How Cleaner Technology is Catching the Eyes of Indian VCs Whether it be green hydrogen, EVs, solar energy, batteries, or renewable energy, India is becoming a major market for climate-change projects. Sovereign funds and long-term investors are eager to contribute significant sums to initiatives addressing climate concerns.
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According to a KPMG report titled "Pivoting to Leadership: Re-imagining supply chains for India's emergence as a credible alternative for global clean energy manufacturing," the country will need to invest an average of USD 350–400 billion annually by 2047 to meet its clean energy objectives.
Various investors gathered to express their perspectives during a panel discussion titled "Investing in Cleaner Technology: The role of VCs" at the Tech and Innovation Summit in Bangalore, which Entrepreneur Media hosted.
Climate technology refers to a broad spectrum of applications and technologies that are aimed at lowering greenhouse gas emissions from different processes and industries or at eliminating carbon dioxide that has already been released into the atmosphere.
Swapna Gupta, partner at Avaana Capital, says, "We try to look at what contributes to almost 90% of India's emissions and about 70% of GDP. Therefore, the supply chain, mobility, energy transition, resource management, sustainable consumption, and sustainable agriculture are the sectors that matter on the trip to climate pathways."
Mobility and transportation, energy production and distribution, industrial processing and manufacturing, food, and agriculture, and the built environment have arisen as some of the important areas for climate technology.
Ankit Kedia, Founder and Lead Investor at Capital A, shares, "The first significant investments made in climate change were in the EV and mobility sectors. Many OEMs, as well as individuals working on battery swapping, analytics, and the development of charging infrastructure, as well as those producing powertrains, challenged the established OEMs."
Numerous climate technologies provide substitutes for traditional high-carbon processes, like chemical synthesis, without the use of fossil fuels or renewable energy sources. Others are made to work in tandem with currently in-place high-carbon processes, such as those that capture carbon from energy-producing or industrial facilities.
Rajeev Kalambi, General Partner, Cactus Venture Partners, adds, "There are several subsegments within clean climate tech, but a lot of our ideas are focused on renewal. We are looking at a company that is a manufacturer of powertrains."
As noted by Kedia, "For us, solar seems to be something that is taking extremely promising steps, and a lot of folks on the hardware side of things and a lot of folks on the solar financing side of things are emerging and hopefully doing some great work. Sustainable packaging is another industry we choose."
In the upcoming years, the solid waste management industry in India is anticipated to grow significantly due to several factors, including growing urbanisation, increased public awareness about trash segregation, and rising infrastructure investments for garbage management.
The industry has been helped by the government's Swachh Bharat Abhiyan (Clean India Mission), which has increased demand for waste management solutions. Over the projected period (2021–2026), the solid waste management market in India is anticipated to rise at a compound annual growth rate (CAGR) of 7.5%. This growth will be fueled by factors including growing urbanisation, increasing waste management awareness, and increased investments in waste management infrastructure.
India produces more than 62 million tons (MT) of waste annually, according to a report published by the Energy and Resources Institute (TERI). Out of the total garbage created, only 43 MT are collected; the remaining 31 MT are just thrown in waste yards, and 12 MT are processed before disposal. The majority of garbage produced is left unprocessed and often even unaccounted for. The nation's environmental and public health problems are mostly attributable to inadequate trash collection, transportation, treatment, and disposal.
"We also look at municipal solid waste disposal," continues Kalambi. "We are examining business plans in which plastic recycling is being considered."
According to Kedia, the government is also doing a lot of things for VC funds to get enough conviction on the climate sector and further investments. Venture capital investments in India related to climate technology surged in 2023, amounting to USD 1.29 billion. According to Statista data, the South Asian nation had a record high of USD 1.49 billion in climate tech venture capital funding in 2021 during the time under review.
"Investing in a climate tech startup has the best opportunity to create more unicorns. I am hopeful that we will see at least 4 to 5 unicorns coming from this sector," says Mohammed Shoeb Ali, Co-founder and Managing Partner of Transition VC. He is focusing on five sectors: the EV value chain, industrial decarbonization, net-zero buildings, long-term energy storage, and renewables.
India is becoming a major market for climate products, whether it be green hydrogen, EVs, solar energy, batteries, or renewable energy. Sovereign funds and long-term investors are eager to contribute significant sums to initiatives addressing climate concerns.
