Rising temperatures could reduce India's GDP by up to 2.5%

Mumbai: Rising temperatures could reduce India’s GDP by up to 2.5% if left unaddressed, according to leaders and experts at a roundtable — Urban Heat in India: Economic and Public Health Impacts — co-hosted by Climate Trends and the World Trade Centre coinciding with the Mumbai Climate Week 2026.

Key economic sectors and their supply chains are finding it difficult to manage urban heat risks due to lack of data.

Banks and investors are studying heat risks and preparing to tweak policies and processes to manage what is emerging as one of the biggest risks facing the Indian economy, according to experts.

The roundtable brought together representatives from key sectors - energy, MSMEs, finance, textile, FMCG and insurance.

In his opening statement, Vijay Kalantari, Chairman, World Trade Center- Mumbai said, heat is not only a serious threat to not only the financial capital but to the whole country.

“The GDP of India will go down by 2.5% if rising heat is not curtailed. Urban city planning needs to be looked at from a different perspective. We should know how many buildings and multistories are needed. We have utilised everything in the city,” he said.

In her statement, Aarti Khosla, Founder & Director, Climate Trends who presented key aspects of rising heat and its impact on the economy, said more discussion is required on the financial mechanism and socialised solutions till the last strata of India’s economy.

“Every dollar invested in climate resilience can generate up to $19 in avoided losses. Investing in climate-resilient infrastructure now prevents more expensive, emergency repairs later,” Khosla said.

Vishwas Chitale, Fellow, Council for Energy, Environment and Water (CEEW) put focus on the heat trends which will reshape the city planning.

“Nearly 60% districts of the country are facing high to very high risk due to extreme heat that comprises nearly 70% of the total population of the country. Another dangerous trend we are looking at is the increasing number of warm nights which is greater than the rise in the hot days. Relative humidity is also very important which changes the way we look at the heat in terms of actual temperature and feel-like temperatures. There is a scarcity of knowledge of solutions to deal with rising heat. We need to dig deeper and look for cost effective solutions.”

The electricity sector which would need to plan for both power demand-supply planning and infrastructure resilience remains in a tough spot.

Shashank Jewalikar, Executive Director, Maharashtra State Load Despatch Centre said, “The different consumer segments are responding differently to weather patterns and that is impacting the grid planning. Localised heat effects have become more dominating. The demand for cooling is increasing. There is a significant change in the electricity demand pattern, for instance the rise in heat during evening hours. Another is data centres which have a very small footprint but the quantum of load is very high.”

Labanya Prakash Jena, Director, Climate and Sustainability Initiative (CSI) said that nearly 90% of Indian homes are not air-conditioned, so cooling has to be thought of as a development and resilience issue, not a luxury.

The World Bank is supporting financing for efficient cooling manufacturing, but costs must come down. Cooling solutions can deliver both adaptation and mitigation - only if they’re affordable and far more energy-efficient.

Key findings:

- Warm nights are increasing faster than hot days, intensifying health and productivity impacts.

- Cooling demand is reshaping electricity load patterns, with evening peaks and data centre loads becoming significant stress factors.

- Heat is now being treated as a material climate risk by financial institutions, with banks building climate risk assessment systems.

- Every $1 invested in climate resilience can generate up to $19 in avoided losses.