India is a signatory and an active participant of various multilateral environmental regimes, including the following:

• Convention on International Trade in Endangered Species of Wild Flora and Fauna;
• United Nations Educational, Scientific and Cultural Organisation;
• Convention on Conservation of Migratory Species of Wild Animals;
• International Whaling Commission;
• Ramsar Convention;
• United Nations Forum on Forestry;
• International Tropical Timber Organisation;
• International Network for Bamboo and Rattan;
• Asia Pacific Forestry Commission;
• United Nations Convention to Combat Desertification;
• United Nations Framework Convention on Climate Change;
• Kyoto Protocol; and
• Nagoya Protocol on Access and Benefit Sharing (ABS), a 2010 supplementary agreement to the Convention on Biological Diversity (CBD).

India takes part in global climate change policy discussions and negotiations as a part of a bloc. These include the Like-Minded Developing Countries (LMDC), BASIC (comprising Brazil, South Africa, India, and China), BRICS, and the G77+ China collective, etc. India along with France initiated the International Solar Alliance (ISA) of 121 sunshine countries to work for efficient exploitation of solar energy to reduce dependence on fossil fuels.

At the bilateral level, India has established green partnerships with the UK, the USA, Denmark, France, Norway, and Australia. In May 2021, the 2030 Roadmap for Future India-UK Relationship was released and indicated that they will jointly lead global climate action through the UK-India Forest Partnership, the Climate Finance Partnership, the Indo-UK Green Hydrogen Partnership, and the Indo-UK Green Energy Partnership.

India made a voluntary pledge in 2010 to reduce the intensity of its GDP emission by 20–25% from the 2005 level by 2020 and to achieve the target of net zero emissions by 2070.

It launched the National Adaption Fund on Climate Change (NAFCC) in 2015–16, to assist national and state-level activities to meet the cost of adaptation measures in areas that are particularly vulnerable to the adverse impacts of climate change.

Various other schemes launched towards adaptation to climate change, include: Guidelines for Preparation of Action Plan – Prevention and Management of Heat Wave 2019; National Mission for Clean Ganga to ensure abatement of pollution and rejuvenation of the river Ganga; and National Agroforestry Policy (NAP).

India, as a signatory of the Paris Agreement, is an active participant in various global forums on the questions of climate finance/capacity building and technology transfer. It has also often stressed that developed nations must increase aid to developing nations and mobilise climate finance of at least USD1 trillion, and that progress in climate finance commitments should be tracked in the same way as the progress of climate mitigation commitments.

India is a part of various regional Asian climate change collaborations. The South Asian Association for Regional Cooperation (SAARC) initiated a Regional Study on the Causes and Consequences of Natural Disasters and the Protection and Preservation of Environment in 1991 and another study on Greenhouse Effect and its Impact on the Region in 1992, which recommended regional measures in sharing experiences, scientific capabilities and information on climate change, sea level rise, technology transfer, etc. As a follow-up to these studies, SAARC Plan of Action on Environment was adopted in 1997.

The Action Plan provided for the establishment of Regional Centres of Excellence, pursuant to which the SAARC Disaster Management Centre (SDMC) was established in New Delhi in 2007, along with other centres in other parts of South Asia.

Further, the SAARC Council of Ministers, at their Twenty-ninth Session held in New Delhi in December 2007, adopted the SAARC Declaration on Climate Change South Asia Cooperative Environment Programme (SACEP), among others. SAARC is an intergovernmental organisation established in 1985 by the governments of South Asia, including India, to promote and support protection, management and enhancement of the environment in the region.

In 2011 the governments of India and Bangladesh signed a Memorandum of Understanding (MoU) on Conservation of the Sundarban. Some of the other key initiatives are the Indian Ocean Rim Association, the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation, the Mekong-Ganges Cooperation Initiative, among others.

The Malé Declaration on control and prevention of air pollution and its likely transboundary effects for South Asia also encourages intergovernmental co-operation to combat the transboundary air pollution problem.

India has also been involved in assisting regional countries in their fight against climate change. For example, in November 2014, India announced an increase in non-reimbursable assistance to USD200,000 to support Pacific Island countries in addressing climate change and pledged to establish a Climate Resilience Fund to strengthen mechanisms for climate change adaptation in Pacific Island countries. In 2020, India committed a further FJD1.8 million for Fiji’s development of climate disaster risk financing through the India-UN Development Partnership Facility.

Evolution of India’s Climate Change Policy

India’s climate policy has evolved over the years, with India now taking a more proactive approach towards mitigating climate change.

India ratified the United Nations Framework Convention on Climate Change (UNFCCC) in 1993, Kyoto Protocol in 2002 and the Paris Agreement and, pursuant to the same, various domestic laws have been enacted.

As part of the initial communication to the UNFCC, in the year 2008, India carried out extensive vulnerability and adaption studies of climate change in various areas such as water resources, agriculture, and forests. Following this, India launched its ambitious National Action Plan on Climate Change (NAPCC) aimed at achieving sustainable development and mitigation targets of the country in various sectors. NAPCC outlines eight missions, which include:

• National Solar Mission;
• National Mission for Enhanced Energy Efficiency;
• National Mission on Sustainable Habitat;
• National Water Mission;
• National Mission for Sustaining the Himalayan Ecosystem;
• National Mission for Green India;
• National Mission for Sustainable Agriculture; and
• National Mission on Strategic Knowledge for Climate Change.

The NAPCC emphasised positioning dedicated research initiatives for developing long-term climate adaptation strategies to promote sustainable development and climate-resilient socioeconomic growth.

India has contributed to the Intergovernmental Panel on Climate Change (IPCC), which released its First Assessment Report (FAR). Following this, several initiatives were undertaken by the government, including Monsoon Trough Boundary Layer Exp. (MONTBLEX) in 1990; and Experiment on Monsoon variability under TOGA-I in 2002, etc.

The Department of Science & Technology (DST) is responsible for implementing the National Mission for Sustaining the Himalayan Ecosystem and the National Mission on Strategic Knowledge for Climate Change. It has, inter alia, supported 25 centres with over 1,500 scientists and students working on the mission projects.

The 6th Assessment report of IPCC focuses on climate research to meet the challenges of now “irreversible” climate change phenomenon like heatwaves, heavy rainfall, floods, etc. The DST, through consultation with experts, has identified six broad priority areas for climate research in the country for 2030: climate modelling; extreme events; glaciology; urban climate; aerosols; and Himalayan ecosystem studies.

