How Climate Crisis Has Made India Into A Hotbed For Climate Tech Investments The climate crisis is a multi-trillion-dollar opportunity for investors, and the timing couldn't be better to cash in on this jackpot.
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Although India emerged as a hotbed for startup entrepreneurship a few years ago, most of our startups had thus far been concentrated in the edtech, consumertech, fintech, foodtech domains, mostly. That is until a renewed focus on the global climate crisis made investors take serious note of the climatetech startups in the country. According to a report released in 2021 by London & Partners and Dealroom.Co, India ranked ninth in the list of top 10 countries for climate technology investment over the past five years. The report also revealed that Indian
climatetech firms received $1 billion in venture capital (VC) funding from 2016 to 2021.
The climate crisis is a multi-trillion-dollar opportunity for investors, and the timing couldn't be better to cash in on this jackpot. The regulatory will is being felt stronger than ever before, for instance, the recent single-use plastic ban reflects the government stance. Heightened consumer awareness and behaviour with regard to climate change are compelling businesses to operate in a responsible manner and in the best interests of the environment. The spurt in dedicated early-stage funds to clean technology startups indicates the opportunity
present in the climate-tech space. The overall need for sustainability across sectors is also unlike anything experienced before; the policy support from the government provides a formidable push to the cause.Enterprises are operating with a sense of urgency to start their
net-zero campaigns, and achieve the sustainability targets and keep their commitments made to the board and shareholders.
When viewed from an analytical lens, pollution is clearly an engineering error. When the technology in sectors such as housing, transportation food, electricity, waste, etc., was being developed, there was no compulsion of reducing this error owing to limitless resources. The climate technology sector is all set to influence a course correction by bringing in innovation and disruption.
India's emergence as a hotbed for climate tech investments has been triggered by various factors. One of them has been Prime Minister Narendra Modi's commitment at the COP26 summit towards the promise that India will achieve net-zero emissions by 2070. This gave a gentle push for the creation of a favourable policy environment. Additionally, the development of new businesses has been driven by the advancement of low-carbon technologies and the formulation of a large asset base in clean energy. While much of this action has been focussed on large, utility-scale sustainable project financing, there has also been renewed focus on bringing about continued decarbonisation of the economy at all levels. Case in point: since 2016, sustainable mobility has massed investments of $705 million across 84 deals. Similarly, the energy sector has garnered $301 million across 44 deals.
The attention that climate tech startups are garnering augurs well for India and the globe as a whole. The agricultural sector that most citizens rely on for their sustenance, is poised to be one of the most significant beneficiaries in this space. Also, the rise of home-grown clean technology startups in big numbers can potentially result in India's minimal dependence on developed countries for advanced climate technologies. This will also give a nudge to India's commitment to the agenda of self-reliance. Additionally, it's worth mentioning that access to climate technologies was one of the major talking points initiated by developed countries at the 2021 global Climate Conference (COP26) held in Glasgow.
The emergence of numerous home-grown startups in the climate technology arena could also give a major push to India's efforts to achieve targets set under Sustainable Development Goal 7 of providing citizens access to affordable and clean energy. In the process, these startups could also join hands in the fight against air pollution which has become a major environmental and health hazard in India. These enterprises could present offerings that could make 'Clean Air for All' a reality for the country's 1.4 billion-plus population and, by doing so, improve their quality of life.
Investment in climatetech startups will only help these enterprises solve sustainability problems in a better, faster, and cheaper way in the long term. In return, by teaming up with these disruptive startups, investors can also solve the climate change problem while generating super alpha which will be ten times bigger than food delivery or commerce. It's refreshing to see a good amount of awareness pertaining to sustainability among startups of today. Discussions on climate are no longer at the fringe but have become mainstream. Also, India is home to talented individuals who are determined to solve some of the toughest problems. Having numerous startups in the climate technology space could present positive consequences to the increasing number of individuals joining India's workforce every year. These climatetech startups could create more jobs—quantitatively and qualitatively—for those seeking employment, in addition to creating opportunities for job flexibility for those already employed. This trend is not only here to stay but is set to grow exponentially with more capital starting to come in.
