Banks and industry leaders warn rising urban heat could cut India’s GDP by 2.5%
Financial institutions begin factoring heat as a “material risk” alongside floods and droughts
Textile and labour-intensive sectors flag safety and supply chain disruptions
Experts call for urban planning reform and greater investment in climate resilience
India’s financial and industrial sectors are raising concerns over escalating urban heat, warning that rising temperatures could reduce the country’s gross domestic product (GDP) by as much as 2.5 per cent if left unaddressed.
Speaking a day ahead of the Mumbai Climate Week, experts said major lenders and investors have begun reassessing their portfolios to account for heat-related vulnerabilities. Temperature risks, they noted, are now being treated with the same seriousness as floods and droughts.
Mumbai Climate Week 2026 will take place February 17-19, 2026.
Warning that extreme temperatures were fast emerging as one of the most significant threats to India’s economy, Vijay Kalantari, Chairman, World Trade Center- Mumbai said, “The GDP of India will go down by 2.5 per cent 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 was speaking as part of a roundtable, Urban Heat in India: Economic and Public Health Impacts, co-hosted by World Trade Centre and Climate Trends on February 16, 2026, that brought together representatives from sectors like energy; micro, small and medium enterprises; finance; textile; fast-moving consumer goods (FMCG); and insurance.
Industry leaders highlighted the impact on supply chains and labour-intensive sectors. Manish Daga, founder chief executive and President of the Cotton Farmer Producer Organisation Association, said the textile sector has one of the longest and most heat-exposed supply chains in India.
“High labour density raises fire and safety risks, and extreme heat directly affects worker safety on the shop floor. Women workers are disproportionately impacted, with consequences that can carry over to the next generation. This is why stronger compliance and workplace standards are not optional anymore,” he said.
The growing stress on supply chains and labour-intensive industries is also prompting a shift within the financial system, where heat was beginning to be viewed not merely as an environmental concern but as a material financial risk. Deepak Kumar, director general manager for Union Bank of India said that heat, alongside biodiversity and nature risks, was being treated as one of 13 climate hazards by the bank.
“Until now, risk assessments focused mainly on floods and droughts, but heat is clearly emerging as a material risk. We’re building a comprehensive climate risk system over the next 6-9 months, along with sector-wise vulnerability assessment tools,” Kumar said.
The Reserve Bank of India is also developing a broader climate risk framework in parallel.
The warnings come amid growing evidence of the long-term economic toll of rising temperatures.
Research has previously estimated how excessive heat could cost India 2.8 per cent and 8.7 per cent of its GDP by 2050 and 2100, respectively, if proper heat action plans were not developed. Reports have further warned that extreme heat could significantly reduce the outdoor working capacity of India’s labour force over the next three decades, placing economic growth at risk.
Experts stressed that mitigation must be matched with stronger financing mechanisms and inclusive adaptation strategies.
Aarti Khosla, founder and director for consultancy Climate Trends, who outlined key dimensions of rising heat and its economic implications, said greater discussion was needed on financial mechanisms and socialised solutions that reach 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.