India is aggressively pursuing renewable energy targets while continuing to rely heavily on coal and crude imports. Is this contradiction unavoidable for a developing economy?
India’s pursuit to meet its renewable energy targets and continued reliance on coal and crude imports is not a simple contradiction, it is an apparent inconsistency due to India’s requirement of sustaining rapid economic growth and ensuring energy access to its enormous population. In that context, fossil fuel reliance is the present-tense reality and renewable expansion is the future-tense strategy that is now being accelerated through law, policy, finance and industrial planning.
The answer, therefore, is not that India is pursuing inconsistent objectives, but that it is managing a staged transition. Heavy dependence on imported oil and gas, particularly through vulnerable maritime routes such as the Strait of Hormuz, exposes India to price shocks and geopolitical disruption. This exposure is precisely why the renewable transition is strategically necessary.
The government’s policy architecture reflects this approach. India’s Panchamrit commitments announced at COP26 set the long-term framework: 500 GW of non-fossil fuel capacity by 2030, meeting 50% of energy requirements from renewable sources, reducing emissions and carbon intensity, and achieving net zero by 2070. Significantly, India has already crossed the 50% non-fossil installed capacity threshold ahead of the 2030 deadline. Similarly, the Production-Linked Incentive scheme for high-efficiency solar photovoltaic modules seeks to reduce dependence on imported clean-energy equipment and create a domestic manufacturing base. At the grid level, “must-run” status for renewable power and waivers of inter-state transmission charges help ensure that renewable electricity is absorbed and delivered across state boundaries . This indicates that renewable energy is no longer symbolic policy; it is becoming central to India’s power economy.
However, despite significant policy support, a large proportion of renewable energy and green hydrogen projects in India remain stalled at preliminary stages. According to an analysis by the Institute for Energy Economics and Financial Analysis (IEEFA), as of August 2025, 158 green hydrogen projects had been announced in India, yet approximately 94% of the planned capacity remained at the announcement stage, only 0.1% was under construction, and merely 2.8% had become operational. Similarly, delays in power purchase agreements (PPAs), weak electricity demand growth, and transmission bottlenecks have slowed the implementation of utility-scale renewable projects.
Under Sections 61(h) and 86(1)(e) of the Electricity Act, 2003, renewable energy is accorded preferential regulatory treatment, including “must-run” status under the Indian Electricity Grid Code, which restricts curtailment except for grid-security reasons.
Government of India, Ministry of Power (RCM Division), Order on Waiver of Inter-State Transmission Charges for Energy Storage Systems (ESS), F. No. 12/07/2023-RCM-Part(1), dated 10 June 2025, F-201, Nirman Bhawan, New Delhi.
Similarly, delays in power purchase agreements (PPAs), weak electricity demand growth, and transmission bottlenecks have slowed the implementation of utility-scale renewable projects.
While coal remains the bridge; renewables are becoming the destination. The contradiction is unavoidable in the short term since energy demand is immediate, while clean-energy infrastructure takes time to mature. It is not permanent. With sustained investment in storage, grid modernisation, green hydrogen, and regulatory certainty, India can ensure that fossil-fuel dependence remains a managed phase of development and not a permanent feature of its economic model.
India balancing energy security concerns with its net-zero commitments over the next decade.
Securing accessible and reliable energy for 1.4 billion people while remaining faithful to its long-term commitment of achieving net-zero emissions by 2070 is not a conventional policy trade-off. It represents a dual challenge of strategic autonomy and national development within the energy sector. India has already moved faster than many anticipated in expanding non-fossil fuel electricity capacity.
Non-fossil sources now account for roughly half of installed power capacity, this is a major achievement and gives credibility to India’s climate commitments. However, installed capacity is not the same as dependable generation. Non-fossil sources contribute a materially lower share of actual electricity generation, since solar and wind remain intermittent and grid-scale storage is still insufficient.
This explains India’s continued reliance on coal. A premature retirement of coal capacity before storage, transmission and balancing infrastructure are mature would risk shortages, price escalation and industrial disruption. Accordingly, India’s coal strategy over the next decade is better characterised as managed displacement rather than immediate elimination. India’s updated decadal climate architecture reinforces this calibrated approach. The proposed NDC 3.0 framework for 2031–2035 contemplates deeper emissions-intensity reduction, expansion of carbon sinks and a higher share of non-fossil fuel-based installed capacity. These commitments are consistent with the net-zero 2070 pathway, but they stop short of imposing a rigid coal exit. That omission reflects a hard reality: for India, climate ambition must remain compatible with energy access, industrial growth and macroeconomic stability.
