Chief Economic Adviser (CEA) Ananth Nageswaran said balancing India’s manufacturing expansion ambitions with its net zero commitments is emerging as a key structural challenge, noting that the country must increase industrial capacity while also working to reduce its carbon footprint.Speaking to ANI at the launch of NITI Aayog’s study report titled ‘Developed India and Scenarios towards Net Zero’.Nageswaran said the report is an important milestone in India’s long-term climate and development planning.
“While emissions are largely a legacy of fossil fuel-led growth in advanced economies, India now faces an unprecedented challenge as it seeks to expand manufacturing while simultaneously reducing its carbon footprint. The release of this report is an important milestone in India’s net zero planning and linking it with its hybrid goals, which come before the net zero transition,” he said.Nageswaran said the NITI Aayog report is rigorous and of high quality and will serve as a benchmark for future policy deliberations.Highlighting structural trends, he said manufacturing has contributed about 18 per cent to India’s GDP over the past decade, while services have driven growth for several decades.He stressed that manufacturing is central to India’s ambition to become a global economic power, citing its role in reducing the cost of capital, strengthening the currency and improving state capacity.“Manufacturing matters more to state capacity than services. The renewed push for manufacturing, also highlighted in the recent Union Budget and Economic Survey, will inevitably increase the emissions intensity of the economy, making India’s net-zero journey more complex than that of many other countries,” he said.On financing the transition, the CEA said that amid geopolitical tensions, pressure on multilateral institutions and rising protectionism, India will need to rely largely on domestic resources. This, he said, will require sustained economic growth, higher domestic savings, job creation and investment generation, creating an “endogenous” growth-investment cycle.Nageswaran also pointed to the energy-intensive nature of renewable technologies. Citing Economic Survey data, he said generating one gigawatt of solar power requires large quantities of silver, polysilicon and aluminium, while wind power depends heavily on copper, the extraction and processing of which is energy intensive.“These facts remind us that the energy intensity of renewable energy itself is quite high, making a strong case for investment in moonshot technologies such as carbon capture, utilization and storage (CCUS), as well as breakthroughs to address intermittency and storage challenges in renewable energy systems.”He said India’s progress in science, research and development will not only help in its energy transition but also support other emerging economies facing similar constraints.The CEA called for a rapid increase in R&D investment in areas such as reducing renewable energy intensity, improving storage technologies and pursuing carbon capture solutions.On the NITI Aayog study, he said it should be treated as a “living document” that will need to be updated from time to time as technology, economic conditions and global realities evolve.“This document will be a constant reference for researchers, policy makers and students of economics and climate change,” he said.