Foreign investment in India’s renewable energy sector has picked up speed in the last four years, with investors including Japanese firms laying down big bets on the country’s green energy push.

According to government data, foreign direct investment in the sector has totaled $3.8 billion over the last four years, accounting for around 56 percent of the $6.84 billion poured in during the last 18 years.

The government has taken various steps to attract investment from both within the country and overseas, including fiscal and promotional incentives.

Seeking to tap India’s renewable energy sector, Japanese firms such as SoftBank Group Corp., JERA Co., Orix Corp. and Hitachi Ltd.’s subsidiary Hitachi High-Technologies Corp. have already entered the sector with plans to generate power and offer various green energy solutions.

SoftBank, which is studying solar projects in India, recently signed a memorandum of understanding with China’s GCL Group to establish a joint venture in India with an investment of $930 million to manufacture and sell solar equipment, showing its increased interest in the sector.

India had around 73.35 gigawatts of renewable energy capacity as the end of October, more than double the 35.51 gigawatts as of March 2014, according to the latest government data.

“A total of 37.83 gigawatts of renewable energy capacity has been added in the country during the last four years and the current year (up to October),” Raj Kumar Singh, minister of state for new and renewable energy and power, said last week in a written reply to India’s Parliament.

As part of its plan to increase the share of clean energy in the overall mix, the country has set a target of 175 gigawatts of renewable energy capacity by 2022 from such sources as solar, wind and biopower.

“The percentage of FDI (foreign direct investment) in renewable energy generation has almost doubled from its average value since 2000 (1.7 percent) to 3 percent in the last fiscal year,” according to a report prepared by the Council on Energy, Environment and Water, a Delhi-based nonprofit policy research institution.

“This is a big achievement for a sector that has only picked up pace in the last five years,” researchers at the council said in the report.

India’s power sector, including conventional energy, ranks second after the construction development sector among infrastructure sectors in terms of FDI received in the form of equity since 2000, the report said.

“India’s green energy push is providing opportunities to global firms, including equipment suppliers, operating in the green energy sector,” Vinay Rustagi, managing director of the clean energy consultancy Bridge to India, said.

According to Rustagi, while investors are betting on India’s renewable energy, the sector is facing various challenges such as aggressive bidding and a steep fall in tariff rates and tenders that might affect long-term business viability.

“Investors are looking for a conducive policy regime in the country’s renewable energy sector,” he said.

KEYWORDS India, renewables