The article argues that India needs a green taxonomy to address two major issues in sustainable finance markets: capital not reaching needed assets and greenwashing. With banks holding US$2.5 trillion in assets and insurance companies managing Rs49 trillion (US$636 billion), India’s financial institutions need clear guidelines to assess climate risks and align investments with sustainability goals. Unlike the EU, China, Malaysia, Mongolia, and South Africa, India’s taxonomy remains in draft stage. The authors argue that a taxonomy would help banks evaluate loan proceeds, assess climate risks in lending portfolios, and potentially offer better terms for green activities. For insurers, it would help in pricing climate risks in underwriting and understanding potential impacts on their investment portfolios, particularly important given that India’s largest insurer LIC has 16% of equity investments in energy companies susceptible to transition risks.