A bias to action, emphasising prototyping, learning, standardisation, and scaling, has reshaped how climate finance moves in India. In a market defined by currency swings, policy pivots, and shifting credit cycles, the opportunity lies in turning uncertainty into design features, not bugs.

Over the past decade, Climate Policy Initiative’s Global Innovation Lab for Climate Finance has established itself in India as a hub for developing practical, high-impact climate finance solutions. The Lab identifies, tests, and scales innovative financial instruments that accelerate private investment in climate solutions, building deep expertise in what works and what doesn’t through hands-on experience. To date, the Lab has developed 16 climate finance vehicles in India, creating a body of knowledge and leadership in designing bankable, scalable, and fast to implement climate finance vehicles.

Early efforts showed that blended finance can work as a system, not just a slogan: catalytic capital absorbs the specific risks that keep commercial money on the sidelines, while each instrument is built for institutional take-out from day one. That approach favours structures that cut friction for lenders and investors, such as standard documentation, aggregation to reach scale in distributed sectors, and risk-sharing that aligns incentives. As domestic investors, from banks and insurers to family offices, leaned into the transition, the Lab’s playbook evolved from launching pilots to building pipelines.

What keeps working is a venture-style portfolio mindset: Not every vehicle launched will achieve scale, but momentum compounds when promising ones are stress-tested early with those who must underwrite them: credit teams, reinsurers, treasurers. Speed helps, and so does humility. The strongest designs are co-created locally: Local intermediaries with borrower insight, data that prices risk credibly, and local capital able to hold assets through cycles. That is how distributed renewables, efficient cooling, electric mobility, and resilient agriculture are moving from anecdotes towards asset classes.

Today’s market backdrop, with higher rates, tighter liquidity, and sharper risk perception, does not shrink the opportunity but clarifies the assignment. Climate finance vehicles must meet two tests at once: compelling risk-adjusted returns and credible, verifiable impact. They should be simple enough for busy credit committees and robust enough for rating models. Above all, they must come up with original solutions for real constraints, such as working capital for small tickets, warehousing for aggregation, and price or performance risk for first movers.

The next decade in India will likely hinge on two levers. First, flexible early capital that helps teams cross the investability gap: funding data, structuring, and the hard work of aligning counterparties, so that strong ideas survive diligence. Second, disciplined blended finance that anchors first-of-kind deals while signalling a route to scale for private capital. With these in place, volatility becomes a catalyst for standardisation, replication, and speed.

The distance from concept to credibility for climate solutions keeps shrinking. When financial solutions are built with local realities in mind, and with bankability as the north star, climate finance stops being alternative finance and becomes simply finance. That, more than anything, is the opportunity of the next decade.

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This blog op-ed was published in the 2025 India Climate Finance Report by Lab proponent Green Artha.