rural economies through increased demand for
biomass. bio-crops.
As of early 2025, the country has reached a blending
Green Hydrogen Mission rate of approximately 19.6%. To meet the E20 target,
The National Green Hydrogen Mission, with an outlay of INR an estimated 1,016 crore litres of ethanol will be
19,744 crore (US$2.4 billion) until 2029-30, aims to make required, with total demand, including other uses,
green hydrogen a viable alternative for hard-to-abate projected at 1,350 crore litres. This necessitates an
sectors such as steel, cement, and chemicals. Five states ethanol production capacity of about 1,700 crore litres,
have already announced independent hydrogen policies, assuming plants operate at 80% efficiency
attracting significant investment and signalling a shift
Public Transport Expansion: Investments in metro rail,
towards a hydrogen-based economy.
electric buses, and last-mile connectivity enhance urban
mobility while reducing emissions.
Production Linked Incentives (PLIs) and
Domestic Manufacturing Indian Railways: A Green Backbone
To reduce import dependency and stimulate job creation, Indian Railways, one of the world's largest networks, is
India has introduced PLIs for clean energy components such targeting 100% electrification by 2030. Initiatives such as
as solar PV modules, batteries, and advanced chemistry cells. regenerative braking, LED lighting, and afforestation are
This strategy strengthens domestic manufacturing expected to save over INR 14,500 crore (US$1.7 billion)
capabilities and enhances economic resilience. annually and significantly cut emissions.

Sustainable Transportation and Electric Financing the Green Shift
Mobility Investment Needs and Current Gaps
Achieving India's climate goals requires annual investments
of Rs. 12.45-16.60 lakh crore, with cumulative needs
exceeding Rs. 830 lakh crore by 2070. Currently, only about
25% of this requirement is being met, underscoring the
urgent need for increased private sector participation and
innovative financing solutions.

Innovative Financial Instruments
Green Bonds: The government has issued sovereign
green bonds worth INR 16,000 crore (US$2 billion) to
finance green infrastructure projects.

Green Deposits: The Reserve Bank of India's green
deposit framework channels capital into sustainable
sectors like renewable energy and green buildings.

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