Additionally, a detailed climate research agenda and vision report, titled India’s Climate Research Agenda 2030 and Beyond, has been developed by a National Drafting Committee. Each chapter is based on the identified themes in climate science and adaptation: monsoon; climate modelling; aerosol climate interactions; hydrology and cryosphere; extreme events; oceanic sciences; urban climate; carbon cycle; and sector-specific climate services.

In 2015, India submitted its intended Nationally Determined Contribution (NDC) under the Paris Agreement to UNFCCC, which comprised of eight goals; three of these have quantitative targets up to 2030. These quantifiable goals were formulated both as a product of the national climate change policy and informed by the Paris Agreement, and were revised by the government in 2022 by introducing the five nectar elements (Panchamrit) or Primary Objectives:

• reach 500 GW non-fossil energy capacity by the year 2030;
• 50% of India’s energy requirements to be fulfilled by renewable energy by 2030;
• reduction of total projected carbon emissions by one billion tonnes by 2030;
• reduction of the carbon intensity of the economy by 45% by 2030, from 2005 levels; and
• achieving the target of net zero emissions by 2070.

Apart from this, there are non-quantifiable NDCs such as propagation of a healthy sustainable way of living, adopting a climate-friendly and cleaner path, etc.

Funding climate measures

As per the NDCs’ projection, approximately USD205 billion (based on 2014–15 pricing) is required from 2015 to 2030 to put into action adaptation measures in various sectors. Besides, supplementary investments will be necessary for fortifying climate resilience and managing disasters.

The Planning Commission has estimated that mitigation actions for moderate low-carbon development could amount to around USD834 billion until 2030 (based on 2011 pricing).

India primarily funds its climate initiatives through domestic resources, which include a combination of budgetary allocations and various market mechanisms, and fiscal tools like market cess, district mineral fund, compensatory afforestation fund, etc. Further, pursuant to various court orders passed in public interest litigations, the compensation levied on polluters is deposited in a specific fund to be used for measures for conserving the environment.

The government has launched various schemes to meet the cost of adaptation and mitigation like the Climate Change Action Programme (CCAP) and the National Adaptation Fund on Climate Change (NAFCC).

Apart from domestic funding to fight climate change, India receives international support as well, which includes support from Global Environment Facility, Green Climate fund with support from the National Bank for Agriculture and Rural Development and the Small Industries Development Bank, and the Climate Investment Fund held by the World Bank. India has stressed that developed nations must increase aid to developing nations and mobilise climate finance.

India made a voluntary pledge in 2010 to reduce the intensity of its GDP emission by 20–25% from the 2005 level by 2020. There are various measures being taken to reduce usage of fossil fuels and increase the use of renewable energy.

India launched the National Adaption Fund on Climate Change (NAFCC) in 2015–16. The Fund is meant to assist national and state-level activities to meet the cost of adaptation measures in areas that are particularly vulnerable to the adverse impacts of climate change.

Transparency framework

India adopted the Paris Agreement and through it an enhanced transparency framework. The information on how each party is implementing their Convention commitments to mitigate and adapt to climate change is now known as National Communications (NATCOMs) (Article 4.1 and Article 12.1 of UNFCCC, 1992). India’s institutional framework for NATCOMs to UNFCCC involves seven personnel from the MoEFCC and seven personnel from the project management cell. The NATCOMs are prepared and consolidated by the project management cell situated within the MoEFCC.

Additionally, a National Steering Committee (NSC) and a Technical Advisory Committee (TAC), both chaired by the Secretary of MoEFCC, facilitate the NATCOM exercise by providing resources, scoping the assessment and providing technical advisory by facilitating linkages with technical experts internationally.

India has submitted four NATCOMS (until 2019) to the UNFCCC.

Loss and damage funds

India has actively advocated recognition of loss and damage, which refers to destruction caused by climate change-induced disasters, during international climate change negotiations, including during the COP27. The COP27 saw the approval towards establishment of a loss & damage fund, which was proposed by the G77 and China (India is part of this group).

Domestically, the NAFCC, among other funds, helps meet the cost of adaptation to climate change for the states vulnerable to the adverse effects of climate change, and NAFCC projects have been implemented in various states. The actual process of loss and damage for a climate change disaster in India varies in each state depending on the geographical region. India used a post-disaster needs assessment tool for the first time during Kerala floods, and in 2019 India released a manual for such assessment.

Technology

India has notified the National Designated Authority for the Implementation of Article 6 of the Paris Agreement (NDAIAPA) vide Gazetted Notification dated 30 May 2022. The Authority is mandated, inter alia, to take decisions in regard to the type of projects that may take part in the international carbon market under Article 6 mechanisms. On 21 February 2023, the NDAIAPA announced a comprehensive list of activities which have been finalised to be considered for trading of carbon credits under bilateral/co-operative approaches under the Article 6.2 mechanism, which includes GHG Mitigation Activities. These activities will facilitate adoption/transfer of emerging technologies and may be revised after a period of three years by the NADAIPA.

India has advocated global collaboration towards research and development of clean technology, and effective transfer of the same without IPR costs, to developing countries.

A preliminary list of certain such technologies is also given in Annexure A to the INDC submitted by India to the UNFCCC, which includes clean coal technologies, nuclear power and renewable energy.

Additionally, India has been a part of various international collaborations to develop and disseminate clean technologies. The MoU between the Ministry of Science and Technology and the International Energy Agency has aided in the analysis of clean energy investment and the mapping of technological innovation in India.

Climate finance

India primarily relies on domestic funding to support its climate actions, utilising a combination of budgetary allocations, market mechanisms, fiscal tools, and policy interventions. Key national initiatives in this regard are the CCAP and NAFCC. Additionally, for the purpose of funding clean energy research and initiatives, a Clean Environment Cess (CEC) is levied on the use of coal and associated carbon emissions. To manage the funds raised from the CEC, a corpus called National Clean Energy Fund was created, and an inter-ministerial group chaired by the Finance Secretary approves the schemes/projects eligible for financing under the fund.

India has implemented a Green Bond Framework which will help the Government of India in tapping the requisite finance from potential investors for deployment in public sector projects aimed at reducing the carbon intensity of the economy.

