India’s ambition of becoming Viksit Bharat by 2047 and building a $30 trillion economy points to a prolonged phase of industrial expansion, infrastructure creation and rising manufacturing activity. A key policy objective underpinning this vision is the planned increase in manufacturing’s share of GDP from about 17 per cent to 25 per cent, a shift that will inevitably intensify energy demand and resource consumption across major industries.
At the same time, India has a net zero target by 2070, placing decarbonisation at the centre of long-term economic planning. These goals highlight a fundamental transition challenge. Recognising this, NITI Aayog has prepared sector-specific decarbonisation road maps for the cement, aluminium, and micro, small and medium enterprise (MSME) segments, outlining pathways to reduce emissions while sustaining growth.
Renewable Watch presents key takeaways from these reports, highlighting the transition strategies proposed for some of India’s most energy-intensive and economically significant sectors.
Cement
India is the world’s second largest cement producer, accounting for about 13 per cent of global output. India’s per capita cement consumption remains around 260 kg annually, significantly below the global average of 540 kg, indicating considerable room for demand growth as construction and infrastructure activity continue to expand. The sector’s production level of approximately 391 million tonnes (mt) in 2023 is associated with nearly 246 mt of carbon dioxide equivalent (mtCO2e) of emissions, representing close to 6 per cent of national greenhouse gas emissions.
Looking ahead, production volumes are expected to rise sharply. Cement output is projected to increase to 2,100 mt by 2070. Such expansion implies that emissions management will become increasingly critical. Under the long-term decarbonisation pathway, the sector’s carbon intensity must decline from about 0.63 tCO2e per tonne of cement to roughly 0.09-0.13 tCO2e per tonne by 2070. This scale of reduction reflects the depth of technological and operational changes required across the value chain.
The transition challenge is particularly complex given the nature of cement manufacturing. Process emissions account for nearly half of total sectoral emissions, limiting the effectiveness of conventional efficiency improvements alone. Continued reliance on fossil fuels, material constraints related to clinker substitutes and infrastructure requirements for emerging technologies further complicate the decarbonisation pathway. Additionally, the expected decline in traditional supplementary cementitious materials, such as slag and fly ash, after 2050 introduces long-term resource uncertainties.
To address these constraints, the road map prioritises a combination of high-impact solutions. Expanded adoption of alternative fuels, particularly refuse-derived fuel sourced from municipal solid waste, is identified as a near-term opportunity with significant emissions reduction potential. Increased utilisation of such fuels is projected to deliver cumulative emissions reductions of about 30-70 mtCO2e by 2030. Clinker substitution remains another central strategy, with emphasis on diversifying material inputs through the use of alternatives such as calcined clay and limestone, alongside recycled materials and processed construction and demolition waste.
Carbon capture, utilisation and storage (CCUS) has emerged as a critical long-term lever. CCUS deployment has the potential to reduce 35-54 per cent of emissions in a phased manner. Initial CCU-oriented projects under the proposed National Mission on CCUS target capture and utilisation of around 2,000 tonnes per day (tpd), supported by an estimated investment of
Rs 11 billion. The broader mission framework envisions 2,000 tpd of capture capacity, equivalent to roughly 0.67 million tonnes per annum, integrated with utilisation and storage planning. Collectively, these measures are assessed to enable cumulative emissions reductions of approximately 100-150 mtCO2e by 2030 when deployed in combination.
Aluminium
India currently accounts for about 6 per cent of global primary aluminium production. Present production levels are estimated at around 4 mt, and annual greenhouse gas emissions from the sector stand at approximately 83 mtCO2e. Value chain analysis indicates that emissions are heavily concentrated at the smelting stage, where alumina is converted into metallic aluminium.
This stage is highly electricity-intensive, making power generation the dominant driver of the sector’s carbon footprint. The widespread dependence on captive coal-based power generation further accentuates emissions exposure.
Over the long term, the sector is expected to witness substantial expansion. Aluminium production is projected to increase from about 4 mt in 2023 to nearly 37 mt by 2070. Under a business-as-usual trajectory, annual emissions could rise sharply from 83 mtCO2e to around 376 mtCO2e by 2070.
