China and India, world's most populated countries, have emerged as an investment pool for the renewable energy sector, Moody's Investor Services said in a report on Thursday.

The countries which are ranked as A1 stable and Baa2 stable respectively by the rating agency, have been highly dependent on fossil fuels to meet its energy needs and investment in the clean energy sector will be profitable in the long run.

“However, there remain the hurdles of an evolving regulatory framework, land acquisition, leverage risks, and access to funding capacities. In the near term, these hurdles will limit the credit benefits of the shift to renewable energy for both sovereigns,” Moody's said.

The investment will boost the countries' growth potential and improve energy securities, the rating agency said adding that it expects the renewable energy capacity to increase by 34% and 40% of total installed power capacity by 2020 and 2030 for China and India respectively.

China and India have increased its investing capacity to implement renewable energy across the sectors as well as reducing the countries carbon emission targets.

Towards the end of 2017, both the countries faced with smog related issues, with China shutting down its coal and iron ore production as well as importing the same from other countries.

First Published:Mar 8, 2018 11:12 AM IST