Globally, climate finance is provided to India through funds from the UNFCCC such as the Global Environment Facility, Green Climate Fund, and Adaptation Fund, as well as other multilateral climate funds like the Clean Technology Fund. Additionally, climate-specific financing is received through bilateral and regional channels, as well as from multilateral development banks such as the International Bank for Reconstruction and Development, Asian Development Bank, etc.

India has notified the Carbon Credit Trading Scheme to develop the Indian Carbon Markets as well as the Green Credits Programme to incentivise voluntary environmental actions of various stakeholders.

In India, the environmental legal landscape is constantly evolving by way of both legislation and judicial precedents. The right to a healthy environment was declared as a Fundamental Right under Article 21 by the Supreme Court in various judgments. Various legislations and policies have been enacted for environmental protection, which are constantly amended to account for the changing dynamics.

Environment Protection Act, 1986 (EPA 1986)

This is the umbrella Act for the protection and improvement of the environment and for matters connected with it. The Act enables co-ordination of activities of the various regulatory agencies established under previous legislation.

Under Section 3, wide powers have been given to the central government, ie, Ministry of Environment & Forest & Climate Change (the name of the Ministry was changed in 2014 – “climate change” being added to emphasise its role) to take such measures as are necessary for the protection of the environment including laying down standards for emission or discharge of environmental pollutants from various sources, restriction of areas in which any industries shall not be set up or certain operations will not be carried out, laying down procedures and safeguards for the Prevention of Accidents which cause environmental pollution and remedial measures for such accidents, laying down procedures and safeguards for the handling of hazardous substances, etc.

In pursuance of the same, the most important notifications that were issued were EIA Notification 1994, subsequently substituted by the Environment Impact Assessment Notification 2006 (EIA 2006). It has been amended as many as 67 times (by 2023) to account for the dynamic changes in environmental protection requirements. All projects covered by the EIA 2006 need to obtain a prior environment clearance through an elaborate procedure provided in the Act.

Coastal Zone Regulation notifications of 1991 and substituted by 2011 notification, and the Wetlands (Conservation and Management) Rules, 2017 are other examples of exercise of power under Section 3.

Under Section 6 of the EPA, various standards for the emission or discharge of environmental pollutants from industry, operations or processes have been specified. Section 7 of the EPA categorically states that no industry, operation or process shall discharge or emit or permit to be discharged or emitted any environmental pollution in excess of such standards as may be prescribed. Sections 15 to 17 of EPA outline the penalties of non-compliance.

Rules Framed Under EPA 1996

• Hazardous Waste Management Rules (management and handling), earlier framed in 1989 and amended in 2016.
• Chemical accidents emergency planning preparedness and response rules (1996).
• Manufacture, Use, Import, Export and Storage of Hazardous Micro-Organisms Genetically Engineered Organisms or Cells Rules, 1989.
• Bio-Medical Waste Management Rules, 2018.
• The Construction and Demolition Waste Management Rules, 2016.
• The Noise Pollution (Regulation and Control) Rules, 2000.
• Ozone Depleting Substances Rules, 2000.
• Batteries (Management and Handling) Rules, 2001.
• Plastic Waste Management Rules, 2016 (amended in 2022); E-Waste (Management) Rules, 2016 (amended in 2022), etc.
• The Water (Prevention and Control of Pollution) Act of 1974 established Central Pollution Control Board and state pollution control boards. The central board may advise the central government on water pollution issues, co-ordinate the activities of state pollution control boards, sponsor investigation and research relating to water pollution, and develop a comprehensive plan for the control and prevention of water pollution.

Section 25 provides that no person shall, without the previous consent of the state board, establish any industry, treatment and disposal system which is likely to discharge sewage or trade effluent into a stream, well or sewer, or on land.

The state board may grant consent on such conditions and for such period as it deems fit or refuse to grant such consent.

Air (Prevention of Pollution) Act, 1981

• Section 17(1) (g) provides that the state board shall, in consultation with the central board, lay down standards for emission of air pollutants into the atmosphere from industrial plants and automobiles or for the discharge of any air pollution into the atmosphere from any other source not being a ship or an aircraft. It is also provided that different standards for emission may be laid down under this clause for different industrial plants having regard to the quantity and composition of emission of air pollutants.
• Section 19 of the Act states that the state government may declare an area within the state as an “air pollution area”.
• The state government may also prohibit the use of any fuel or appliance that may cause or is likely to cause air pollution. The state government may also prohibit the burning of any material (which is not a fuel) if it causes or is likely to cause air pollution.
• Section 20 states that the state government may, after consulting the state board, issue instructions to the authority responsible for the registration of vehicles under the Motor Vehicles Act 1939 and such authority shall be bound to follow these instructions. This is done to ensure that the standards of emission prescribed under Section 17(1)(g) are complied with.
• Section 21 talks about the setting up of industries in compliance and with the consent of the respective state board. It takes a decision as to whether permission has to be granted to set up the plant or not. The conditions are also given for setting up the plant. These should be complied with; otherwise, the permission for the plant can be revoked.

Forest (Conservation) Act, 1980

• The objective of the Act was to check deforestation and limit usage of forest land for non-forest purposes, without the approval of the central government.
• In 2002, the Supreme Court of India in the case of TN Godavarman Thirumalpad v Union of India, dated 30 October, observed that a Compensatory Afforestation Fund be created in which all the monies received towards compensatory afforestation, under the Forest Conservation Act, 1980 would be deposited, primarily to be used for plantations, protection of forests, wildlife protection and other related activities. To ensure safety, security and expeditious utilisation, in a transparent manner of the funds, the Compensatory Afforestation Fund Act, 2016 was enacted.
• Non-forest purpose has been defined as breaking up or clearing of any forest for the purpose of cultivation of tea, coffee, spices or any other plants or for any other purpose other than the afforestation.

Indian Forest Act, 1927

The object of the colonial Act was to consolidate the law relating to forests, the transit of forest produce and the duty leviable on timber and other forest produce. It gives power to the state government to declare a forest as a reserved forest. Section 26 prescribes the acts prohibited in such forests, which include: clearing, setting fire, trespassing, felling trees, breaking or clearing the forest land or using the same for hunting, shooting, fishing, poisoning water, catching elephants.

Biodiversity Act, 2002

This Act was enacted to give effect to meet the obligations under the UN Convention on Biological Diversity 1992, to which India is a party. The Act has been amended by way of an amendment in 2023, and it is reported that the three key reasons to bring these amendments are conservation of biodiversity, sustainable use of its components, and fair and equitable sharing of benefits.

