India must give a thrust to the climate tech startups to accelerate its shift to a net-zero economy, according to a joint report by Climate Trends and Climate Dot.
India ranks third after the US and China in terms of the size of the startup ecosystem. It has more than 61,000 startups recognized and registered as of January 2022. At the COP26 in Glasgow, the nation pledged to take several measures to decarbonize its economy towards achieving Net Zero in 2070.
The report states that given the pace at which the country needs to ramp up renewables, reducing emissions while adapting to extreme weather events is an uphill climb. India should enable the startup community to play its part in meeting India’s targets.
Currently, most of the startups in India are concentrated in the IT sector, with most in the clean-tech sector either in renewable energy or EVs.
The report observes that funding is available for very early-stage ideas mainly as grants, and for startups that have broken through to establish their business model. It highlights the need to support startups to scale from their initial prototype to being ready to enter the market.
“Our analysis shows us that there is the need for climate tech to receive dedicated backing, especially during the “missing middle” to enable startups to scale technology underpinning a sustainable planet. Ultimately climate-tech startups can help drive systemic change in the fight against climate change,” says Akhilesh Magal, director, ClimateDot.
A clear impetus by the Indian Government on startups through various schemes such as the Startup India Scheme, Atmanirbhar Bharat among others, have helped startups flourish in India. However, these are focussed around Bangalore, Delhi, Mumbai, and a few universities.
The report states policymakers need to ensure financial support and provide the right ecosystem to accelerate climate tech innovation geographically distributed across India.
Europe is one of the fastest-growing regions globally for climate tech. The report recommends India can explore a model like the European Union’s European Institute of Technology (EIT InnoEnergy) model. The European Commission initially supported this fund to accelerate climate tech startups, but the fund now operates and finances itself independently. India can adopt and tailor this model to integrate it with Startup India.
“There is a need for accelerated and deep decarbonization. While India has mainly relied on domestic sources for its renewable energy projects, there is a need for a significant fund flow into the country to enable the energy transition. At COP26, India announced the need for one trillion dollars towards climate finance. Climate-tech startups can facilitate the flow of funds domestically and internationally,” said Aarti Khosla, director, Climate Trends.
This report becomes particularly relevant in the context of the Copenhagen Accord where developed countries agreed to mobilise $100 billion annually and still remains a promise to be fulfilled.
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