Sustainable agriculture Archives

As India strives to boost agricultural output while protecting the environment, a new force is quietly reshaping the sector—green finance. Could the future of farming lie not just in better seeds or machinery, but in smarter, eco-friendly funding?

With agriculture contributing nearly 18% to India’s GDP and supporting over 40% of the workforce, the potential impact of sustainable agri finance is enormous. From renewable energy adoption to climate-resilient farming, green finance is opening doors to opportunities farmers never imagined. Green finance, with investment flows directed toward environmentally friendly and climate-resilient initiatives, is transforming the way the sector produces, manages, and sustains growth.

Understanding green finance in agriculture

Fundamentally, green finance in agriculture refers to financial instruments and investments that promote sustainable agricultural practices, reduce carbon emissions, and enhance resource efficiency. It includes credit support for renewable energy adoption, efficient irrigation systems, low-emission machinery, organic farming, and waste management solutions.

In India, the focus on sustainable agri finance has gained momentum following policy initiatives such as the National Mission on Sustainable Agriculture (NMSA) and the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM). These programs aim to encourage farmers to adopt renewable technologies like solar-powered irrigation and climate-resilient crop practices—key areas where green finance plays a pivotal role.

Why green finance matters for India’s agricultural future?

Traditional agricultural credit models often overlook environmental sustainability. However, the rising frequency of climate shocks—droughts, floods, and erratic rainfall—has underscored the urgent need for climate-smart agriculture in India. According to the World Bank, climate change could reduce India’s agricultural income by up to 25% by 2050 if adaptive and sustainable measures are not adopted.

Green finance bridges this gap by offering innovative credit structures and risk mitigation mechanisms that enable farmers and agri-enterprises to invest in sustainable technologies. From solar financing in India for water pumps to carbon-neutral warehousing and biofertilizer production, green finance acts as both a growth driver and a climate safeguard.

Market momentum and growing investments

The green finance ecosystem in India is witnessing rapid growth. As of December 2024, India’s cumulative aligned green/social/sustainability (GSS+) debt issuance stood at USD 55.9 billion, up 186% since 2021. Green bonds accounted for around 83 % of this volume.

While the agriculture‑specific breakdown for green finance is less frequently available, the broader momentum in sustainable capital flows is a strong signal for opportunity in the agri‑space. The development of India’s draft climate taxonomy and regulatory frameworks is expected to channel more capital into green agricultural activities in coming years.

Role of Agriwise & other NBFCs

Non-Banking Financial Companies (NBFCs) are playing a crucial role in driving green finance in agriculture by bridging last-mile credit access. Agriwise, for instance, has been actively promoting sustainable agri finance solutions tailored for farmers, agribusinesses, and supply chain partners.

Through Agriwise loans, farmers can access structured financial products to invest in renewable technologies, efficient irrigation systems, and sustainable farm inputs. The company’s focus on digitized lending and agri-data analytics allows it to assess borrower risk more accurately, ensuring faster and more transparent loan approvals.

Such technology-driven financing models are pivotal in empowering farmers to shift toward climate-smart agriculture in India without facing the traditional credit barriers of collateral-heavy systems.

Green finance and renewable energy in agriculture

One of the most compelling applications of green finance in agriculture is in renewable energy adoption. Farms and rural agri‑units in India still rely heavily on diesel‑based irrigation pumps, contributing both to high fossil‑fuel costs and greenhouse‑gas emissions. Transitioning to solar‑powered alternatives via solar financing in India is not only cost‑effective for farmers but also pivotal for climate mitigation.

The government’s ambition — including targets such as installation of 10 GW of solar capacity through agricultural applications by 2030 — underscores the potential scale of opportunity. While specific agriculture‑loans data is limited, the broader driver is clear: renewable‑enabled farms benefit from reduced energy cost, reduced risk of fuel‑price shocks and improved sustainability.

Challenges and the road ahead

Despite its promise, green finance in agriculture faces several challenges—limited awareness among farmers, lack of standardized green credit frameworks, and the perception of high implementation costs. However, with increasing public-private partnerships, carbon credit opportunities, and the rise of ESG (Environmental, Social, and Governance) investing, the momentum is shifting positively.

To scale impact, policymakers and financial institutions must integrate sustainability metrics into credit assessment models. Simultaneously, digital platforms like Agriwise can continue leveraging data-driven tools to promote transparency and inclusivity in green lending.

Conclusion: The future of sustainable agri finance

The integration of green finance into India’s agricultural ecosystem is not just an environmental necessity—it is an economic imperative. By unlocking access to capital for sustainable practices, the sector can enhance productivity, build resilience against climate change, and ensure long-term profitability. As initiatives around sustainable agri finance, renewable energy, and climate-smart agriculture in India continue to evolve, the role of innovative financiers like Agriwise becomes increasingly vital. With tailored Agriwise loans and forward-looking credit models, India’s farmers can be at the forefront of the next big leap—toward a greener, more resilient agricultural future.

