India must step up support to cleantech & climate tech startups

That startups can contribute immensely to India’s growth story has never been in doubt.

In a post on the social media platform X on January 16, Union Commerce and Industry Minister Piyush Goyal had said: “Bharat’s Startup Story = Bharat’s Growth Story”. In March, a report brought out by industry body CII spelled out the impact that startups can make in fast-tracking the realisation of the Viksit Bharat (developed India) goal by forecasting that the ‘startup and venture economy’ could likely contribute $1 trillion to the Indian economy and, also, add over 50 million jobs by 2030.

However, amidst all the talk on India’s startups and how they can become potential game-changers, the time may have come now to turn our gaze towards an issue that, inexplicably, has not been discussed as much as it should despite its strong linkage with multiple national objectives, including, most importantly, that of Sabka Vikas (development for all).

The matter I am referring to pertains to the stark absence, thus far, of any unicorns – yes, you read it right – in the cleantech and climate tech domains in India’s multiple unicorn-spawning startup ecosystem. India has one of the highest numbers of startups worldwide, with more than 100,000 recognised startups as of 2023 and unicorns spread across the ed-tech, fintech segments, etc.  

Both cleantech and climate tech focus on areas like clean energy, built environment, supply chain, and transportation. Additionally, cleantech caters to clean water, recycling, and waste, and the air quality and pollution domains. Besides those mentioned earlier, climate tech also focuses on carbon capture, afforestation, agtech, and geoengineering.

What makes the absence of unicorns in the cleantech and climate tech segments unfortunate is the significant role having many well-funded local startups in these domains can play in helping India address the challenges posed to the lives and livelihoods of its citizens by climate change and the rise in extreme weather events.  

Having a sizeable number of home-grown innovative cleantech and climate tech startups having the ability to scale rapidly can also contribute to India being able to achieve several targets associated with numerous sustainable Development Goals (SDGs) – especially Goal 3 (Good Health and Well-being), Goal 6 (Clean Water and Sanitation), Goal 7 (Affordable and Clean Energy), Goal 8 (Decent Work and Economic Growth), Goal 11 (Sustainable Cities and Communities), and Goal 13 (Climate Action).

That’s not all. The emergence of more promising local startups in the cleantech and climate tech arenas with the potential to come up with India-specific offerings can reduce the country’s dependence on the advanced West for these critical technologies. Incidentally, the transfer of climate technologies is an issue that keeps getting raised by the Global South, including India, at every meeting of world leaders on the climate issue, especially at the yearly UN Climate Change Conference more popularly known as the COP summits.

According to the World Bank, more than 80 percent of Indians “live in districts that are at risk of climate-induced disasters.” In the context of India, the World Bank has further pointed out that “rising temperatures, changing rainfall patterns, declining groundwater levels, retreating glaciers, intense cyclones, and sea-level rise can precipitate major crises for livelihoods, food security, and the economy.”

In its Global Risks Report 2024, the World Economic Forum (WEF) had placed ‘extreme weather events’ in the second position in the list of ‘global risks ranked by severity’ in the short term. Over the long term, ‘extreme weather events’ were stated as the biggest global risk.

Way forward

Over the past decade, the Narendra Modi-led governments at the Centre have demonstrated that authorities would do everything it takes to improve the quality of life of the Indian people.

Given the huge promise that startups in the cleantech and climate tech arenas hold in terms of being able to play an effective role in addressing multiple national challenges, it may, thus, be fitting if the Modi government 3.0 could come up with an action plan to provide greater support to these new-age businesses.

A wish list in this connection would include authorities devising a dedicated funding mechanism for cleantech and climate tech startups as part of the government’s first 100-day agenda so that these startups, in turn, can contribute more effectively to the ‘development for all’ cause. Such an arrangement being announced in the full Union Budget for the financial year 2024-25 to be presented in July would be the icing on the cake.

At the end of the day, startups in the cleantech and climate tech segments fail to reach their full potential due to the reluctance of the investor fraternity to provide the large dose of patient capital that is required for making a business viable in the cleantech and climate tech domains cannot be good news for the country.

India’s cleantech and climate tech startups are far too important to be left at the mercy of venture capital (VC) funds, private equity (PE) firms, etc. on the lookout for the safe bets and quick returns.      

(Sumali Moitra is a current affairs commentator.)