Economic Growth, FDI, and Energy Transition in India’s Revolution 6.0

The transition to RE is a critical component of India’s sustainable development agenda, particularly within the framework of Revolution 6.0, which emphasizes digitalization, artificial intelligence, and innovative energy solutions. This study investigates the nexus between economic growth (EG), foreign direct investment (FDI), fossil fuel consumption (FFC), and renewable energy (RE) in India, providing new empirical insights into the drivers and constraints of energy transition. The study examines relationships among these variables using time-series data from 1990 to 2023 and employing the Vector Autoregression (VAR) model and Granger Causality Tests (GCT). The findings reveal that FDI positively influences RE adoption in sectors with government incentives. However, EG remains heavily reliant on FFs, posing challenges to India’s clean energy targets. The results also highlight a bidirectional causality between RE and FDI, suggesting that investment inflows are both a driver and a beneficiary of the green energy transition. Digitalization and policy reforms under Revolution 6.0 are accelerating energy efficiency and technological advancements, though regulatory bottlenecks and infrastructure limitations persist. This study makes two key contributions: (1) it provides empirical evidence on how economic and investment factors shape India’s RE trajectory, and (2) it offers policy recommendations for balancing economic expansion with sustainable energy adoption. This research advances the literature on sustainable energy transitions in emerging economies by integrating advanced econometric techniques with policy analysis. The study concludes with targeted policy strategies, emphasizing FDI incentives, regulatory reforms, and digital innovations to support India’s clean energy ambitions.