India must invest big to hit 2070 net-zero goal, says Moody’s

Mumbai: India will need to invest about 2% of its real gross domestic product (GDP) annually in the power sector over the next decade to meet its 2070 net-zero pledge, Moody’s Ratings said on Wednesday.

The renewable energy sector is expected to add 450 gigawatts (GW) of clean energy capacity during this period, while coal-based power generation is also projected to rise by 32–35%, or 70–75 GW, to meet growing electricity demand. 

India, Moody's said, will need to balance the trilemma of energy security, affordability, and transition.

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According to the United Nations, net zero means cutting carbon emissions to a small amount of residual emissions that can be absorbed and durably stored by nature or through carbon dioxide removal measures, leaving zero emissions in the atmosphere. India announced its net-zero target for 2070 at the 26th session of the United Nations Framework Convention on Climate Change (COP26) in November 2021.

“We expect the private sector to remain active in India's renewable energy sector, while government-owned companies will also increase their role,” said Abhishek Tyagi, vice-president and senior credit officer, Moody’s.

“Solar and wind power will dominate new generation capacity additions over the next 20-25 years, with smaller nuclear and hydropower additions,” added Tyagi.

Foreign investment, both debt and equity, will remain an important source of capital to bridge funding gaps for energy transition infrastructure.

In February, Moody's reportedly pegged the power sector's annual investment requirement at ₹4.5 trillion to ₹6.4 trillion ($53 billion to $76 billion) until FY2034-35, and at around ₹6-9 trillion annually over FY2026–51.

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Alongside the power sector, India’s broader infrastructure landscape, including data centres, ports, and roads, is also seeing shifts in investment trends, according to Moody’s Indian affiliate, Icra.

Icra said major investments are lined up in data centres and ports, even as the awarding of new road projects has slowed.

The capital outlay for the Ministry of Road Transport and Highways (MoRTH) remained healthy at ₹2.72 trillion for FY26. However, a shift in focus to private investment under the build-operate-transfer (BOT-Toll) model is delaying project rollouts. Under this model, a private firm finances, builds, and operates a toll road for a defined period before transferring ownership to the government.

“With road awarding projected to improve only in second half of FY2026, the revenue growth of road developers is likely to remain subdued over the next 12-15 months, as it takes 6-9 months from project awarding to on-ground execution (first billing milestone),” said Ashish Modani, senior vice-president and group head of corporate ratings at Icra.

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Road developers are expected to bid aggressively for central government projects to rebuild their shrinking order books, which will likely keep their operating profitability under pressure, Modani added.