National Green Tribunal Act, 2010

• The National Green Tribunal Act, 2010 was enacted to set up a specialised tribunal for effective and expeditious disposal of civil cases relating to environmental protection, including enforcement of any legal right relating to the environment.
• The NGT has wide powers under the Act over all civil cases where substantial questions relating to the environment is involved and such questions that arise out of implementation of the enactments specified in schedule, which have been discussed earlier.
• In addition to the NGT, the Supreme Court of India and the High Courts of various states have passed environmentally progressive decisions in light of climate change, such as orders banning mining in eco-sensitive regions, banning use of pet coke, directing use of environment-friendly fuel in vehicles, etc.

Mines and Minerals (Development & Regulation) Act, 1957 (MMDR)

The grant of a mining lease is governed by the provisions of the MMDR Act, 1957, the Mineral Concession Rules, 1960 and now 2016 Rules, and the Mineral Conservation and Development Rules, 1988. Subsequent to enactment of the Environment Protection Act, Section 4A was inserted to provide for premature termination of a prospecting licence or a mining lease for the purpose of preservation of the natural environment, prevention of pollution and to avoid danger to public health.

Articles 32 and 226 and 142 of the Constitution of India

Prior to the NGT Act of 2010, most of the litigation arose on account of filing of writ petitions under Articles 32 and 226 of the Constitution of India. Article 32 is a fundamental right which empowers the Supreme Court to issue a direction, order, and writs. Article 226 is the constitutional right which empowers the High Court to issue a direction, order, and writs for enforcement of fundamental rights and other legal rights. Under Articles 32 and 226 of the Constitution of India, the Supreme Court and High Courts have original jurisdiction over all cases concerning fundamental rights. The courts can issue directions in cases filed under the said provisions.

Article 142 of the Constitution of India provides that the Supreme Court, in the exercise of its jurisdiction, may pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it, and any decree so passed, or orders so made, shall be enforceable throughout the territory of India in such manner as may be prescribed by or under any law made by Parliament.

It is this powerful provision that has been exercised by the Supreme Court in passing far-reaching orders relating to the environment and other issues that sometimes even amount to laying down policy: for example, laying down waste management Rules, amending the Wildlife Protection Act, etc. In exercise of the aforesaid powers, orders have been passed banning mining in eco-sensitive regions, banning use of pet coke, and directing the use of environment-friendly fuel in vehicles, etc.

India has actively engaged in formal negotiations with other Paris Agreement parties for the implementation of climate change policies. A few recent bilateral/trilateral co-operation agreements are notable, including the following.

• In 2023, France, India and UAE agreed on a trilateral initiative to embark on energy projects with a particular focus on solar and nuclear sources.
• In 2022, India and Germany jointly agreed upon concrete development projects to the tune of EUR1 billion for the year 2023. India’s specific goals include increasing its non-fossil energy generation capacity to 500 GW by 2030, restoring 26 million hectares of forest, and achieving climate neutrality by 2070.
• In 2019, an MoU was signed between India and the UK on co-operation in weather and climate sciences. Another MoU was signed between India and Argentina on Antarctic co-operation, which will help in the fields of Earth Sciences, as well as those related to the protection and conservation of the natural environment of Southern Oceans.
• In 2020, an MoU was signed between India and USA for technical co-operation in Earth observation and Earth sciences to better understand the regional meteorology and oceanography, improved data assimilation and modelling for better prediction and early warning of natural disasters.

The following key authorities are engaged in the development, enforcement and supervision of India’s climate change policy, and derive their mandate from different legislations.

• Ministry of Environment, Forest, and Climate Change (MoEFCC) is the nodal agency in the administrative structure of central government for the planning, promotion, co-ordination and overseeing of the implementation of India’s environmental and forestry policies and programmes.
• Central Pollution Control Board (CPCB) is a statutory body under the Water (Prevention and Control of Pollution) Act, 1974 and the Air (Prevention and Control of Pollution) Act, 1981, which provides technical services to the MoEFCC.
• State Pollution Control Boards (SPCB) monitor the interest of the respective states where they perform and carry out the functions as per instructions provided by CPCB. SPCBs have branches in different towns in the states and a team of scientists and experts assist in their functioning.
• Bureau of Energy Efficiency (BEE) was set up by the government under the provisions of the Energy Conservation Act, 2001 to assist in developing policies and strategies with a thrust on self-regulation and market principles, with the primary objective of reducing energy intensity of the Indian Economy.
• Ministry of New and Renewable Energy (MNRE) is primarily responsible for research, development and promotion of renewable energy sources, with the intent to develop and deploy new and renewable energy for supplementing the energy requirements of India.
• National Green Tribunal (NGT) is the judicial authority for effective and expeditious disposal of cases relating to environmental protection including enforcement of any legal right relating to the environment. It is a specialised body equipped with the necessary expertise to handle environmental disputes involving multidisciplinary issues.

Various other regulatory bodies are in place across India to supervise different environmental laws, including state-level Environment Impact Assessment Authority, for overseeing Environmental Clearance applications and Environmental Impact Assessment (EIA) reports.

Additionally, the Ministry of Corporate Affairs has enacted the National Guidelines on Responsible Business Conduct (NGRBC). Pursuant to the NGRBC, the Securities Exchange Board of India (SEBI) has also recently mandated the top 1000 companies to file a Business Responsibility and Sustainability Report (BRSR) in a prescribed format, which includes Principle Wise Performance Disclosure, relating to the nine major principles on which the NGRBC is based.

The NAPCC is enacted and aimed at achieving mitigation targets set for India. The government of India, through specific parent statutes aimed at protection and preservation of the environment (Environment Protection Act, Forest Conservation Act, etc) and executive actions through statutory authorities, is constantly working towards mitigating the effects of climate change. The Environment Impact Notifications (and subsequent amendments) and the various legislations provide for regulation of emissions, noise pollution, waste management, discharge of pollutants, etc to mitigate climate change.

The Water (Prevention of Pollution) Act and Air (Prevention of Pollution) Act require industries to obtain prior consent from regulatory authorities before commencing operations, and lay down conditions to mitigate pollution depending on the polluting nature of the industry.

Framing and Implementation of Policy/Legislation

Policy is framed by the central government. The initiation of a policy starts when any Minister feels that a new law/policy should be brought in or an existing law needs to be strengthened. Thereafter, to implement the policy a bill is made. If the same is passed by both Houses of Parliament, it becomes legislation.

