Viksit Bharat and net-zero as goals demand that India sets up a specialized transition finance institution
India’s Viksit Bharat 2047 vision requires a massive expansion of infrastructure and manufacturing, highlighted by the $1.3 trillion National Infrastructure Pipeline. However, achieving this alongside India’s net-zero 2070 target poses a financing challenge: investment must jump from $14.7 trillion to $22.7 trillion for a full green transition. To remain globally competitive amid tightening carbon border rules, key sectors such as steel and cement must decarbonize rapidly.
This double mandate necessitates a specialized transition finance institution.The EU’s Carbon Border Adjustment Mechanism presents a threat to Indian exports like steel and aluminium. From 2026, exporters could face an additional tax burden of 25% and price disadvantages of 15-22%. To maintain market access, production must shift rapidly to lower-emission processes.
Domestically, India’s carbon credit trading scheme and green steel frameworks are making emission compliance mandatory. While our voluntary carbon market could reach $20-40 billion by 2030, high-emitting sectors and small and medium firms face back-breaking capital requirements. As global value chains pivot to mandatory disclosures and net-zero commitments, we need a dedicated financial institution to provide low-cost capital.The scale, tenor and technological uncertainty of decarbonization investments exceed the risk appetite of commercial banks.
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