Introduction
The Union Budget 2025 has reinforced India’s commitment to sustainability by introducing substantial investments in green energy and Environmental, Social, and Governance (ESG) initiatives. With an increasing focus on reducing carbon emissions, promoting renewable energy, and strengthening ESG compliance, the budget sets the stage for India’s transition towards a low-carbon economy. These measures align with India’s target of achieving net-zero emissions by 2070 and reinforce its global commitment to climate action.
Key Green Energy Initiatives in Budget 2025
- Increased Investments in Renewable Energy
The government has allocated a significant budget towards expanding solar, wind, and hydropower projects. The budget earmarks funds for:
- Expanding Solar Capacity: The initiative aims to increase solar power capacity through rooftop solar installations and large-scale solar parks.
- Wind Energy Expansion: Offshore wind projects will receive policy support and financial incentives to attract private investments.
- Hydropower Development: Investment in hydropower projects will boost India’s capacity to meet peak energy demand sustainably.
- Green Hydrogen Mission Expansion
The Green Hydrogen Mission, initially launched to position India as a global leader in hydrogen energy, has received further financial backing. The government has announced:
- Subsidies for industries adopting green hydrogen in sectors such as steel, refineries, and transport.
- Incentives for research and development in hydrogen storage and transportation.
- Partnerships with private players to scale up green hydrogen production capacity.
- Strengthening Sustainable Finance Framework
The budget introduces new guidelines for sustainable finance, ensuring that financial institutions align with ESG principles. Key measures include:
- Green Bonds Expansion: Increased issuance of sovereign green bonds to fund sustainable projects.
- Sustainable Investment Framework: Encouraging financial institutions to integrate ESG criteria into lending and investment decisions.
- Tax Incentives for ESG-Compliant Businesses: Companies demonstrating strong ESG performance will benefit from tax reliefs and low-interest financing options.
ESG-Related Announcements in the Budget
- Enhanced ESG Disclosures and Compliance
The government has taken steps to strengthen ESG reporting requirements. This includes:
- Mandatory ESG Reporting Expansion: Currently applicable to the top 1,000 listed companies under SEBI’s Business Responsibility and Sustainability Reporting (BRSR), the scope may be widened to include mid-sized enterprises and unlisted large corporations.
- Greenwashing Prevention Framework: To curb misleading sustainability claims, SEBI is working on stricter compliance mechanisms.
- ESG Rating Standardization: Establishing uniform ESG rating methodologies to enhance credibility and transparency in ESG performance evaluation.
- Focus on Sustainable Infrastructure
The budget prioritizes infrastructure projects that align with sustainability goals. This includes:
- Electric Vehicle (EV) Infrastructure Expansion: Increased funding for EV charging stations across urban and rural areas.
- Smart Cities and Sustainable Urban Development: Promoting green buildings and climate-resilient infrastructure.
- Public Transport Electrification: Increased investments in electrification of railways and expansion of metro networks.
- Corporate Sustainability and Circular Economy Promotion
The government is encouraging industries to adopt circular economy principles by:
- Promoting waste management and recycling initiatives.
- Incentivizing sustainable manufacturing practices.
- Encouraging companies to integrate resource efficiency in their supply chains.
Implications for Businesses and Investors
- Opportunities for Green Investments: Companies investing in renewable energy, ESG-compliant projects, and sustainable finance will benefit from tax incentives and subsidies.
- Increased ESG Scrutiny: Businesses must strengthen ESG reporting to attract investors and remain compliant with evolving regulatory requirements.
- New Avenues for SMEs: Small and medium enterprises (SMEs) focusing on sustainability will gain access to financial incentives and improved market positioning.
Conclusion
India’s Union Budget 2025 has reinforced sustainability as a key driver of economic growth. By prioritizing green energy, ESG compliance, and sustainable finance, the government is laying the foundation for a resilient, future-ready economy. Businesses and investors must align their strategies with these policy shifts to capitalize on new opportunities and contribute to India’s sustainable development.