NEW DELHI: India’s Economic Survey 2025–26 has flagged inadequate global funding flows and structural issues in international finance as major challenges to the country’s transition towards a net zero future, even as India has achieved its renewable energy targets ahead of schedule.
The Survey notes that global turmoil has complicated the energy transition, which has moved beyond a purely technological shift to one involving difficult trade-offs between ambition and operational reality.
Constraints related to global funding, skilled labour, infrastructure and supply chains for critical materials have slowed decarbonisation and climate adaptation efforts.
It expresses concern that insufficient international funding to developing countries has made it harder to balance industrial competitiveness with environmental conservation.
The government pointed out that India continues to rely largely on domestic resources for its climate transition, as international financing and regulatory frameworks remain binding constraints.
“While global capital is abundant, it does not flow at scale to developing countries due to structural features of the international financial system and risk perceptions, resulting in a high cost of capital,” the Economic Survey Report 2025–26 states.
Despite the urgent need for climate adaptation, international and private capital flows remain limited and are skewed towards mitigation.
The 2025 Adaptation Gap Report estimates that developing countries will need between USD 310 billion and USD 365 billion annually by 2035, while current international public adaptation finance stands at about USD 26 billion.
In the absence of adequate global support, India has increasingly deployed domestic funds for climate resilient development. As a result, domestic spending on adaptation and resilience rose from 3.7 per cent of GDP in FY16 to 5.6 per cent in FY22.
Climate action is anchored through the National Action Plan on Climate Change, which comprises nine missions covering solar energy, energy efficiency, sustainable habitats, water, the Himalayan ecosystem, a green India, sustainable agriculture, and strategic knowledge for climate change and health.
Each mission is implemented by the relevant ministry or department, with several focusing on adaptation.
The Survey also highlighted India’s progress in decarbonisation, noting that the country achieved its renewable energy targets five years ahead of schedule.
India has exceeded its target of sourcing 50 per cent of installed power capacity from non-fossil fuel sources, reaching 51.93 per cent by the end of December 2025.
By December 31, 2025, India had installed 38.61 GW of renewable energy capacity, comprising 30.16 GW of solar power, 4.47 GW of wind power, 0.03 GW of bio power and 3.24 GW of hydropower.
According to the International Renewable Energy Agency’s Renewable Energy Statistics 2025, India now ranks fourth globally in total installed renewable energy capacity, after China, the United States and Brazil, underscoring its growing role in global clean energy markets.