Green finance has emerged as an important instrument for promoting sustainable economic development in emerging economies by channelling financial resources toward environmentally sustainable and climate-resilient investments. This paper examines the role of green finance in supporting sustainable economic development with special reference to India, one of the fastest-growing major economies facing significant climate challenges. The study adopts a descriptive and analytical research design based on secondary data drawn from government reports, international financial institutions, and sustainability publications. It reviews recent trends, major instruments, and policy frameworks related to green finance, including green bonds, green loans, sustainability-linked bonds, and blended finance. The analysis shows that India’s green finance ecosystem has expanded rapidly, with cumulative GSS+ debt reaching about USD 55.9 billion by 2024 and strong growth in sovereign and corporate green bond issuances. Green finance has supported renewable energy expansion, with non-fossil fuel capacity exceeding 190 GW, and has contributed to significant emission reductions, pollution control, and resource efficiency. It has also generated employment and supported climate-resilient infrastructure. However, a large financing gap persists between current flows and estimated investment needs for achieving climate targets. Structural challenges such as limited market depth, green washing risks, and institutional capacity constraints remain. The paper concludes that stronger regulatory clarity, standardized taxonomies, fiscal incentives, and public–private partnerships are necessary to scale up green finance and achieve inclusive, low-carbon, and resilient development.