Context

While many developing countries made net-zero pledges at COP26 in Glasgow, they face enormous developmental challenges in their attempts to grow in a climate-constrained world.

Developmental challenges for India

• For India, the national context is shaped by high youth unemployment, millions more entering the workforce each year, and a country hungry for substantial investments in hard infrastructure to industrialise and urbanise.
• Growth with low emission footprint: India’s economic growth in the last three decades, led by growth in the services sector, has come at a significantly lower emissions footprint.
• But in the coming decades, India will have to move to an investment-led and manufacturing-intensive growth model to create job opportunities and create entirely new cities and infrastructure to accommodate and connect an increasingly urban population.
•  All of this requires a lot of energy. Can India do all of this with a low emissions footprint?

What could India do to pursue an industrialization pathway that is climate-compatible?

• A coherent national transition strategy is important in a global context where industrialised countries are discussing the imposition of carbon border taxes while failing to provide developing countries the necessary carbon space to grow or the finance and technological assistance necessary to decarbonise.
• What India needs is an overarching green industrialisation strategy that combines laws, policy instruments, and new or reformed implementing institutions to steer its decentralised economic activities to become climate-friendly and resilient.

Issues with India’s domestic manufacturing of renewable technology components

• India’s industrial policy efforts to increase the domestic manufacturing of renewable energy technology components have been affected by policy incoherence, poor management of economic rents, and contradictory policy objectives.
• India managed to create just a third of jobs per megawatt that China has managed to in its efforts to promote solar PV and wind technologies.
• China has created more jobs in manufacturing solar and wind components for exports than domestic deployment.
• India could have retained some of those jobs if it were strategic in promoting these technologies.

Opportunities in decarbonising transport and industry sector

• Technologies needed to decarbonise the transport and industry sectors provide a significant opportunity for India.
• However, India’s R&D investments in these emerging green technologies are non-existent.
• PLI is a step in right direction: The production-linked incentives (PLIs) under ‘Aatmanirbhar Bharat’ are a step in the right direction for localising clean energy manufacturing activities.
• Focus on R&D: Aligning existing RD&D investments with the technologies needed for green industrialisation is crucial for realising quantum jumps in economic activities.
• Encourage private entrepreneurship: India also needs to nurture private entrepreneurship and experimentation in clean energy technologies.
• Besides China, Korea’s green growth strategy provide examples of how India could gain economic and employment rents from green industrialisation without implementing restrictive policies.

Way forward

• India should set its pace based on its ability to capitalise on the opportunities to create wealth through green industrialisation.
• India should follow a path where it can negotiate carbon space to grow, buying time for the hard-to-abate sectors; push against counterproductive WTO trade litigations on decarbonisation technologies; all while making R&D investments in those technologies to ensure that it can gain economic value in the transition.

Consider the question “What are the challenges India faces as it strives to reach the goal of net-zero emission by 2070. Suggest the strategy India should follow to maximise the developmental gains.”

Conclusion

The government should neither succumb to international pressure to decarbonise soon nor should it postpone its investment in decarbonisation technologies and lose its long-term competitiveness in a global low-carbon economy.

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