If India can modernise the grid, scale storage, secure climate finance and manage the social consequences of transition, its present fossil dependence can remain a controlled phase of development rather than a permanent constraint on its net-zero future.
Is Viksit Bharat 2047 in absence of expanding energy infrastructure possible. What may be the effect on the economy in absence of expansion of energy infrastructure and how is Viksit Bharat 2047 taking part in this?
Viksit Bharat 2047 is not realistically achievable in the absence of a substantial expansion of India’s energy infrastructure. Energy is not one sector among many. It is the enabling condition for the entire 2047 development compact. India’s installed electricity capacity is approximately 535 GW, while the capacity required to support a developed economy by 2047 is projected to be several multiples of that level. Accordingly, Viksit Bharat 2047 without energy infrastructure expansion is not a credible proposition. The country already has abundant sunlight, a growing manufacturing base, expanding transmission plans, nuclear ambition and international investor interest. What it lacks is a solvent last-mile buyer capable of converting policy ambition into commissioned capacity. If India is to sustain high growth and move toward developed-economy income levels, it must add generation, transmission, distribution, and storage infrastructure on a sustained basis.
Do you believe India’s current regulatory framework is investment-ready for the scale of energy infrastructure Viksit Bharat demands?
India has seen the third-largest growth in power generation capacity in the world after China and the United States over the past five years. India’s long-term development pathway will require energy infrastructure capable of supporting a high-growth economy, rising per capita electricity consumption and net-zero commitments. A regulatory framework suitable for this transition must therefore do more than approve projects. It will require to reduce execution risk, mobilise domestic and foreign capital, and create markets for storage, transmission, carbon reduction and clean industrial demand.
India has introduced a broad suite of policy and regulatory measures to catalyse investment in non-fossil fuel power generation, domestic manufacturing of critical energy components, including batteries and solar photovoltaic modules, and transmission and distribution infrastructure. Although domestic capital continues to finance a substantial portion of India’s power generation capacity and transmission network expansion, foreign direct investment has gained considerable momentum, reaching approximately USD 5 billion in 2023.
This growth has been supported, in part, by a liberal investment regime permitting 100% FDI across electricity generation and transmission infrastructure. The proposed Infrastructure Risk Guarantee Fund announced in the 2026 budget further reflects this policy direction, seeking to de-risk infrastructure lending through credit guarantees, ease credit constraints, and improve bankability for long-gestation projects by sharing development and construction risk with lenders. The Electricity Amendment Bill 2025 addressed the weaknesses of distribution companies by seeking cost-reflective tariffs, rationalised cross-subsidies and greater direct procurement flexibility for industrial consumers which it could materially improve investor confidence in power-sector offtake.
Yet these reforms sit atop unresolved structural weaknesses. The most serious is the financial condition of distribution companies. India needs enforceable DISCOM reform, sovereign-backed storage financing, fast-track land and transmission clearances, bankable long-term offtake structures and deeper carbon markets. Viksit Bharat does not require better policy statements; it requires a regulatory system capable of converting ambition into financed, commissioned and reliable energy assets at national scale.
With nuclear energy discussions reviving globally, do you see India becoming more aggressive in its nuclear energy strategy?
The renewed global interest in nuclear power is not occurring in abstract policy circles; it is being driven by hard commercial and strategic realities. Artificial intelligence, data centres, green manufacturing and industrial electrification require large volumes of reliable, round-the-clock, low-carbon electricity. Nuclear energy therefore occupies a strategic space that neither coal nor renewables fully satisfy: it offers dispatchable, zero-carbon electricity at scale.
The clearest evidence of a more aggressive strategy is the SHANTI Act, 2025. Its significance lies not merely in updating the law, but in changing the structure of the sector. By opening nuclear generation to qualified private and foreign participants, while retaining government control over sensitive areas such as enrichment, heavy water and spent-fuel management, the Act attempts to reconcile commercial expansion with national security safeguards.
The announcement of Nuclear Energy Mission for the Union Budget 2025-26 is backed by substantial public allocation of ₹20,000 crore seeks to develop indigenous small modular reactors by 2033 with capacity expanding from 8,180 MW today to 22,480 MW by 2031-32. That said, aggression in policy does not automatically translate into execution. India’s nuclear history is marked by delayed projects, revised targets and cost escalation. The country is now discussing 100 GW of nuclear capacity by 2047 while still working toward much smaller interim capacity targets. Land acquisition, regulatory capacity, financing, supply-chain dependence and construction delays remain serious constraints.
If the government treats nuclear power as sovereign infrastructure, with credible land, financing, safety and regulatory capacity, India can become a major nuclear market. If not, the present revival will remain another ambitious chapter in a programme long defined by the gap between promise and delivery.
