7 months ago
PSUs Invest in Climate Startups Amid VC Hesitation
Public sector companies and global investors are putting money into climate-tech startups in India.
These startups work on things like making ships more eco-friendly and developing electric vehicles.
Unlike venture capitalists, who usually want quick returns, these investors are patient and focus on long-term benefits.
For example, Cochin Shipyard invested in a startup that makes special paint for ships to reduce pollution.
Another company, Mahanagar Gas, invested in an electric vehicle startup.
Global investors are also interested in Indian climate startups because they want to meet sustainability goals.
However, many climate-tech startups in India struggle to get enough funding because their technologies take a long time to develop and require a lot of money upfront.
This is why public sector companies and global investors are stepping in to support these important but challenging projects.
Public sector undertakings (PSUs) and global investors are funding climate-tech startups in India, focusing on long-term sustainability and regulatory compliance.
Neiox Eco Cycle, a startup developing carbon-negative marine coatings, received ₹1.05 crore from Cochin Shipyard.
Mahanagar Gas Ltd (MGL) invested ₹120 crore in 3ev, an electric vehicle startup, for a 30.97% stake.
Varaha, a climate-tech startup, received $30.5 million from Mirova, a sustainable investing arm of Natixis, to support its carbon removal projects.
Total climate-tech funding in India fell to $657 million in 2025, down from $1.17 billion in 2024, with less than 3% of startups raising Series B or beyond.
- Who
- Public sector undertakings (PSUs) and global investors are funding climate-tech startups in India.
- What
- PSUs and global investors are providing patient capital to climate-tech startups, focusing on long-term sustainability and regulatory compliance.
- Where
- Investments are happening across India, with startups based in Kerala, Bengaluru, and New Delhi.
- When
- Recent investments occurred in 2024 and 2025, with a notable decline in VC funding for climate-tech in 2025.
- Why
- PSUs and global investors are hedging against regulatory risk, future demand shifts, and operational disruptions, while VCs prefer high-risk, hyper-growth businesses with shorter payback cycles.
Key facts
- Neiox Eco Cycle
- Startup developing carbon-negative marine coatings
- Cochin Shipyard
- Invested ₹1.05 crore in Neiox Eco Cycle
- Mahanagar Gas Ltd (MGL)
- Invested ₹120 crore in 3ev for 30.97% stake
- Varaha
- Received $30.5 million from Mirova for climate-tech
- HPCL
- Backed Maraal Aerospace with ₹35 crore for solar drones
- Oil India Ltd
- Invested in Caliche and Carbonation India in 2025
- Climate-tech startups in India
- 800 viable, less than 3% raised Series B or beyond
- Total climate-tech funding in 2025
- $657 million
Quotes
Sumanta Biswas
Assistant Director at CUTS International, a policy research and advocacy group
“MGL’s earlier engagement with Tata Power in 2019 on EV charging infrastructure was part of nascent sector exploration. Its lead investment in 3ev represents a meaningful escalation, transitioning from collaborative pilots to capital commitments in core EV value-chain companies.”
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“Risk-adjusted technology exposure is often the priority (for investors such as Cochin Shipyard): small grants help create an early pipeline of tested solutions that could become relevant to future operations without committing large balance-sheet capital upfront.”
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Rajan Mehta
Founder, Climate Ventures Partner
“The traditional VC model is built for high-risk, hyper-growth businesses, while most climate technologies require patient capital and long gestation periods. That mismatch is why legacy firms, public sector undertakings (PSUs) and global investors are stepping in—they’re investing to hedge transition risk and build relevance, not to chase fast exits.”
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Peter Voelkner
Managing Director of 3ev
“Mahanagar Gas’s management was actively analysing the transition to electric mobility—what it would mean for gas distribution, transportation demand… It wasn’t just an internal discussion; investors and analysts were asking the same questions.”
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Pradeep Singhvi
Executive Director, Energy and Climate Practice, Grant Thornton Bharat, a management consultancy
“Global investors are greening their portfolios. Supporting climate projects in India helps them meet sustainability targets while accessing long-term growth.”
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