Environment laws are implemented by CPCB and SPCB as constituted under the Water (Prevention of Pollution) Act. Therefore, the mechanism for mitigation is by way of statutes and delegated legislation. Various judgments are also passed by the High Courts and Supreme Court issuing directions for mitigation.

Capping of Green House Gas Emissions – Implementation and Reporting Requirements

With respect to Green House Gas (GHG) emissions, the government of India, through different statutes, has mandated that a commercial unit may operate after seeking environmental consents (ECs) which prescribe standards and limits of greenhouse gas emissions. The EIA Notification, 2006 (and subsequent amendments) require the listed projects to mandatorily obtain prior EC from the state and national authorities prior to commencement. The parameters on which the EC is granted are aligned with the National Environment Policy notified in 2006.

Climate change mitigation is an issue for consideration of grant of environment permits/clearance. Permissions are granted only when the mitigation plan for the anticipated environmental impact is made by an accredited environmental agency engaged by the company and approved by the expert committee constituted in this regard. For example, in the case of thermal power plants, there is a requirement to install flue gas desulphurisation plant.

Further, companies are required to obtain consents to establish and consents to operate under the Water (Prevention and Control of Pollution) Act, 1975; Air (Prevention and Control of Pollution) Act, 1981 and Hazardous Waste Rules, 2016. These consents prescribe specific standards to be maintained by each unit while functioning, including capping emissions from manufacturing activities, and require reporting in case the emissions are over the statutory limits. The Pollution Control Boards have been vested with vast powers to act against companies defaulting on their obligations under the Consents to Operate under the aforesaid statutes.

The greenhouse gas emission caps are implemented by way of regular monitoring and inspection. If they exceed the standards prescribed, a plant will suffer consequences including being shut down. Further, any person aggrieved by pollution can file a case before the National Green Tribunal, Supreme Court or High Court; and the courts, after conducting an enquiry, may stop the activity causing greenhouse gas emissions beyond the prescribed standard. Cases filed as public interest litigation, espousing causes of the underprivileged who are unable to approach the courts, do not have to adhere to procedural issues such as locus.

Further, if there is a likelihood that greenhouse gas emissions will be emitted exceeding the prescribed standard, or it does take place, industries are obliged under the statutes and under the conditions on which consent to operate is granted to report the same to the relevant authorities.

The consequences of not adhering to greenhouse gas emission caps laid down in the standards are both civil and criminal liability.

Recently, the CCTS has been enacted to develop the Indian Carbon market, the objective being to decarbonise the Indian Economy by pricing Green House Gas (GHG) emissions through the trading of Carbon Credit Certificates. The recently notified Green Credit Programme also incentivises voluntary reduction of emissions.

Government companies engaged in the mining of coal, thermal power plants, infrastructure projects, etc, have to obtain Environment Clearance and other permissions before commencing operations. Renewable energy projects are granted certain exemptions subject to conditions. The government sector is subjected to similar consequences as the private sector in terms of compensation, closure and criminal liability for non-compliance.

India’s adaptation policy is guided by the eight missions under the NAPCC which act as a fountainhead for all policies and measures aimed towards addressing climate change, whether mitigation or adaptation. The missions are driven by the core principles of NAPCC that drive adaptation strategies.

India also launched the National Adaption Fund on Climate Change (NAFCC) in 2015–16, to assist national and state-level activities to meet the cost of adaptation measures in areas that are particularly vulnerable to the adverse impacts of climate change. The National Bank for Agriculture and Rural Development (NABARD) is the National Implementation Entity (NIE) designated for implementation of adaptation projects under the NAFCC.

Under the NAPCC, each Indian state is required to develop its own State Action Plan on Climate Change (SAPCC), to identify state-specific vulnerabilities to climate change and outline adaptation strategies and actions.

NABARD aids in identifying project ideas from the SAPCCs, formulating and appraising projects, sanctioning and disbursing funds, monitoring and evaluating projects, and building the capacity of various stakeholders, including state governments.

The adaptation projects (around 30) under the NAFCC are largely aimed at meeting objectives such as food and water security, improved policies and regulation, etc, and almost half the budget of the NAFCC is targeted towards promoting and developing climate resilient agriculture.

Sectors such as the agriculture sector, water resources sector, infrastructure sector, coastal and urban areas are highly susceptible to climate change and are the targets of adaptation operations.

India’s revised NDCs outline India’s transition strategy towards cleaner energy from 2021 to 2030. Three of the revised NDCs are directly concerned with adaptation strategies and building capacities. The government has launched numerous programmes aimed at amplifying India’s efforts on climate adaptation and mitigation. Actions are being taken under these schemes across various sectors, including, but not limited to, water, agriculture, forest, energy and enterprise, sustainable mobility and housing, waste management, circular economy, and resource efficiency.

Climate change adaptation is increasingly considered in the granting of environmental permits and authorisations in India. Certain sectors, such as coastal development, water resource management, or infrastructure, have sector-specific guidelines that explicitly address climate change adaptation.

India has undertaken various steps towards participation in carbon markets. India has notified the National Designated Authority for the Implementation of Article 6 of the Paris Agreement (NDAIAPA), and the authority is mandated, inter alia, to take decisions in regard to the type of projects that may participate in the international carbon market under Article 6 mechanisms. A list of activities announced by the NDAIAPA to be considered for the trading of carbon credits comprises activities for which foreign investors can obtain corresponding carbon credits, subject to the transfer of specific emerging technology and mobilisation of international finance to set up the project in India.

In 2022, India notified the Carbon Credit Trading Scheme (CCTS), with effect from 28 June 2023, to set up the Indian Carbon Market Framework: a national framework established with the objectives of reducing/removing/avoiding greenhouse gas emissions by pricing such emissions through the trading of carbon credit certificates. The CCTS also provides for measures and mechanisms to implement the carbon trading framework.

The CCTS provides that a National Steering Committee (NSC) be constituted for the Indian carbon market (ICM), and governance and direct oversight of its functioning will vest with the NSC. The Bureau of Energy Efficiency is to act as the Administrator and perform various functions, including identification of sectors for reduction of GHG, development of a market stability mechanism for carbon credits, procedure for accreditation and functions of the accredited carbon verification agency, etc. The Grid Controller of India Limited is to be the registry for the ICM and shall carry out functions such as undertaking registration of obligated or non-obligated entities, maintaining a secure data base and recording all transactions, etc. The Central Electricity Regulatory Commission shall act as a regulator for trading activities under the ICM.

