Keywords

Abstract

This study analyses how sustainable finance drives India’s shift to a green economy. Sustainable finance—notably green finance instruments, green bonds, and ESG investing—is vital for funding climate adaptation, resilient infrastructure, and renewable energy. Using a descriptive-analytical approach with secondary sources (RBI, SEBI, Climate Bonds Initiative, and academic literature), the paper maps market growth, regulatory developments, and policy initiatives. Objectives: (i) track market size and growth; (ii) assess contribution to economic growth and energy transition; (iii) evaluate enabling policies and regulations (NAPCC, SEBI guidelines, RBI green deposit guidance); (iv) identify barriers and scaling strategies. Findings show rapid expansion in sustainable debt (GSS+: green, social, sustainability, sustainability-linked). By 2024 India’s GSS+ market reached about USD 55.9 billion, and green bond issuance totalled roughly INR 11,678 crore by March 2026. Banks and policy tools (priority-sector lending, sovereign green bonds, transparency rules) mobilize finance for low-carbon projects, while green bonds and ESG adoption steer investment to transport and renewables. Key challenges include greenwashing risk, high financing costs, fragmented standards, limited investor awareness, and funding gaps for long-term adaptation. Recommendations include blended finance, stronger verification and reporting, standardized taxonomies and disclosures, and capacity building for financial institutions. The paper concludes that pragmatic regulatory and market measures can scale sustainable finance to meet India’s climate and development goals.