India has overtaken China as a destination for clean technology funding in recent months, as efforts to boost domestic green production help attract investors.
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(Bloomberg) — India has overtaken China as a destination for clean technology funding in recent months, as efforts to boost domestic green production help attract investors.
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Deals worth about 2.4 billion were completed in the third quarter, four times the amount in China and the second highest in the world after the US, data compiled by BloombergNEF show.
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The push is being driven by India’s drive to build local clean energy to reduce dependence on China, and the opportunity to become a technology trader, said Raj Pai, founder of GEF Capital Partners, a private climate fund. .
“The attractiveness of the climate sector to both public and private capital is very high,” he said.
A series of policy initiatives from Prime Minister Narendra Modi’s government is boosting the clean energy sector in particular, and India is likely to see the fastest rate of renewables expansion among major economies throughout the decade, according to the International Energy Agency.
More than a dozen renewable and electric vehicle firms have listed publicly this year, including solar panel manufacturer Waaree Energies Ltd. and scooter manufacturer Ola Electric Mobility Ltd. Shares of clean energy company NTPC Green Energy Ltd. have improved by more than 30% since its inception. trade last month.
“Climate is the hottest topic of investment right now” in India, said Abhinav Sinha, head of technology and communications at British International Investment Plc, the UK government’s development and finance arm. The BII, which has invested more in India than any other country, has committed to sending at least $1 billion to the country for climate-related projects by 2026.
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About a quarter of all seed-stage investments in India by startups are currently made in climate-related startups, Sinha said.
Although India outpaced China in green technology funding in the third quarter, the $3.6 billion raised this year still lags behind China’s $5.6 billion total, BNEF data shows. Accelerating India’s path to zero emissions to reach the target 20 years ahead of the current 2070 target would require investments of up to $12.4 trillion, according to BNEF.
“We’re not even in the lake, we’re in the lake where we need a big ocean,” said Dhanpal Jhaveri, CEO of Eversource Capital, which closed India’s largest climate impact fund by 2022 and is currently investing more than $125 million in energy resources.
Among India’s 800 or so climate-focused startups, only a quarter have raised capital in the past decade, with a total of $3.6 billion far less than the $19 billion raised by fintech firms over the same period, IIMA Ventures and Mitsubishi UFJ Financial. Group Inc. said in the September report.
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Green startups have also struggled to attract growth-stage funding, according to the report.
“You have to keep showing mobility, that you have big customers and that someone is building,” said Akshay Shekhar, CEO of Kazam, a Bengaluru-based startup that provides EV charging software and hardware.
Still, the climate technology market is predicted to grow rapidly as firms develop solutions to curb pollution in India, the world’s third-largest emitter of greenhouse gases.
Mumbai-based investor Avaana Capital, which has backed energy mobility, solar and agriculture firms, in October raised $135 million to invest in sectors including energy and supply chains.
Family offices and other financiers are also increasingly supporting the sector, says founding partner Anjali Bansal. “We are very hopeful because we see all these developments,” he said.
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