India's climate-tech startups have grown rapidly over the past five years and annual funding is projected to reach $2.6 billion by 2025, up from $315 million in 2020, according to a new report on the sector. This boost in investor interest is driven by increased confidence in the technologies that could help to combat climate change and align with the country's energy transition targets.

The report notes that climate-tech startups have collectively attracted billions of dollars in investment over the years, making India one of the world's fastest-growing climate-tech markets. This expansion of funding has been spurred by growing worries about climate change, encouraging government policies, and a growing desire for renewable and clean energy alternatives.

Experts say the importance of climate technology for both environmental sustainability and economic growth is increasing and is expected to continue growing in the coming years. Most investments have been made in clean energy, EVs, energy storage, clean transportation, and energy efficiency. These technologies are expected to make a significant contribution to reducing carbon dioxide emissions and helping India meet its long-term climate commitments.

Although India continues to rely heavily on fossil fuels, the government and investors have been receptive to innovative ideas that focus on climate-centric solutions. The country is investing in expanding domestic capabilities in clean energy to bolster energy security and reduce dependence on global fuel markets. Investments in the sector have been further supported by government measures promoting electric mobility, renewable energy generation and carbon-emission reduction.

Renewable energy has attracted the largest share of climate-tech investments, followed by electric mobility, and advanced energy-storage technologies. Startups in these sectors have attracted significant investment as consumers and businesses increasingly invest in sustainable solutions to protect the environment. The swift expansion of electric vehicle infrastructure development and battery production has also helped the industry to expand.

Despite the strong funding momentum, analysts note that a significant share of investment has been concentrated in a small number of high-profile companies with proven business models. But there is space for startups that are new to the market and have novel technologies for solving environmental problems.

According to industry experts, climate-tech investments are expected to rise in the coming years as sustainability gains greater attention across the public, private and policy sectors. The report recommends that India is highly fit to emerge as one of the world's key innovation centres for climate action and advanced technology will be a critical enabler of economic growth and climate protection