Accelerating India%E2%80%99s Energy Transition through Industrial Clusters 2025

Policy challenges India has introduced various policies to improve energy efficiency in energy-intensive industries, promote electric mobility and integrate renewable energy into the national power grid, and also several federal policies targeting solar, wind, biomass and small hydro. The country is also developing a National Framework for the Indian Carbon Market41 to complement and support various entities through carbon pricing. Complementing these efforts are advanced policies introduced by individual states to leverage available resources to meet local demand and needs. Each state offers various benefits and incentives to developers and consumers, such as financial/ capital subsidies. Furthermore, some states offer non-financial incentives like procuring power at a pre-fixed levelized tariff for Power Purchase Agreements (PPA), tax or duty exemptions, and fast-tracked approvals. Incidentally, the coastal locations of Gujarat, Odisha, Maharashtra, Andhra Pradesh, Kerala and Tamil Nadu strategically place them near key shipping hubs and seaports. Below is a brief overview of the six individual states in India with progressive policies in the areas of renewable energy, hydrogen and green mobility. At the national level, the task of coordinating the policies and efforts of various government agencies, ministries and stakeholders is enormous, and a holistic and integrated approach to energy policy formulation and implementation is necessary.Social and employment challenges In 2023, the fossil fuel sector employed over three million workers, with coal supply supporting 1.6 million jobs.42 The oil and gas industry provided over 800,000 jobs, primarily in midstream and refining. Several million more depend on indirect employment by the fossil fuel sector. A just transition aims to ensure jobs in renewables, electric mobility and sustainable industries offset losses in traditional sectors. However, India’s largely informal, low-skilled energy workforce needs extensive reskilling to transition to clean energy jobs. There is currently a skills gap of approximately 1.2 million workers,43 with demand projected to increase to 1.7 million by 2027. Government initiatives such as the Production-Linked Incentive (PLI) scheme have encouraged local manufacturing, but companies struggle to fill key technical roles. Regional disparities add complexity to the transition, as some areas are more vulnerable to fossil fuel phase-outs while others stand to gain from renewable energy growth. Ensuring an equitable transition will be essential to balancing job losses with new employment opportunities.