Sustainable agriculture is no longer a niche aspiration — it’s becoming central to how India funds its food future. As climate risks, soil degradation, and market shocks intensify, financiers, policymakers, and farmers are shifting capital toward practices that increase productivity while protecting ecosystems. This transition is evident in the rise of green debt markets, the expansion of agricultural credit, and the introduction of new public schemes designed to support climate-resilient farming.

Why is sustainable agriculture finance necessary now?

India’s farm sector supports nearly half the workforce but faces mounting stress from extreme weather and input-cost inflation. Financing models that reward water-efficient irrigation, regenerative soil management, agroforestry, and renewable energy on farms reduce long-term risk for both lenders and producers. Between FY2020-21 and FY2021-22, tracked financial flows into activities the Climate Policy Initiative classifies under sustainable agriculture averaged about ₹22,393 billion (≈USD 301 billion) per year, a clear sign that both public and private money are already moving into sustainability-aligned uses.

Public support + Private capital: A blended push

Public budgets and banks remain the backbone of agricultural finance in India, but the composition is evolving. Government budget allocations and public sector undertakings supplied roughly one-third of those sustainable agriculture flows in the CPI study, while commercial financial institutions provided the lion’s share of private debt. This mix matters: public programmes de-risk new technologies, enabling private lenders to scale loans for solar pumps, precision inputs, and storage that reduce post-harvest losses.

At the same time, India’s broader green debt market is growing. As of December 2024, India’s cumulative aligned green, social, and sustainability (GSS+) debt reached approximately USD 55.9 billion, marking a rapid expansion that creates opportunities for climate-smart agri projects to tap into institutional investors seeking impact, as mentioned in the Climate Bonds Initiative’s 2024 report.

Agricultural credit at scale and shifting in quality

Access to credit is improving in absolute terms: ground-level agriculture credit hit about ₹19.28 lakh crore by December 31, 2024, against a FY25 target of ₹27.5 lakh crore, demonstrating banks’ willingness to provide large volumes of farm finance. While much of this remains short-term crop loans, regulators and development banks are nudging a portion of flows toward longer-term, sustainability-oriented lending such as watershed investments, on-farm renewable energy, and warehouse upgrades that enable better price realisation for farmers.

NABARD and other development institutions play a central role: their credit planning and refinance windows help scale innovations at the last mile, pairing technical assistance with concessional finance to make sustainable agriculture practices bankable.

Policy levers accelerating sustainable agriculture finance!

Two policy trends are particularly catalytic!

First, India’s draft climate finance taxonomy provides a framework to classify and direct capital toward low-emission and adaptation activities — including many agri investments — thereby reducing greenwashing and clarifying which projects qualify for “green” finance.

Second, recent budgetary increases and targeted schemes for climate-resilient agriculture signal sustained public intent to subsidise transition costs for smallholders. Together, these measures improve investor confidence and create standardised pipelines for sustainable agriculture projects.

Agriwise: Enabling sustainable agriculture through green finance

Agriwise is leading this transition with enabling farmers and agri-enterprises to access finance that supports eco-friendly practices. The company offers solar loans that empower farmers to transition from diesel-based irrigation to renewable energy, thereby significantly reducing fuel costs and carbon emissions.
Beyond solar financing, Agriwise provides structured warehouse receipt finance and customised working capital solutions for agribusinesses adopting sustainable models. By aligning credit products with long-term sustainability goals, Agriwise ensures that farmers not only secure capital but also build climate resilience. Its approach demonstrates how financial innovation can make sustainable agriculture both profitable and scalable across India’s diverse agri value chains.

Challenges & where opportunity lies!

Despite momentum, gaps remain. The CPI analysis highlights that domestic commercial banks account for most private sustainable agriculture finance due to priority-sector lending obligations, which can mask genuine market-driven investments and leave project-level green finance underdeveloped. Data limitations also make it hard to track the exact end-use of many loans, complicating impact measurement. Overcoming these hurdles — through stronger reporting standards, blended finance instruments, and aggregation vehicles for smallholder projects — would unlock institutional capital on a larger scale.

What does this mean for lenders?

For agribusinesses and lenders, the practical steps are clear: (1) structure products that link credit terms to measurable sustainability outcomes (soil health, water savings, emissions reduction); (2) use blended capital to lower first-loss risks for pilots; and (3) invest in data and verification to prove impact. For farmers, access to affordable loans for drip irrigation, bio-inputs, on-farm solar, and quality storage can raise yields and buffer climate shocks — making sustainable agriculture both a resilience strategy and a business proposition.

Conclusion

India’s shift toward sustainable agriculture finance is already underway, as evidenced by substantial tracked flows, expanding green debt markets, and rising agricultural credit targets. The next phase will require standardisation, better measurement, and creative finance structures that align farmer incentives with long-term ecosystem health. If policymakers, lenders, and agribusinesses coordinate effectively, sustainable agriculture can transition from a policy slogan to a mainstream investment that secures incomes, food supplies, and the environment for decades to come.

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Green finance in agriculture: The next big leap for sustainable growth