“Companies that minimize emissions, manage waste responsibly, uphold worker safety and practice transparent governance tend to earn higher ESG scores. In return, they gain access to better credit terms, longer repayment periods and lower interest rates. It is a financial reward for environmental and social responsibility, an incentive that truly works.” Khushal Tipre, Head Green Technology & Projects, Ecofy
India’s manufacturing renaissance stands at a critical crossroads. On one hand, it must rapidly expand production to meet the demands of a growing population and global economic aspirations. On the other, the onus of operating sustainably without sacrificing the environment, social integrity or long-term resilience also rests on their shoulders. In accordance with these seemingly dualistic objectives, the concept of green financing is exactly what the doctor ordered. Driven equally by financial innovation and a call to safeguard the environment, green financing strategies are marshalling a silent yet but profound revolution that can transform the very future of the industry. Beyond funding clean energy projects, it aims to reengineer the very foundation of manufacturing finance.
From collateral to consciousness
This paradigmatic shift is being duly shepherded on the back of a new underwriting model that is poised to redefine how creditworthiness is evaluated. As we speak, traditional assessments based on balance sheets are being enhanced with two powerful new pillars: Asset Underwriting and ESG (Environmental, Social and Governance) Underwriting.
Asset Underwriting primarily focuses on the intrinsic value and durability of the machinery or infrastructure being financed. Lenders now assess the credentials of original equipment manufacturers, the reliability of product certifications and the strength of equipment warranties. Importantly, performance data from IoT and remote monitoring devices feed into real-time updates, creating a dynamic feedback loop between asset health and credit viability.
Simultaneously, ESG Underwriting evaluates how adeptly businesses align with global sustainability and ethical standards. Companies that minimize emissions, manage waste responsibly, uphold worker safety and practice transparent governance tend to earn higher ESG scores. In return, they gain access to better credit terms, longer repayment periods and lower interest rates. It is a financial reward for environmental and social responsibility, an incentive that truly works.
The rise of Battery-as-a-Service
One of the most visible and scalable examples of green financial innovation can be found in the Battery-as-a-Service (BaaS) model. In India’s booming last-mile mobility sector, EV batteries, typically a major capital outlay are now offered through subscription-based models. This approach slashes upfront costs by up to 40 percent and makes electric vehicles accessible to a much broader base of users.
This model has been enabled by financiers willing to underwrite the residual value of the battery packs and structure subscription programs in partnership with OEMs. The result is a new kind of affordability that powers not only cleaner transport but also more inclusive economic participation.
Fueling India’s charging infrastructure
Charging networks across India are another frontier where green financing is creating real-world impact. Most of these operate on an OPEX model, where working capital (and not fixed asset loans), is provided to entrepreneurs and companies. This mitigates startup risk, ensures smoother cash flows and accelerates infrastructure deployment. Financiers are simultaneously funding the necessary infrastructure and underwriting scalability. A true win-win.
Energy efficiency as a strategic asset
Financial innovation is also fueling a quiet but powerful movement inside factories. Special lending programs are enabling MSMEs to adopt energy-efficient machinery, install LED lighting, upgrade to smart automation systems, and invest in waste heat recovery solutions. These upgrades lower carbon footprints, reduce long-term operating costs, improve productivity, and enhance competitiveness across global supply chains.
Crucially, these programs are no longer reserved for large manufacturers. Tailored financing solutions are bringing them within reach of micro and small enterprises. Every cleaner machine installed, every watt saved, is a step closer to industrial sustainability.
The power of digital-first finance
The digital transformation of SME financing has been a game-changer. Loan applications, disbursals and servicing have moved online, reducing turnaround time dramatically. More importantly, this accessibility has allowed smaller manufacturers, even those in remote industrial clusters, to tap into green financing programs.
One of the most visible outcomes has been the rise in rooftop solar adoption. Retail loans are being used to install solar PV systems, lithium-ion battery storage, and small-scale renewable energy setups in manufacturing units. These investments lower fossil fuel reliance, stabilize energy costs, and future-proof factory operations.
Financing the green technology wave
The green transition in manufacturing also requires a deeper understanding of emerging technologies. Financiers are now building expertise in electric vehicles, solar power systems, wind energy, fuel cells, and green hydrogen solutions. This technical know-how is being embedded into underwriting criteria, risk models, and loan structuring to unleash a new era of sustainable financing.
Rather than relying solely on outdated asset classifications, lenders are evaluating real-world performance, commercial potential, and lifecycle economics of these assets. It is a proactive strategy to align financing with the pace of technological advancement.
A smarter path to sustainable growth
India’s journey to becoming a global manufacturing powerhouse cannot come at the cost of environmental degradation. Financial innovation is making it possible for manufacturers, especially MSMEs, to grow responsibly, competitively, and sustainably. This evolution in financing models is shifting the focus from short-term credit to long-term impact.
The future of manufacturing will be shaped not just by factories and machines, but by the wisdom with which capital is allocated. Every loan structured around ESG principles, every asset evaluated for performance rather than price, is a vote for a greener, more resilient industrial future.
As this wave gathers further momentum, one thing is clear. Financial institutions are no longer passive lenders. They are becoming active enablers of sustainable manufacturing as they forge the economic infrastructure for a greener India, one transaction at a time.
The author is Khushal Tipre, Head – Green Technology & Projects, Ecofy. Khushal serves as Ecofys Head of Green Technology & Projects, bringing a rich array of expertise to the company’s sustainability efforts. His skill set covers market assessment, risk evaluation, technology review, and a range of financial and environmental analyses. Moreover, Khushal is well-versed in crafting ESG Policies and ESMS Frameworks, particularly for green Non-Banking Financial Companies (NBFCs).