India already has a market-based mechanism in the form of Perform, Achieve and Trade (PAT) and Renewable Energy Certificates (REC), which will continue to remain obligatory under the ICM as well and would also allow participation by other non-obligated sectors for the trading of offsets.

Impact on Exports by India

The following effects will occur.

• The implementation of the Carbon Border Adjustment Mechanism (CBAM) by the European Union will have a significant impact on India’s exports of energy-intensive products such as steel, aluminium, cement and fertilisers.
• UNCTAD forecasts India will lose USD1–1.7 billion in exports of energy-intensive products such as steel and aluminium. In addition to the quantum of the carbon border tax itself, the CBAM will increase compliance requirements by Indian companies, requiring them to monitor and calculate emissions.
• Commencing 1 January 2026, the EU will begin collecting carbon tax on each consignment of steel and aluminium, which will result in Indian firms paying an amount equivalent to 20–35% of tariffs.
• India has consistently opposed the CBAM, questioning its compatibility with the fundamental rules of the World Trade Organization.
• On 26 June 2023, the MoEFCC announced the Green Credits Programme, to leverage a competitive market-based approach for Green Credits, thereby incentivising voluntary environmental actions by various stakeholders, including private sectors, industries and organisations.
• Green Credits will be tradable outcomes and will act as incentives. In the beginning, Green Credits will be made available to individual and entities engaged in selected activities and who undertake environmental interventions.

ESG reporting is a regulatory requirement in India for select companies, as prescribed by the Indian market regulator, ie, the Securities and Exchange Board of India (SEBI). Pursuant to the SEBI (Listing Obligations and Disclosure Requirements) 2015, the SEBI has mandated the top 1,000 listed companies (by market capitalisation) to make mandatory disclosures under the Business Responsibility and Sustainability Report (BRSR) framework, which must be reported on an annual basis.

Very recently, the International Sustainability Standards Board (ISSB) subsumed the TCFD reporting, and it is therefore expected that TCFD will be replaced in several jurisdictions. In the Indian context, TCFD has influenced the BRSR. Additionally, many entities in India follow the Carbon Disclosure Project (CDP) disclosure system on a voluntary basis (which is also to an extent aligned with the BRSR) and, given that the CDP has the largest TCFD aligned environmental database in the world, TCFD has significant influence on the regulatory position on climate change financial disclosures.

In fact, while submitting the BRSR disclosures, entities already preparing and disclosing sustainability reports based on internationally accepted reporting frameworks (eg, Global Reporting Initiative and Integrated Reporting and TCFD) are permitted to refer to the disclosures made under the global frameworks.

Climate disclosures under the BRSR framework derive several reporting parameters from the TCFD: for instance, the metrics and targets to disclose the total energy consumption, risk identification and management of climate-related risks into an organisation’s risk management, etc.

The central bank of India, ie, the Reserve Bank of India, released a discussion paper in July 2022 on “Climate Risk and Sustainable Finance”, stating that the TCFD recommendations are a desirable framework for regulated entities to rely on. The regulated entities and financial institutions have been encouraged to align climate-related financial disclosures with the TCFD recommendations.

Civil society, experts in the area of climate change and non-governmental organisations have been participating in the process of providing comments in the public comments process associated with the release of consultation papers (which are eventually finalised and adopted as regulations) by the Indian regulatory authorities.

The current landscape of climate reporting in India is still at a nascent stage. India’s long-term low carbon development strategy, developed by the Ministry of Environment, Forest and Climate Change has task groups with representatives from various stakeholders including civil society organisations.

Directors of a company act in a fiduciary capacity and are required to act in good faith in order to promote the objects of the company for its benefit as a whole, per the Companies Act, 2013 (the “Indian Companies Act”). By virtue of Section 166(2) of the Act, a director is required to act in good faith for the protection of the environment and exercise duties with due and reasonable care.

In practice, imposing liability on a company’s directors for climate change risks will require the presence of extraordinary circumstances, in the absence of which a company’s directors are not made liable for climate change impacts.

As set out above, the BRSR requires climate-related disclosures to be made by the top 1,000 listed companies by market capitalisation in their annual reports, and the directors are responsible for operational transparency to stakeholders and formulation of a risk management committee.

In certain climate-related litigations in India, such as Union Carbide Corporation v Union of India (AIR 1991 SCC 584) and MC Mehta v Union of India (AIR 1987 SC 1086), the Indian courts have pierced the corporate veil to ascertain absolute liability and personal liability of persons responsible for the management and conducting of business operations of the company. The Indian Supreme Court (apex court in India) has also decided in several judicial outcomes that the duties of directors, under the Indian Companies Act, are vicarious and include the responsibility that activities of the company shall not harm the environment.

Directors of Indian companies have been held liable for climate risks and environmental loss through various implementation mechanisms, such as the following:

• institution of public interest litigations under Articles 32 and 226 of the Constitution of India;
• filing of suits before the National Green Tribunal;
• actions by the environmental regulators such as the Union Ministry of Environment, Forest and Climate Change; and
• proceedings instituted by central/applicable state pollution control boards.

Institutional investments that do not factor climate risks prior to making investments are usually not on the radar of the government. The Indian government is adapting to green investment and sustainability; however, infrastructural investments and/or financing arrangements that may have negative climate change impacts are not its immediate target.

In India, shareholders cannot be held liable for a breach of climate change law by the company. A parent company can be held liable for the climate change damage, if liability can be attributed to the parent company or if the parent company had instructed the board of directors/management to act accordingly.

The decision to attribute liability to the shareholders depends on the facts and circumstances of the specific case. In exceptional circumstances and in cases where it is in public interest, Indian courts have pierced the corporate veil and disregarded the construct of separate legal personality of a company, and imposed liability upon the persons exercising real control over the company in question.

The courts in India have held that when subsidiaries are bound hand and foot to the parent company and must do what the parent company says, then the general tendency in law is to look at them as a group entity.

Parent entities have been held liable for the environmental acts and omissions of its subsidiary companies. Even though parent companies have a separate legal identity, the courts have pierced the corporate veils of their subsidiaries to hold the parent companies liable if required, on a case-by-case basis.

