India’s climate finance taxonomy presents an opportunity to electrify the country’s vast but overlooked fleet of traditional boats, delivering gains in emissions reduction, livelihood security, and the preservation of artisanal boat-building traditions.
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A report titled "The climate response: Tapping into India's climate and energy transition opportunity," on India's energy transition and adaptation to climate change, released on 17 July, estimates a significant investment requirement of US$1.5 trillion by 2030. The report emphasises strategic investments, policy support, and technological advancements in areas like renewable energy, green hydrogen, and sustainable infrastructure. It has identified three key pillars of the energy transition: grid decarbonisation, industrial decarbonisation, and transport transition. For India, energy transition is not just an environmental imperative, but also an economic opportunity to access essential resources.
Towards that end, to enhance the availability of capital for climate adaptation and mitigation, the Government of India is developing India’s Climate Finance Taxonomy. The Climate Finance Taxonomy is meant to serve as a tool to identify activities consistent with the country's climate action goals and transition pathways. The Department of Economic Affairs (DEA) released the Draft Framework of India’s Climate Finance Taxonomy in May 2025. The DEA accepted public comments on the draft framework until 25 June.
The taxonomy, when finalised, will define what truly qualifies as “climate-aligned” financial activity in the Indian context and will be critical in channelling capital into appropriate sectors and projects. This will aid the actual energy transition and help mitigate the risk of of financial products.
The DEA acknowledges that the taxonomy must continually evolve in scope and depth to move along the long pathway to Net Zero. It will be a “living document” that will be reviewed from time to time, allowing for updating, inclusions, and enhancement of scope.
The draft framework document sets down the rationale, objectives, principles, and approaches that will govern the classification of activities, projects, and measures related to identified sectors — added in the form of Annexures to the framework document over time. In its current form, the following sectors have been included:
Given that the taxonomy is envisioned to serve as a “living document,” further additions are expected as subsequent annexures to the framework document.
The unorganised inland and coastal country boat fleet, which is covered neither by the mobility sector of the draft framework document nor the green transition guidelines for inland vessels.
With the opportunity for further additions of sectors to the framework document, this piece brings forth the potential of decarbonising the unorganised inland and coastal country boat fleet, which is covered neither by the mobility sector of the draft framework document nor the green transition guidelines for inland vessels. While mobility in the draft framework document pertains to land transport, the guidelines for inland vessels apply only to passenger vessels and Ro-Pax vessels plying on inland waterways and select coastal waterway routes. The 13 inland waterways have 3,425 registered vessels as of March 2024.
The country boat fleet in India, although ubiquitous, remains hidden. At least 1,74,482 boats are registered and operating in the coastal waters, and present the opportunity for electrification. Given India’s extensive maritime history and tradition of boat building, numerous families of artisanal boat builders along the country’s rivers and coasts set up temporary build sites to construct boats on order. About 51.6 percent of the fishing crafts in India are locally built, non-standard, and motorised. The number of boats that are locally built every year is not known. Almost all of these boats are fossil fuel-powered. Depending on the boat size and engine capacity, as per the author’s field observations, these boats consume between one and four litres of diesel per hour of operation, emitting roughly 2,640 to 10,560 grams of CO2 per hour.
The country boat fleet in India, although ubiquitous, remains hidden. At least 1,74,482 boats are registered and operating in the coastal waters, and present the opportunity for electrification.
The Indian Climate Finance Taxonomy is based on eight principles that guide the identification and delineation of relevant criteria, activities, projects and/or technologies. One of these principles is to “Support Transition Activities.” The country boat fleet in India, given its size and emission reduction potential, is a fit case to receive transition support aimed at electrification. Such support will also help sustain traditional boat-making. However, the taxonomy will have to incorporate specific provisions to ensure that resources reach the appropriate country boat owners/operators. Therefore, the taxonomy must incorporate simplified and proportionate criteria for country boat owners/operators in order to facilitate their inclusion in the climate finance framework — addressing their resource constraints and ensuring their smooth transition to low-carbon pathways. Technology-based reporting mechanisms could be implemented by financial institutions and regulators to address the unique challenges of the country boat owners/operators, thereby supporting their climate transition. Existing trials have shown that by leveraging Global Positioning System (GPS) and Internet of Things (IoT) technologies, the information required for Monitoring, Reporting, and Verification (MRV) can be captured efficiently, ensuring traceability and accountability without burdening operators.
To implement simplified and proportionate criteria for country boat owners/operators, the Pradhan Mantri Kisan Urja Suraksha Evam Utthan Mahabhiyan (PM-KUSUM) Scheme for de-dieselisation of the farm sector could serve as a model. Under the Scheme, a central government subsidy of up to 30 to 50 percent of the total cost is given for the installation of standalone solar pumps and the solarisation of existing grid-connected agricultural pumps. As per the author’s observations, the upfront cost of electric propulsion units and batteries is at least 15 times higher than that of conventional diesel propulsion units. However, with a subsidy of 30 to 50 percent, the total cost of ownership for electrically propelled country boats can become comparable. This is primarily due to a 70 percent reduction in operating costs — driven by the replacement of diesel and significantly lower maintenance needs owing to reduced vibrations — as demonstrated in WWF-India’s electric propulsion trials on National Waterway 97.
As per the author’s observations, the upfront cost of electric propulsion units and batteries is at least 15 times higher than that of conventional diesel propulsion units. However, with a subsidy of 30 to 50 percent, the total cost of ownership for electrically propelled country boats can become comparable.
Done right, the framework can direct resources for the electrification of the country boat fleet, delivering environmental gains, enhancing the financial and livelihood prospects of boat owners and operators, and preserving the long tradition of boat making in India.
Anamitra Anurag Danda is a Senior Visiting Fellow with the Energy and Climate Change Programme at the Observer Research Foundation.
Matteo Marinelli is the Asia Pacific Lead for Sustainable Finance at WWF International, with over 20 years of global experience in sustainable finance, impact investing, and ESG strategy.
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Anamitra Anurag Danda is Senior Visiting Fellow with ORF’s Energy and Climate Change Programme. His research interests include: sustainability and stewardship, collective action and institution ...
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Matteo Marinelli is the Asia Pacific Lead for Sustainable Finance at WWF International, with over 20 years of global experience in sustainable finance, impact investing, ...
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