Could small modular reactors (SMRs) become commercially viable in India in the coming years?
SMRs are unlikely to compete with utility-scale solar or wind on the simple metric of lowest-cost electricity. India has a credible market case for SMRs because its electricity demand is rising rapidly and several sectors, including steel, cement, aluminium, chemicals, advanced manufacturing and digital infrastructure, require round-the-clock power.
Renewable energy will remain central to India’s energy transition, but without adequate storage it cannot by itself meet all firm power requirements for energy-intensive industry. In that context, SMRs may be commercially viable even at a higher per-unit cost, provided they deliver reliability, proximity to demand and decarbonisation value.
The policy direction is supportive. India’s Nuclear Energy Mission and work on indigenous SMR designs, including the Bharat Small Modular Reactor, indicate a serious institutional push. The more realistic first market is not the general electricity market, but captive industrial power, repowering of retired coal sites, high-reliability digital infrastructure, and process heat or hydrogen applications. However, commercial viability will depend on execution.
India will need a clear regulatory framework for private participation, predictable licensing, safety oversight, workable liability and insurance arrangements, credible long-term offtake structures, and disciplined project delivery. Early projects must avoid the cost overruns and delays that have affected nuclear construction globally and domestically. The supply chain must also be developed so that modularity translates into repeat manufacturing efficiencies, rather than one-off bespoke projects. Accordingly, SMRs can become commercially viable in India in the coming years, but not immediately and not across the entire power market. Their viability will first be tested in niche but substantial use cases where reliability and decarbonisation justify a premium. Broader deployment will depend on whether the first projects are delivered on time, on budget and under a bankable regulatory and contractual framework.
Could energy diplomacy become as strategically important for India as trade diplomacy over the next decade?
SMRs can be effective on a conditional and sector-specific basis, considering its unlikely to compete with utility-scale solar or wind on the simple metric of lowest-cost electricity. India has a credible market case for SMRs because its electricity demand is rising rapidly in several sectors.
Renewable energy remains central to India’s energy transition, but without adequate storage it cannot by itself meet power requirements for energy-intensive industry. In that context, SMRs may be commercially viable even at a higher per-unit cost, provided they deliver reliability, proximity to demand and decarbonisation value.
India’s Nuclear Energy Mission and work on indigenous SMR designs, including the Bharat Small Modular Reactor, indicate a serious institutional push. The more realistic first market is not the general electricity market, but captive industrial power, repowering of retired coal sites, high-reliability digital infrastructure, and process heat or hydrogen applications. However, the state needs a clear regulatory framework. Early projects must avoid the cost overruns and delays that have affected nuclear construction globally and domestically. The supply chain must also be developed so that modularity translates into repeat manufacturing efficiencies, rather than one-off bespoke projects.
Accordingly, SMRs can become commercially viable in India in the coming years, but not immediately and not across the entire power market. Their viability will first be tested in niche but substantial use cases where reliability and decarbonisation justify a premium. Broader deployment will depend on whether the first projects are delivered on time, on budget and under a bankable regulatory and contractual framework.
If India wants to truly power Viksit Bharat by 2047, what is the one policy or regulatory shift it cannot afford to delay?
If India intends to truly power Viksit Bharat by 2047, the one policy and regulatory shift it cannot afford to delay is comprehensive reform of its electricity distribution companies. India’s entire energy transition depends on DISCOM reform. Renewable generation, nuclear expansion, battery storage, green hydrogen, transmission investment and industrial electrification all ultimately require one basic commercial certainty: electricity must be bought, distributed and paid for by financially credible entities. At present, that foundation remains structurally weak.
As of March 2025, DISCOMs carried outstanding borrowings exceeding ₹7 lakh crore, with state-owned utilities accounting for almost the entire amount. DISCOMs are increasingly dependent on state subsidy reimbursements, and delays in those payments force further short-term borrowing. The result is a recurring cycle of losses, debt accumulation and public bailouts.
Renewable projects are being tendered and awarded, but many are not translating into operating assets because DISCOMs delay signing power sale agreements or cannot provide credible payment security. More than 40 GW of awarded capacity has remained stranded at various points because the ultimate buyer is uncertain or financially distressed. This converts a distribution problem into a national infrastructure bottleneck. The legal and regulatory architecture may permit investment, but capital will not flow at Viksit Bharat scale if the offtaker is not commercially reliable.
Accordingly, DISCOM reform is the regulatory unlock that unlocks everything else. Until India fixes DISCOMs, its energy transition will remain vulnerable at the point of delivery. Once it does, the rest of the energy architecture becomes materially more investable, executable and credible.
