India has made noticeable strides in backing clean energy, with government support for renewables rising sharply in the financial year 2023–24. A new analysis by the International Institute for Sustainable Development (IISD) highlights that subsidies for clean energy in India grew by about 31% to nearly ₹32,000 crore, narrowing the gap with fossil fuel support to its lowest level in five years. 
The “Mapping India’s Energy Policy 2025” report also notes that fossil fuel subsidies fell by roughly 12%, a decline largely attributable to global energy price changes rather than structural policy shifts. As a result of these trends, non-fossil electricity capacity in India crossed 50% of total installed capacity in 2025, achieving a key milestone ahead of national targets. 
Despite this positive trajectory, the IISD report underscores that sustained advancement in the clean energy transition depends on broader reforms in the power sector and a strategic reorientation of state-owned energy companies. Currently, 83% of capital expenditure by energy-related public sector undertakings (PSUs) continues to be directed toward fossil fuel activities such as coal mining and oil and gas development, limiting the scale of diversification into renewable technologies. 
The report raises concern that without a meaningful shift in how PSUs prioritise investments, India risks locking in carbon-intensive infrastructure that may not align with its long-term climate and energy goals. It also highlights that electricity subsidies reached a record ₹2.1 lakh crore in the same period, placing additional strain on state finances even as overall electricity demand grew more modestly. 
Policy experts cited in the analysis argue that targeted reforms such as smarter electricity subsidy delivery, supportive pricing signals, and incentives for renewable and storage technologies will be critical in steering public investment toward cleaner energy. Enhanced diversification by PSUs into emerging sectors like off-shore wind, green hydrogen and battery storage is also seen as vital to maintaining momentum in India’s energy transition. 
The IISD findings suggest that while India’s clean energy landscape is evolving and government support is growing, meaningful structural changes in public investment strategies and power sector reforms will be crucial to lock in long-term progress toward sustainability and energy security.
