India’s Renewable Energy Sector: An Overview of Growth Patterns and Policy Directions

AbstractIndia is one of the world’s fastest-growing economies, facing challenges increasingly in managing carbon emissions and meeting surging energy demands. In 2022, India’s greenhouse gas (GHG) emissions were 4.2 GtCO2e, marking a 6% increase from the previous year. Since coal is the dominant source of energy production, and the electricity and heat production sector contributes the largest to carbon emissions. Projections indicate that India’s energy demand could triple by 2050, with electricity consumption expected to grow four times, necessitating a massive overhaul of its energy infrastructure to ensure sustainability and energy security. The significance of renewable energy (RE) in India lies in its potential to mitigate these emissions while address ingenergy requirements. RE is crucial for decarbonisation, reducing imports of fossil fuels, and enhancing energy equity. Compared to other countries, India’s RE capacity ranks fourth globally at more than 230 GW by March 2025, behind China (over 1,800 GW total RE, including 1200 GW solar), the US (around 220 GW solar), and the EU. The RE sector in India has exhibited robust growth, which is propelled by solar and wind additions, alongside off-grid systems. Key policy mechanisms include Accelerated Depreciation, Generation-Based Incentives, Viability Gap funding, and Renewable Purchase Obligations (RPOs). The sector’s transformation is evident in projections for renewables to dominate the energy mix by 2030. Financial assistance to the Ministry of New and Renewable Energy (MNRE) via Gross Budgetary Support (GBS) for FY 2024–2025 stands at Rs. 17,298 crore, a 118% increase from the previous year’s revised estimates. Internal and Extra Budgetary Resources (IEBR) raised Rs. 31,701crore in 2024–2025. The Indian Renewable Energy Development Agency (IREDA), a key financier, sanctioned loans worth Rs. 1,29,291.25 crores, cumulatively, up to 2024. IREDA offers schemes like loans up to 90% of project costs and repayment terms up to 25 years. In conclusion, India’s RE sector is stated to be on a transformative trajectory, balancing emission reductions with energy needs through aggressive growth and supportive policies. While challenges like grid integration persist, sustained government backing and financing position India as a global RE leader. Moreover, the challenges of delay in disbursements of funds, underutilisation of allocated funds, and transparency issues.