The implications of NITI Aayog’s net zero finance report for India: a tempered ambition

The National Institution for Transforming India (known as NITI Aayog), in its 2026 report on India’s net zero financing needs, estimates the nation requires US$22.7 trillion in cumulative investment by 2070 to achieve net zero emissions.

This policy brief assesses the distance between that investment ambition and the domestic financial system’s current capacity to deliver it. The authors suggest the NITI report’s recommendation for the formation of a new dedicated financial institution focused on blended finance structuring deserves serious attention and note three emerging priority areas (i.e. power, transport and industry) for closing the net zero financing gap.

Main messages

• The report is the first of its kind to assess both the investment required for India’s net zero transition and the capital that could be mobilised, estimating that reforms could unlock US$16.2 trillion by 2070. Commercial banks and non-banking financial companies (NBFCs) are projected to provide 42% of financing while institutional investors and corporations account for 36%. Although banks and NBFCs are expected to provide 83% of total debt financing, institutional investors are identified as the largest source of equity capital.
• India’s corporate bond market, equivalent to around 16% of gross domestic product, remains shallow and dominated by financial institution issuers. Related work undertaken by NITI Aayog on deepening India’s corporate bond market calls for strengthening regulatory frameworks, enhancing market infrastructure, facilitating issuance by mid-size firms and broadening investor participation.
• Of the US$16.2 trillion to be mobilised, NITI Aayog’s analysis estimates that international finance flows would remain at 19%, broadly in line with current levels. This means a gap of almost US$6.5 trillion will also need to be met by international capital.
• The report’s recommendation to establish a dedicated green finance institution and strengthen the enabling environment for blended finance deserves serious attention. Some broad priorities emerge from the report. The banking system could explore a gradual reduction of the Statutory Liquidity Ratio towards the regulatory limit of 18%, while institutional players such as insurance and pension funds could be encouraged to reduce their allocations to government securities without compromising the risk–return objectives of individual investors. Together, these reforms could unlock capital for green infrastructure
  and help attract the international capital needed to close the remaining financing gap.

DOI: 10.21953/researchonline.lse.ac.uk.00140338