The principal challenge lies in reconciling rising demand with emissions reduction requirements. Aluminium smelters require a continuous, uninterrupted electricity supply, limiting flexibility in power sourcing decisions. Renewable energy integration, while attractive from an emissions perspective, introduces reliability and round-the-clock supply considerations. Nuclear power options involve high upfront capital requirements and regulatory complexities. Carbon capture solutions for coal-based assets face cost, infrastructure and storage-related uncertainties.
The decarbonisation road map, therefore, centres on transforming the sector’s power mix through three high-impact pathways. Immediate adoption of renewable energy-based round-the-clock supply configurations is positioned as the near-term strategy. This pathway offers measurable emissions reduction potential but necessitates robust storage and balancing mechanisms to ensure operational stability. Captive nuclear power integration is identified as a medium-term solution capable of providing stable, low-emission baseload electricity aligned with smelter requirements. CCUS technologies for coal-based captive power plants constitute the long-term pathway, enabling emissions mitigation for existing assets while supporting a gradual transition.
Together, the interventions are projected to deliver a measurable short-term impact by 2030, including emissions reductions of about 10 per cent, expansion of renewable power capacity, mobilisation of investments and creation of green jobs.
MSMEs
India hosts approximately 69 million MSMEs, comprising about 68.6 million micro enterprises, 0.48 million small enterprises and 0.036 million medium enterprises. The sector contributes to roughly 30 per cent of gross value added in GDP, accounts for about 36.2 per cent of manufacturing output and provides employment to nearly 250 million people. MSMEs also play a significant role in trade, with their share in India’s overall exports estimated at 45.7 per cent.
MSMEs collectively represent a substantial emissions source. Heavy reliance on fossil fuels for energy and process requirements resulted in approximately 135 mtCO2e of emissions in 2022. Structural constraints, including limited access to finance, technology adoption barriers, lack of awareness of policy mechanisms, and fragmented market structures, complicate the sector’s transition towards low-carbon operations. MSMEs are also particularly exposed to transition risks arising from regulatory shifts, evolving market expectations and technological change. To address these constraints, the road map emphasises three foundational pillars: technology adoption, financial accessibility and capacity building. Modernisation of equipment and integration of cleaner energy solutions are expected to lower operating costs, improve efficiency and enhance competitiveness, particularly in price-sensitive markets.
Given MSMEs’ contribution of nearly 30 per cent to the GDP and their substantial share of industrial emissions, their role is central to India’s net zero pathway. Aligning with evolving global sustainability norms and certifications can strengthen market access, improve resilience and position MSMEs for long-term growth in an increasingly carbon-conscious economy.
Furthermore, NITI Aayog highlights that the green transition of MSMEs can be achieved through the application of three levers: energy efficiency, green electricity adoption and alternative fuels.
Energy efficiency interventions emphasise cluster-based models. Under the primary approach, demand aggregation enables retrofitting programmes implemented through energy service companies using pay-as-you-save mechanisms. This structure eliminates upfront capital requirements while linking repayments to realised savings. The secondary approach targets Udyam-registered SMEs, aiming for at least 20 per cent reductions in specific energy consumption. Capital subsidies of up to 15 per cent are proposed, alongside performance-linked disbursal mechanisms. A funding requirement of Rs 60 billion over five years is indicated.
Green electricity adoption pathways similarly prioritise innovative financing models. Behind-the-meter renewable installations under renewable energy service company arrangements and procurement via green open access mechanisms are positioned as scalable solutions requiring no upfront investments. For individual MSME units, capital subsidy support for rooftop solar systems up to 3 kW is proposed, with an initial allocation of Rs 70 billion. Under the secondary approach, similar subsidy structures target coverage of approximately 1-1.5 million micro units over five years.
Alternative fuel strategies focus on reducing dependence on coal, pet coke and furnace oil. The first phase prioritises natural gas uptake, supported by infrastructure expansion and equipment retrofits.
Conclusion
Taken together, the sector-specific road maps underline a common transition imperative across industries: balancing sustained output growth with deep emissions reductions. While the technological pathways are increasingly well defined, the next phase will centre on implementation, financing and institutional coordination. Going forward, the extent to which these strategies are operationalised at scale will shape both industrial competitiveness and the credibility of India’s long-term decarbonisation trajectory.
