Empowering India’s Net-Zero Goals: The Rise of Climate Tech Startups

Indian climate tech startups are leveraging advanced technologies to combat climate change, supporting the country’s net-zero goals, and providing industries with the tools to achieve sustainability across their operations. Despite challenges like funding declines and economic pressures, these innovative businesses are making significant strides across diverse sectors.

Climate change is one of the most pressing challenges facing humanity today. In India, climate tech startups are leveraging advanced technologies to combat environmental destruction and help the country achieve its goal of net-zero emissions by 2070.

The current landscape of Indian climate tech

India has a diversified geographical presence, and each region has unique needs when it comes to answers to this climate change dilemma. This is the reason early-stage investors have become more interested in Indian climate-tech businesses.

Funding obstacles

Nevertheless, developing technology to fight climate change while generating revenue can be challenging. Private players across various sectors face obstacles, such as rising interest rates, falling valuations, inflation, and geopolitical unrest.

According to a PwC report, venture and private equity investment in 2023 was US$638 billion, a 50.2 percent decrease from the previous year. This decline in funding impacted climate tech startups, with grant financing and private market equity decreasing by 40.5 percent during the same period, setting back startup financing to levels seen five years ago.

Women entrepreneurs play a key role

In February 2024, Secretary Rajesh Kumar Singh of the Department for Promotion of Industry and Internal Trade (DPIIT) praised the growth of climate tech startups in India focusing on green technology, renewable energy, the circular economy, water, and carbon capture. DPIIT recognition for startups is necessary for such enterprises to access government incentives.

The number of startups in India has surged from fewer than two dozen in 2015 to over 112,000 today, making India the third-largest startup ecosystem globally. Singh highlighted that over 600 startups in India are dedicated to climate tech, with a notable representation of women directors and startups from tier-two and tier-three cities.

Technology driving innovation

Advanced technology is crucial for innovation in sectors like solar energy, the circular economy, industrial decarbonization, and agriculture, emphasizing the importance of early-stage investments.

India’s climate goals and technological alignment

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India, home to over 1.43 billion people, is highly vulnerable to climate change and ranks high on the global climate risk index. Achieving net-zero carbon emissions by 2070 is critical, with the private sector and climate tech startups playing a pivotal role.

A 2022 report by Unitus and Climate India estimates that the Indian climate tech market needs over US$1 trillion by 2030 to meet sustainability goals. Significant strides have been made, but the climate tech sector is still in its infancy compared to other industries. Notably, 2021 saw climate tech investments surpass the combined total of the previous three years. While US$2 billion has been injected into the sector between 2014 to 2022, there remains ample room for growth and development.

India’s initiatives to promote climate tech companies

• International Solar Alliance (ISA): Founded in 2015 by French President François Hollande and Indian Prime Minister Narendra Modi, ISA aims to mobilize over US$1 trillion by 2030 for solar energy deployment. The alliance seeks to lower the cost of solar power and increase solar energy generation through aggregated demand for finance, technologies, innovation, R&D, and capacity building.
• One Sun, One World, One Grid Project (OSOWOG): Proposed by India in 2018, OSOWOG aims to provide solar power to approximately 140 countries via a common grid system. Jointly launched with the UK, ISA, and the World Bank Group, it addresses global energy challenges.
• COP26 Glasgow Summit Commitments: At COP26, India committed to achieving net-zero emissions by 2070, meeting 50 percent of energy needs from renewables by 2030, reducing carbon emissions by one billion tonnes by 2030, increasing non-fossil energy capacity to 500 GW by 2030, and reducing carbon intensity by over 45 percent by 2030.
• National Biofuel Policy: Introduced in 2018 to enhance domestic biofuel production and reduce import reliance, this policy allows the use of various raw materials for ethanol production. A National Biofuel Coordination Committee approves the use of excess food grains for ethanol manufacturing to be blended with gasoline.

Emerging climate tech startups in India

• Buyofuel: This Coimbatore-based startup, launched in 2020, works with 30 large consumers of biofuels across various sectors. With clients like ITC, Aditya Birla Group, and Hindustan Unilever, Buyofuel has a monthly revenue rate of INR 70 million (US$838,912) and handles about 12,000 tonnes of biofuels monthly. In November 2022, it raised close to US$2 million in equity funding from investors like Inflection Point Ventures and Venture Catalysts.
• Ace Green Recycling: Specializing in battery recycling technology, Ace Green Recycling secured over US$7 million in funding in 2022. Founded by Nishchay Chadha and Vipin Tyagi, the company aims to develop eco-friendly recycling methods for lead-acid and lithium-ion batteries, operating a plant in the National Capital Region of New Delhi with plans for international expansion.
• GreenJams: This social enterprise has created the world’s first carbon-negative concrete, Agrocrete, which boosts thermal insulation and reduces building costs by 50 percent. Founded by Tarun Jami, GreenJams processes farmer residue and combines it with BINDR, a low-carbon, up-cycled Portland cement substitute.
• urbansciences (Respirer Living Sciences): A leading climate tech startup, Respirer Living Sciences develops IoT and Big Data-enabled technologies for air quality and emissions monitoring. Recognized by Microsoft Research and the Government of India, the company provides solutions for various stakeholders, including government pollution regulators and the general public.
• CI Metrics: Founded in 2021, CI Metrics is the world’s first private R&D lab focused on space, climate, and defense challenges. Supported by ex-ISRO scientists and ML engineers, the startup develops cutting-edge technology for satellite image processing, carbon footprint mapping, and other R&D subjects.
• Aatral: This Chennai-based R&D company, founded in 2017, focuses on fuel cell and hydrogen generation technologies, boasting experienced researchers and expertise in these fields.

Conclusion

India’s climate tech startups are crucial in advancing the country’s sustainability goals and addressing environmental challenges. Despite being a significant source of carbon emissions, India is vulnerable to climate change’s adverse effects. The nation’s rapid urbanization has highlighted the need for sustainable practices in pollution control and water conservation.

Many businesses are re-evaluating their operations to mitigate climate change, transitioning to renewable energy, adopting eco-friendly transportation, and creating a circular economy. While electric vehicles are a prominent market segment, Indian companies are also exploring broader sustainability opportunities. The rise of climate tech startups in India demonstrates a proactive response to the climate crisis, offering innovative solutions to reduce greenhouse gas emissions and promote environmental sustainability.

(US$1 = INR83.44)

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