India will require several trillions of dollars, and access to skills, innovations, and technologies, to achieve the formidable climate targets it has set for itself at COP 26. The transition path towards Net Zero will have to be aligned with India’s goal of improving the livelihood of millions of its citizens. The mutually reinforcing partnership between the state and the private sector will help mobilize the required resources for the transition.

The private sector is playing a vital role in the decarbonization efforts. During the last decade, a decisive shift has been observed toward clean energy generation. Low-carbon transport like EVs, though remain at a nascent stage currently, has exhibited encouraging trends in recent years. However, the push for low-carbon infrastructure is spatially uneven, with only a few states leading the shift towards green infrastructure. Participation of the lagging states is critical for India to meet its ambitious climate target.

Climate mitigation efforts being a public good, SOEs can act as levers for market failures while simultaneously leading the transition process. However, the SOEs’ weak financial health may hinder such efforts. Opportunities exist at the sectoral level for private and public sector players to learn from each other and adopt the best practices. At the same time, it is essential to safeguard the smaller enterprises during the transition process, as they remain vital sources of employment.

Finally, a sound financial infrastructure is a pre-condition to meet the large investment requirements. The banking sector, which traditionally has led infrastructure financing, is expected to play a leading role in the transition. However, the large quantum of envisaged investment will require adopting newer instruments and avenues to finance. Although nascent, green financing, especially through FDI and bonds, has picked up. Supporting policies for green financing will be essential to achieving the transition.