There is an old joke among energy analysts: if you look at installed capacity, the energy transition has already happened; if you look at actual electricity generation, it has only just begun.
India illustrates this paradox. The country is undertaking one of the largest energy transitions among emerging economies. It plans to reach 500 GW of renewable energy capacity by 2030 and achieve carbon neutrality by 2070, while supplying electricity to 1.4 billion people and sustaining rapid economic growth.
As of December 31, 2025, India’s installed power capacity reached 513.73 GW, of which 51.9% comes from non-fossil sources—hydropower, renewables, and nuclear energy. The country has therefore crossed the 50% threshold of non-fossil capacity, doing so five years ahead of its stated climate commitments. Yet behind these numbers lies a paradox: coal still accounts for more than 70% of electricity generation.
This gap between the rapid expansion of green capacity and the slow decline of coal generation points to a deeper issue. India does not lack strategies. It is expanding renewables, modernizing grids, and mobilizing investment. The challenge lies in the mechanics of implementation. Uneven enforcement of environmental policy and ESG (Environmental, Social, and Governance) instruments creates investor confidence risks—compliance risk, litigation or permit risk, and data integrity risk—increasing the cost of capital and slowing the transition.
The Reporting Landscape
A key element of this institutional architecture is the Business Responsibility and Sustainability Reporting (BRSR) framework introduced in 2021. It requires the 1,000 largest listed companies to disclose information across 140 ESG indicators, including greenhouse gas emissions, water use, waste management, and gender diversity.
On paper, BRSR is one of the most extensive ESG reporting regimes among emerging economies. In practice, however, weak auditing and limited penalties for incomplete disclosure create risks of greenwashing. Companies may overstate sustainability performance or provide only partial information, treating ESG primarily as a regulatory requirement rather than a strategic management tool.
As a result, corporate reporting can create the appearance of sustainability without reflecting real structural changes in energy portfolios. In 2022, for example, Adani Green Energy reported ambitious ESG indicators while remaining part of a conglomerate that operates some of India’s largest coal mines. This is less an anomaly than a symptom of a broader institutional gap.
Regulatory and Federal Dynamics
Institutional challenges also appear in environmental regulation. India operates an Environmental Impact Assessment (EIA) system that determines whether major projects can proceed. Yet the system’s performance indicators often prioritize speed. Many approvals are issued in around 90 days, compared with the 180 days prescribed by regulation, and in some cases, permits are granted after construction has begun. In such conditions, the system measures administrative throughput more than the quality of environmental evaluation.
India’s federal structure further amplifies these differences. Environmental enforcement varies across states because State Pollution Control Boards differ in funding, expertise, and administrative capacity. Consequently, federal regulations are implemented unevenly. Gujarat, for instance, attracts about 31% of foreign investment in clean energy thanks to more predictable administrative procedures. Coal-dependent states such as Jharkhand, where local economies rely heavily on mining, face higher regulatory and social risks.
India is also building a broader carbon policy framework that includes the Perform, Achieve and Trade (PAT) energy-efficiency scheme, a coal levy, and a national carbon market. Yet these mechanisms remain at different stages of development, leaving climate policy, energy governance, and ESG regulation insufficiently integrated. This pattern is common in emerging economies: sustainability regulations often appear faster than the institutions capable of enforcing them.
The Path Forward
India has made remarkable progress in expanding renewable energy. Yet its transition is not only technological—it is institutional. According to NITI Aayog, reaching net zero by 2070 will require about $22.7 trillion in investment. Although renewables attracted over $12 billion in sustainability-focused investment in 2023, official climate finance remains limited and most funding still comes from domestic sources.
In this context, institutional fragmentation, weak ESG verification, and continued coal expansion signal regulatory uncertainty to investors. One of the central challenges of India’s energy transition is therefore not only technology or finance, but the ability to turn green rules into functioning institutions.