FDI Surge in India's Renewable Energy: 1% (FY21) to 8% (FY25)

Current Context: The Market Handbook 2025, released by the Council on Energy, Environment and Water’s Green Finance Centre (CEEW-GFC) on May 6, 2025, provides a detailed analysis of India's energy transition and green finance trends.

Key Findings

• Renewable Energy Investment Surge – India's renewable energy sector saw FDI grow from ~1% in FY21 to ~8% in FY25, with $3.4 billion invested in the first three quarters of FY25.
• Shift in Power Generation – Total power generation increased 3.2% in Q3 FY25, with hydro power rising by 27.4%, signaling diversification in energy sources.
• Renewable Energy Stock Performance – Companies like Adani Green Energy (-45%) and Suzlon Energy (-22%) experienced stock declines, reflecting sector volatility.
• Policy Developments – The report analyzes RE auctions, coal phase-out strategies, EV market trends, and India's evolving green finance ecosystem.

Question:

Q.1 What was the trend in Foreign Direct Investment (FDI) in India's renewable energy sector between FY21 and FY25, as per The Market Handbook 2025?
a) Decreased from ~8% to ~1%
b) Remained constant at ~5%
c) Increased from ~1% to ~8%
d) Fell sharply after FY23

Answer: c) The report highlights a substantial surge in FDI in India's renewable energy sector, growing from approximately 1% in FY21 to about 8% in FY25.