India’s clean energy investment drive represents one of the ‘clearest opportunities’ for the City of London to turn ‘sustainable finance ambition into actual capital flow’, new analysis from the Institute for Energy Economics and Financial Analysis (IEEFA) has suggested.
As it notes, the City of London has outlined its intention to be the ‘world’s leading centre for sustainable finance’, adding that growth in India’s renewable energy capacity continues to accelerate, as the country targets 500GW of capacity by 2050.
India‘s renewable energy capacity had already reached 263GW by January 2026, with investment requirements forecast to reach around $1.5 trillion between 2026 and 2035.
‘Insufficient funding’
‘India’s energy sector continues to rely heavily on domestic bank lending, while bond markets remain relatively shallow – both onshore and offshore,’ IEEFA noted.
‘While India has managed to record renewable capacity additions, continued high costs of capital versus OECD countries risks creating a vicious cycle in which insufficient financing slows deployment, raising transition costs and further deterring investment. The City’s role should be obvious: helping reduce this barrier and unlock capital.’
Early support
The City of London was an early backer of sustainable finance for India, with the London Stock Exchange hosting the International Finance Corporation’s pioneering green masala bond and some of the first Indian sustainable debt issuances.
However, in the years since, deal flow has slowed, with other financial centres picking up the slack – Singapore, for example, has strengthened its position as a regional centre for US dollar-denominated debt.
At the same time, IEEFA notes that London retains significant advantages through its concentration of sustainable finance expertise, including legal advisers, verification specialists, investment banks and structuring professionals.
‘The City can push for high sustainable finance standards with demonstrable implementation in India, creating a practical proving ground and a stepping stone for wider international harmonisation,’ it noted.
‘This contextualises and works in tandem with the ongoing “transition finance” agenda. Doing this would help translate stronger domestic fundamentals into a clearer investment case for international capital, beyond co-financing mechanisms alone.’ Read more here.
