Changing the colour of India's economy

Hindustan Times

4 hours ago

The world is experiencing massive disruptions across geopolitical, technological, economic, and climate fronts. In the midst of it all, there is an opportunity to future-proof India's economy and ensure lives and livelihoods are protected while our developmental goals are met, because the climate crisis will only accelerate these uncertainties.
As global demand for green products and services accelerates, India has a chance to shape an inclusive growth story that benefits every layer of India's economy — farmers, small and medium enterprises, startups, and large industries alike. Investing now in emerging clean technologies is not just a climate imperative but a strategic economic move — one that could future-proof our economy and position India as a global leader in the green transition. China began investing in clean technologies more than two decades ago — ranging from solar panels and batteries to electric vehicles — and today dominates many of these global markets. India, too, has taken massive strides in this direction over the last decade. It must now double down on the next frontiers of clean tech areas, not only to meet our own rising demand, but also to become competitive and capture a share of the booming international green economy.
To be sure, the green economy is not about renewable energy alone. It is about seizing India's comparative advantage in resource efficiency, circular production, bioeconomy and climate-resilience to unlock new jobs, drive technological innovation, and redefine India's global competitiveness in emerging value chains. The numbers speak plainly. India's bioeconomy — using biological resources beyond food needs for materials, energy and beyond — alone has expanded from $10 billion in 2014 to $166 billion in 2024. The ministry of science and technology projects the sector will reach $300 billion by 2030. Similarly, the circular economy — from wastewater reuse to recycling of battery, plastics, and construction waste — could add millions of jobs to the Indian economy.
Consider Odisha, for example, a resource-rich state known for its mines and coal. A recent study by the Council on Energy, Environment and Water (CEEW) reveals that 28 green value chains — from seaweed cultivation in Chilika Lake to green hydrogen production for exports to e-waste recycling in urban centres like Bhubaneswar and Cuttack — could collectively add 23% to the state's GDP while creating one million jobs and attracting over $42 billion in investments by 2030. At Invest Odisha 2025 alone, over 35% of the ₹13 lakh crore commitments targeted green sectors — marking the first time non-mineral sectors claimed the majority share.
If this is the potential of one state alone, imagine India's green economy at scale. Our leapfrog advantage lies in unique strengths: 67 million MSMEs contributing 30% of GDP, 7,500-km of coastline for blue economy enterprises, and a thriving startup ecosystem already delivering green solutions. The early gains from this structural shift are visible on the ground as well. Take Guwahati-based Bamboostan, a startup transforming 80,000 MT of local bamboo annually into construction material while raising farmer incomes. Or Eco Recycling Limited's Maharashtra facility, which annually recycles 25,000 tonnes of e-waste with its cutting-edge technology. These are among the thousands of entrepreneurs and businesses that point to a silently emerging revolution, where micro-transformations aggregate into macro-opportunities.
Like the IT revolution of the 1990s, the green economy can propel India into a new era of industrial leadership. India needs a whole-of-economy push, bringing together government, industry, investors, and communities to act in concert.
First, the Union government should spearhead a green economy action plan to provide policy certainty and market direction. This requires four decisive interventions: time-bound fiscal incentives (including tax holidays) to boost adoption of cleaner technologies, single-window clearances for green industries, mandatory green procurement across public infrastructure, and strategic reorientation of existing schemes towards green priorities. Specifying engineered bamboo in furniture contracts, recycled plastics in road projects, bio-based construction materials, and energy-efficient appliances in all government facilities would create immediate market signals. Niti Aayog, with its experience steering cross-ministerial missions like the aspirational districts programme, is best placed to coordinate this nationally, supported by a digital data platform for tracking investments, skills, and performance.
Second, Indian industry must be at the heart of the green economy. While micro-enterprises remain vital for inclusive industrialisation, large industries need to move beyond adopting green practices within plants to actively shaping markets and supply chains through ownership and investment. With support, MSME clusters can leapfrog into clean production systems, like textile units adopting solar-powered effluent treatment, food processors shifting to biodegradable packaging or solar cold chains. Meanwhile, our startups must commercialise the underlying technologies. The entire value chain must transform to enable this transition through shared green infrastructure like zero-waste hubs, tech transfer programmes helping suppliers decarbonise, and collaborative research and development (R&D) hubs co-funded by anchor firms.
Third, financial institutions and philanthropies must unlock green capital across risk spectrums. Many high-impact green sectors — from EV manufacturing to plastic waste recycling to sustainable tourism — need catalytic capital to scale. Philanthropy can provide the risk-taking first rupee/dollar, while public finance can share some of the risks faced by private investment. Civil society organisations can bridge this ecosystem by preparing portfolios of community-linked projects for financing. The goal is not just capital allocation but building pipelines that convert India's green transition needs into investable opportunities.
Fourth, India's research and innovation systems must form the bedrock of this transformation. At 0.64% of GDP, India's R&D spending lags behind China's 2.4%, a critical gap when building self-reliance in green tech. India's private sector, in particular, must look over the horizon and boost its R&D spending to institutionalise innovation as an economic multiplier. The government can incentivise private sector innovation spending in critical areas through matching grants. Academia-industry partnerships and tech transfer can accelerate this: IIT Madras' incubation ecosystem turned an ₹29 lakh investment into a ₹50 crore green mobility breakthrough through Ather Energy, while IISc Bangalore's hydrogen generation tech, co-developed with Indian Oil R&D, promises to decarbonise refining.
The G20's green development pact, under India's presidency, recognised this new economic opportunity. To deliver on this ambition at home, India must translate that vision into domestic resolve. A green economy is not about sacrificing profit at the altar of sustainability; it is about rewriting the rules of economic value creation. When future historians trace the inflexion points of 21st-century development, let them record this truth: India redefined green transition and led a full-fledged green industrial revolution for people, prosperity, and planet.
Amitabh Kant is former G20 Sherpa of India and former CEO of Niti Aayog, and Arunabha Ghosh is CEO, Council on Energy, Environment and Water (CEEW). The views expressed are personal.