• Capital Catalyst: India’s taxonomy aims to unlock $2.5 trillion in investments by 2030 for climate-aligned sectors.
• Global Alignment: The framework mirrors international taxonomies from the EU, UK, and others to ensure consistency and investor confidence.
• Strategic Sector Focus: Targets hard-to-abate industries like steel and cement, while supporting critical sectors such as power, mobility, agriculture, and water security.

India’s Ministry of Finance has released a draft framework for its Climate Finance Taxonomy, inviting expert and public comments by June 25, 2025, as it seeks to mobilize significant capital toward its net zero goals.

“We will develop a taxonomy for climate finance for enhancing the availability of capital for climate adaptation and mitigation,” Finance Minister Nirmala Sitharaman announced in the Union Budget 2024–25.

The taxonomy will serve as a classification tool to identify and define sustainable economic activities that support India’s climate objectives. These include a net zero emissions target by 2070, a 45% reduction in emissions intensity by 2030, and 50% electric power from non-fossil-based sources by 2030.

“The Taxonomy is being designed with an objective to facilitate greater resource flow to climate-friendly technologies and activities, enabling the country to achieve the vision of being Net Zero by 2070 while also ensuring long-term access to reliable and affordable energy,” the ministry stated.

The framework distinguishes between two categories:

• Climate-supportive: Activities that directly reduce emissions, adapt to climate impacts, or conduct R&D toward these goals.
• Transition-supportive: Projects improving energy efficiency or reducing emissions intensity in high-emitting sectors where full decarbonization is not yet feasible.

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At launch, the taxonomy will focus on:

• Hard-to-abate sectors: Iron, steel, cement.
• Mitigation-adaptation sectors: Power, mobility, buildings.
• Resilience sectors: Agriculture, food, and water security.

The draft aligns India with global efforts to develop green taxonomies, mirroring systems already established or in progress in the EU, UK, Singapore, Hong Kong, Canada, and Australia—critical for attracting international capital and avoiding greenwashing.

Read the full draft framework of India’s climate finance taxonomy here.

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