Foreign Direct investment (FDI) in India’s renewable energy sector stood at $838 million (~₹69.2 billion) in the fourth quarter (Q4) of the financial year (FY) 2023, a 102% increase year-over-year (YoY) compared to $415 million (~₹32.1 billion).

The Ministry of Commerce and Industry recently published the data.

There has been no FDI in coal production after FY14, while petroleum and natural gas investments have been stable. The FDI in the petroleum and natural gas segment stood at $66.7 million (~₹5.5 billion) in Q4 FY23, while for the power segment, the total FDI was $6.9 million (~₹567.6 million).

Full Year

FDI in India’s renewable energy sector for FY23 stood at $2.5 billion (~₹206.5 billion), a 56% increase YoY compared to $1.6 billion (~₹121 billion). The investment is the highest ever in the Indian renewable sector in a year.

The rise in FDI in the renewable energy sector can be attributed to the Indian government’s ambitious target of achieving 500 GW of renewable energy capacity by 2030, attracting significant interest from foreign investors and showcasing the sector’s vast potential.

The cumulative FDI inflow in the renewable sector stood at $13.3 billion (~₹1.02 trillion) from April 2010 to March 2023. Foreign investments of up to 100% in the renewables sector are permitted under the automatic route, with no prior approvals required.

According to a World Economic Forum report, India’s transition towards a net-zero economy could contribute over $1 trillion (~₹82.8 trillion) by 2030 and $15 trillion (~₹1,242 trillion) by 2070 in economic impact.

The Indian Renewable Energy Development Agency announced plans to finance renewable energy projects in foreign currency for which an office would be established in Gujarat International Finance Tec-City in Gandhinagar.

In March last year, the Parliamentary Standing Committee on Energy observed that India would need an investment of ₹1.5 trillion (~$14.6 billion) – ₹2 trillion (~$24.4 billion) annually in the renewable energy sector until 2030, which was twice the ₹750 billion estimated in the past few years.