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India is confronting a growing economic threat from rising urban heat as experts warn that accelerating temperatures in the country’s cities could shave off up to 2.5% of the nation’s gross domestic product if the issue remains unaddressed. Financial institutions and industry leaders raised the alarm during the Mumbai Climate Week 2026, held from February 17 to 19, with voices from banking, manufacturing and labour-intensive sectors highlighting heat as a serious economic risk. Rising temperatures are already affecting workers, supply chains and long-term investment outlooks, prompting calls for urgent reforms in urban planning and climate resilience.
Heat’s Toll on Workers and Industries
Industry representatives described how rising urban heat is affecting the workforce, particularly in sectors such as textiles and manufacturing that have high labour densities. In these environments, prolonged exposure to extreme temperatures is slowing productivity and putting worker health at risk. Female workers, in particular, are experiencing greater impacts, with direct consequences that can ripple across families and future generations.
Textile leaders also pointed to safety concerns on the shop floor as temperatures climbed. They stressed that stronger workplace standards and compliance measures are needed to safeguard employees and to ensure uninterrupted production. Without action, rising heat threatens not just immediate health but the longer economic stability of industries that depend on large pools of manual labour.
Financial Sector Reframes Heat as an Economic Risk
The dialogue at Mumbai Climate Week shifted significantly as heat moved from being seen solely as an environmental issue to being recognised as a material financial risk by major lenders. Representatives from large banks, including the Union Bank of India, explained that climate risk assessments are being expanded to treat rising heat with the same seriousness as other hazards, such as floods and droughts.
Financial institutions are now developing comprehensive frameworks to evaluate heat exposure across sectors and portfolios. These tools will help lenders and investors better understand where heat-related vulnerabilities lie and how they could influence defaults, insurance claims and long-term investment returns. The Reserve Bank of India is also working in parallel to broaden its climate risk framework to capture these emerging dynamics.
Rising Heat Imposes Broader Economic Costs
Experts at the event noted that India has already experienced research projecting how rising temperatures could weigh heavily on economic growth over time. A study by the Asian Development Bank suggests that by 2050 and 2100, heat could reduce GDP further if comprehensive heat action plans are not developed and implemented widely. These projections are bolstered by scientific findings showing that extreme heat can reduce outdoor working capacity and alter labour patterns in both urban and rural settings.
Speakers, including climate consultants, also emphasised that investing in climate resilience now could prevent much higher economic losses in the future. They highlighted studies showing that every dollar invested in resilience could generate up to 19 dollars in avoided damageslater if cities and industries take action now. Experts said this makes a strong economic case for prioritising adaptation alongside mitigation in policy and planning.
References:
Assessing the Costs of Climate Change and Adaptation in South Asia | Asian Development Bank
Banner image: Mumbai Climate Week Post on X
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