Foreign Direct investment (FDI) in India’s renewable energy sector saw a rise of 50% year-over-year (YoY) in the financial year (FY) 2023-24. FDI in renewables stood at $3.76 billion (₹315.84 billion) compared to $2.5 billion (₹206.5 billion) the last financial year, according to Ministry of Commerce and Industry data.

The cumulative FDI in the renewable sector stood at $17.07 billion (₹1,336.08 billion) between FY 2010-11 and FY 2023-24.

Currently, FDI of up to 100% is allowed in the renewable energy sector under the automatic route, with no prior government approval needed.

There has been no FDI in coal production after FY 2013-14, indicating a clear shift in the energy choices of investors.

Petroleum and natural gas investments have also witnessed a dip in the last couple of years. The FDI in petroleum and natural gas stood at $32.57 million (₹2.73 billion), a YoY decline of 81% compared to $171.65 million (₹14.18 billion).

Total FDI for the power segment was $1.7 billion (₹142.77 billion) in FY 2023-24, a 144% YoY increase from $697.92 million (₹57.65 billion).

During the Mercom India Renewables Summit 2024, Vikram Sheth, Head of Investment Banking at New Age, cited Mercom’s analysis, emphasizing the need for India to add 50 GW of renewable capacity annually over the next 5-6 years. He estimated that this expansion would require around ₹900 billion ($10.7 billion) to ₹1 trillion ($11.9 billion) in equity annually.

Thanks to robust government support and improving economics, India’s renewable energy sector has become increasingly attractive to investors. As the country strives to achieve its net-zero targets, the renewable sector is poised to contribute over $1 trillion to the economy by 2030 and $15 trillion by 2070. FDI will be crucial in bringing the necessary capital to drive this transformation.