Under the 2°C warming scenario, India faces an estimated 4.5% of annual GDP at risk from climate-physical damage by 2035 — approximately $140 billion at current GDP levels. Agricultural productivity losses (heat stress + water scarcity) account for 1.8% of GDP, followed by infrastructure damage (1.2%), labour productivity loss (0.9%), and coastal asset erosion (0.6%). The RBI's 2023 Climate Risk Report estimates that physical climate risks alone could depress credit quality across 18% of the banking sector's retail loan book by 2030 if mitigation investments are delayed.

India's agricultural sector — employing 45% of the workforce and contributing 18% of GDP — faces compounding risks. Kharif crop yields (rice, cotton, soybean) are projected to decline 12–18% by 2040 under RCP 4.5. Rabi crops (wheat) face 8–14% yield loss. Combined food inflation risk from climate-supply disruption is estimated at +4.2 percentage points annually by 2035, with severe implications for CPI management and rural household income. The World Bank estimates that 200 million Indians could fall below the vulnerability threshold from climate-induced agricultural income shock by 2050.

India's insurance penetration of 4.2% (vs global average 7.2%) creates a massive climate protection gap. Insured losses from climate events in India represent only 8% of total economic losses — meaning 92% of climate damage is uninsured. This creates systemic financial system risk as climate events scale. IMF analysis suggests that climate-uninsured losses in India could reach $48 billion annually by 2035, straining government fiscal capacity and creating NPL risk in infrastructure-linked bank lending. Green bond issuance must scale from $20B (2025) to $200B+ by 2030 to fund India's adaptation infrastructure requirements.