ESG reporting in India is mandatory for the top 1,000 listed companies (by market capitalisation) under the BRSR format of reporting, which must be reported on an annual basis.

The BRSR is intended towards having quantitative and standardised disclosures on ESG parameters to enable comparability across companies, sectors and time. The BRSR seeks disclosures from listed entities on their performance against the nine principles of the National Guidelines on Responsible Business Conduct (NGRBCs) and reporting under each principle is divided into essential (mandatory) and leadership (voluntary) indicators.

The climate change component is a critical part of the disclosures under the BRSR framework, which includes: (a) mandatory disclosures relating to energy and water consumption, scope 1 and scope 2 emissions, waste management, extended producer responsibility, environmental impact assessments undertaken by the reporting companies and general disclosures relating to the environmental impact of the respective companies’ operations; and (b) voluntary disclosures in relation to the break-up of renewable and non-renewable sources of energy used, water usage in areas of water stress, details of scope 3 emissions, disaster management systems, etc.

Climate change ESG reporting is not a requirement for stock exchange listing.

Climate disclosures under the BRSR framework derive several reporting parameters from the TCFD: for instance, the metrics and targets to disclose total energy consumption, risk identification and management of climate-related risks into an organisation’s risk management, etc. Presently, the reporting and disclosures made under the TCFD reporting is more prevalent than the International Sustainability Standard Board and/or the Science Based Targets Initiative for ESG in India. In fact, while submitting BRSR disclosures, entities already preparing and disclosing sustainability reports based on internationally accepted reporting frameworks (eg, Global Reporting Initiative and Integrated Reporting and TCFD) are permitted to refer to the disclosures made under the global frameworks.

In India, climate change due diligence plays a crucial role in M&A and finance transactions. While environmental compliance is a key consideration, the nature of due diligence can vary depending on the specific sector involved. The regulatory regime for climate change due diligence is governed by the Environment Protection Act, 1986 and other legislation mentioned above. It will include discovering any judgments passed by the National Green Tribunal and various other courts against a company.

Some common aspects of climate change due diligence include the following.

• Environmental approvals: this involves assessing whether the company has obtained the necessary permissions and authorisations for its operations, taking into account environmental regulations, such as emissions standards and pollution control measures.
• Forest clearance: if the target company operates in or near forested areas, it becomes essential to evaluate its compliance with forest clearance requirements. India’s Forest (Conservation) Act, 1980, governs forest clearance procedures.
• Waste processing: this entails reviewing compliance with waste processing and disposal regulations, as well as efforts to minimise waste generation and promote recycling or sustainable waste management practices. The Environment (Protection) Act, 1986, and its subsequent rules and notifications guide waste management in India.
• Licensing requirements: the acquirer or financier examines whether the target company holds the necessary licences and permits required for its operations. Sectoral regulators, such as the Ministry of New and Renewable Energy, govern licensing requirements in their respective sectors.
• Reporting requirements: it also involves reviewing the target company’s compliance with reporting obligations related to environmental sustainability. This includes assessing whether the company discloses relevant climate-related information in its financial statements, annual reports, or sustainability reports, as well as compliance with any mandatory reporting frameworks or guidelines. The Securities and Exchange Board of India (SEBI) requires listed companies to disclose climate-related information.

In property transactions, in addition to the points detailed above, climate change due diligence in India considers location-based risks and regulatory compliance. Here are the key considerations.

• Location-specific risks: property due diligence focuses on evaluating climate change risks associated with the specific location of the property.
• Environmental impact assessments: some property transactions may necessitate conducting environmental impact assessments to understand the potential effects of the transaction on the surrounding environment. The Prior Environmental Clearance Notification, 2006, governs such assessments in India.

India has implemented several policy and regulatory instruments to support the uptake of renewable energy.

Renewable Energy Policy and Regulatory Instruments

India has established various policy and regulatory instruments to encourage the deployment and utilisation of renewable energy technologies, which aim to create a conducive environment for investment, promote market competition, and ensure the integration of renewable energy into the national grid. Some key instruments include the following.

• Renewable Purchase Obligation (RPO): the RPO is a regulatory mechanism that mandates electricity distribution companies and certain consumers to procure a certain percentage of their power from renewable sources. This obligation encourages the uptake of renewable energy technologies and provides a guaranteed market for renewable power producers.
• Competitive bidding: in India, end procurers/intermediaries may conduct a competitive bidding process for procurement of renewable energy. Under this mechanism, project developers bid to supply renewable energy at the lowest tariff. Competitive bidding encourages cost competitiveness, promotes innovation, and helps in achieving better price discovery.
• Renewable Energy Certificates (RECs): the Renewable Energy Certificate (REC) mechanism is a market-based instrument that encourages the use of renewable energy and helps obligated entities meet their RPOs. Its purpose is to bridge the gap between the availability of renewable energy resources in a state and the requirement for obligated entities to fulfill their RPOs. As per the Central Electricity Regulatory Commission (Terms and Conditions for Renewable Energy Certificates for Renewable Energy Generation) Regulations, 2022, a technology multiplier is assigned to RE projects which are commissioned after December 2022, as below:
1. onshore wind and solar: certificate multiplier 1;
2. hydro: certificate multiplier 1.5;
3. municipal solid waste (MSW) and non-fossil fuel-based co-generation: certificate multiplier 2; and
4. biomass and biofuel: certificate multiplier 2.5.
• Banking of energy: this is a system in which any excess power produced during a specific timeframe is transferred to the electrical grid with the concerned distribution companies. This surplus energy, referred to as banked energy, is then provided back to the concerned off-taker/power generator during times when renewable energy generation is low, or upon request. India allows banking of renewable energy with the grid, ensuring that the surplus power generated during favourable conditions can be utilised during times of low generation. This helps in optimising renewable energy utilisation and supporting the integration of intermittent renewable sources into the grid. The banking arrangement varies across states as it is regulated by the State Electricity Regulatory Commissions (SERCs).
• Electricity Act, 2003: India has granted significant exemptions to renewable energy technologies from certain provisions of the Electricity Act, 2003. Key exemptions include the following.
1. Waiver of open access charges: Open access allows consumers to directly purchase electricity from renewable energy generators instead of relying solely on distribution companies. Renewable energy projects enjoy exemptions from several open access charges, making it financially viable for consumers to switch to renewable energy sources.
2. Waiver of cross-subsidy surcharge (CSS) and additional surcharge for captive consumers procuring power from a captive generating plant: Cross-subsidy surcharges are levies imposed on consumers who opt for open access power procurement. To promote renewable energy uptake, renewable power projects enjoy a substantial exemption of reduced CSS, making renewable energy more cost-effective for consumers. Captive consumers are exempted from paying cross-subsidy surcharge as per Section 42(2) of the Electricity Act, and, as a matter of practice, payment of additional surcharge is also exempted for captive consumers, and the same has been further affirmed by the Honourable Supreme Court of India in Maharashtra State Electricity Distribution Company v JSW Steel Limited & Others (2021) INSC 866, wherein the Supreme Court of India ruled that additional surcharge is not leviable on captive consumers.
3. Additional exemptions: Certain additional exemptions are provided by particular state regulators to renewable power developers, including the exemption from payment of electricity duty and the waiver of inter-state transmission charges.

