Balancing climate policy and development

India has aggressive renewable energy targets and industry energy efficiency policies, but faces significant infrastructure challenges, which may derail otherwise good policy. India is growing rapidly and represented 8% of the increase in global energy-related CO₂ emissions between 2000 and 2010.


These graphs show the changes in emissions, emissions drivers, and policy in the Industry sector in India


Emissions Greenhouse gas emissions

Emissions have risen, but not as rapidly as production.


    Emissions Drivers Sectoral intensity changes

    Indian industry largely improved in efficiency, although performance at a sectoral level was mixed. The steel industry emissions intensity increased due to an increase in primary steel production versus scrap.


      Policy National energy conservation award scheme

      Indian policy towards industrial energy efficiency effectively began in the 2000s, which saw the creation of a number of programs targeting high-visibility energy efficiency programs, the largest of which, the National Conservation Award Scheme, has seen increasing participation over the last decade.

        • Policies prior to 1990 focused on improving the functioning of public sector undertakings and (in general) aimed to improve technology and productivity.

          • Policy Barriers

            • Policy prior to 1980 aimed to facilitate establishment of basic industries and building core infrastructure
            • Industrial Policy of 1980 aimed to promote domestic competition, technological advancement, and modernization of industries
              Measures also taken to improve efficiency of public sector undertakings
            • The Seventh Plan (1985-1990) focused on technical and talent improvement measures to improve productivity, quality, and reduce cost of production
              Public sector was freed from a number of regulatory constraints and was given greater autonomy
            • Air Act of 1981 established Central and State Pollution Control Boards for data collection and enforcement (Greenstone 2011)
            • Environment Protection Act, 1986
              Centralized environmental control
              Gave Ministry of Environment and Forests power to close firms violating pollution regulations (Reich 1992)
          • Underlying changes

            • Industries advanced technologically and increased scale of operations (e.g., automotive, cement, cotton spinning, food processing, and yarn industries)
            • Development of lesser developed areas commenced under Growth Centre Scheme (1988), driving building of critical infrastructure
            • Bhopal Disaster of 1984 prompted new attention to environmental protection (Greenstone 2011)
            • GDP grew nearly 94% (from USD 150.86 billion in 1980 to USD 292.92 billion in 1990) (World Bank 2012)
        • India took on major industrial reforms in 1991 as the country faced an unprecedented balance of payments crisis.

          • Policy Barriers

            • New Industrial Policy, 1991
              Removed licensing requirements for the majority of industries, with only 15 industries requiring compulsory licensing post-April 1993
              Foreign investment permitted up to 51% in high priority sectors (e.g., software, electrical equipment, hotel and tourism)
              Reduced number of industries exclusively reserved for public sector from 17 to 8 sectors
          • Underlying changes

            • Foreign Direct Investment (FDI) increased from INR 10.9 billion in 1992 to INR 107.3 billion by 2000 (Ministry of Commerce & Industry 2013)
            • GDP increased by 54% from USD 292.92 billion in 1990 to 450.48 billion in 2000 (World Bank 2012)
            • Consumption of finished steel increased from 14.84 million tonnes in 1991-92 to 27.65 million tonnes by 2000-01 (Ministry of Steel 2012)
        • The Indian economy continued to liberalize as benefits of the 1991 reforms started accruing.

          • Policy Barriers

            • Continued economic liberalization
              By start of next decade, only six industries required licensing
              Only three industries reserved for the state sector as of 2012
              Various policy measures increased private participation in key infrastructure sectors (e.g., telecommunication, roads, ports) (Jadhav 2005)
              100% foreign equity participation permitted in construction and maintenance of roads and bridges
              FDI limits raised to 74% for private banking and 100% for oil exploration, petroleum product marketing, petroleum product pipelines, natural gas and LNG pipelines, and periodic publications in 2004
          • Underlying changes

            • GDP increased by over 200% over the decade from USD 450.48 billion in 2000 to 1,380.64 billion in 2010 (World Bank 2012)
            • Consumption of finished steel increased from 27.65 million tonnes in 2000-01 to 66.42 million tonnes by 2010-11 (Ministry of Steel 2012)