Supported Technologies and Differentiation

India has a diversified portfolio of renewable energy sources, including solar, wind, biomass, small hydro, and biofuels. However, certain technologies have received greater emphasis based on their potential and market readiness.

• Solar energy: solar energy has been a focal point of India’s renewable energy push. The country has implemented various policies and incentives to promote solar energy adoption, such as the National Solar Mission (NSM), launched in 2010, and the introduction of solar parks, viability gap funding schemes, central public sector undertaking scheme, canal bank & canal top scheme, bundling scheme, grid connected solar rooftop scheme, etc.
• Green hydrogen: hydrogen has various applications, including long-duration storage of renewable energy, replacing fossil fuels in industry, promoting clean transportation, and potentially serving as a source of decentralised power generation, aviation, and marine transport. On 4 January 2022, the Union Cabinet approved the National Green Hydrogen Mission with the key objectives of establishing India as a leading global producer and supplier of green hydrogen and creating export opportunities for green hydrogen and its derivatives.
• Waste to energy: non-recyclable dry waste is used in waste-to-energy operations to produce power. Heat produced by the combustion of the garbage is then used to create power. The first waste-to-energy plant was set up in Timarpur in Delhi in 1987.
• Offshore wind: the Ministry of new and renewable energy had announced the “National offshore wind energy policy” in October 2015. The Ministry has subsequently released the “Strategy Paper for Offshore Wind Development” in July 2022. The strategy outlines three models for the development of offshore wind:
1. Model-1: applies to sites where studies and surveys are carried out by NIWE/Government entities, such as the current site in Zone B off the Gujarat Coast;
2. Model-2: applies to sites where studies and surveys will be conducted by potential developers (without any exclusive rights to the seabed) for participation in offshore bids organised by the government; and
3. Model-3: applies to sites where studies and surveys will be conducted by potential developers (with exclusive rights to the seabed) and project development will occur through bilateral agreements, for captive consumption, or on a power exchange basis.

India recognises the importance of climate-friendly investment to mitigate the impacts of climate change and assist transition towards a sustainable future. The country has implemented various policy and regulatory instruments to promote and support investments in climate-friendly sectors.

Climate Investment Funds

India has actively engaged with the Climate Investment Fund (CIF), a global financing instrument designed to support climate change mitigation and adaptation projects. The CIF provides financial resources to developing countries for clean technology deployment and capacity-building initiatives. India has benefited from CIF through various programmes, including the Clean Technology Fund (CTF).

The CTF has funded numerous clean energy projects in India, promoting the adoption of solar power, energy-efficient technologies, and sustainable transportation.

Carbon Credit Trading Scheme

India is planning to develop the Indian Carbon Market by establishing a national framework with the objective of decarbonising the Indian economy by pricing Green House Gas emissions through the trading of carbon credit certificates. In June 2023, the government announced the Carbon Credit Trading Scheme. The Carbon Credit Trading Scheme assigns a value, ie, a carbon credit, to each tonne of carbon dioxide equivalent which has been reduced or avoided. The trading scheme allows these credits to be bought, sold and traded within the country’s carbon market framework.

Issuance of Green Bonds

Green bonds are those issued by any sovereign entity, intergovernmental groups or alliances and corporates with the aim that the bond revenues will be used for ecologically sustainable initiatives. India issued its first green bonds in 2015. The government of India launched the first Sovereign Green Bonds in January 2023 for INR80 billion (USD1 billion). The deal attracted oversubscription by more than 400%. The Sovereign Green Bond also obtained a greenium, ie, pricing benefits which mean that investors are willing to pay extra or accept lower yields in exchange for sustainable impact. Obtaining a greenium for the Sovereign Green Bonds indicates a strong demand from domestic investors, thereby making inroads in the goal of leveraging the sustainable finance market as a source of capital.

Framework for Accepting “Green Deposits” by Banks and Deposit-Taking Non-banking Finance Companies (NBFCs)

A “green deposit” is a deposit for a fixed tenure by banks and deposit taking NBFCs, which allows investors to invest in environment-friendly projects. On 11 April 2023, the Reserve Bank of India (RBI) issued a framework for the acceptance of green deposits, effective from 1 June 2023. This framework appears against the backdrop of increased awareness of environmental, social and governance (ESG) principles and to facilitate sustainable investing. Green deposits provide investors an alternative to fulfil their sustainability goals by investing their surplus cash balances into sustainable projects as detailed under the framework issued by RBI.

Incentives From Government of India for Construction of Renewable Energy Projects

The government of India also offers financial benefits for specific projects through schemes like the viability gap funding scheme for certain solar projects. To ensure that renewable energy projects receive timely and sufficient credit, banks in India must prioritise loans up to INR150 million for these projects. However, the Ministry of New and Renewable Energy is currently discussing with India’s central bank the possibility of removing the priority sector lending limit for the renewable energy sector. This move aims to encourage banks to provide more loans for renewable energy projects and facilitate easier access to finance for developers. Additionally, banks and financial institutions are being encouraged to collaborate with the Solar Energy Corporation of India Limited to offer predetermined loans to successful bidders.

SEBI Allows Mutual Fund Houses to Launch Multiple ESG Schemes

SEBI has introduced measures to bolster ESG investing in India under the mutual fund route. Previously, mutual fund houses were allowed to launch only one ESG scheme, which are considered as thematic funds. In March 2023, SEBI permitted mutual fund houses to launch multiple thematic schemes with an investment objective governed by ESG factors. This regulatory change allows investors to obtain more options to make ESG-based investments.