On 9 November, the union minister for finance Nirmala Sitharaman, approved the final sovereign green bonds framework for India to boost India’s efforts towards energy transition.
“This approval will solidify India’s commitment towards its Nationally Determined Contribution targets, adopted under the Paris Agreement, and help attract global and domestic investments in eligible green projects," said IEEFA said in a statement.
Shantanu Srivastava, Energy Finance Analyst, IEEFA said that the green bond framework for India’s maiden sovereign green bond issue looks robust, having several hits, amid a few misses too.
“Overall, the framework is comprehensive and gives sufficient details on all the core components. The framework mirrors the eligible project categories given by the International Capital Market Association’s (ICMA) Green Bond Principles (GBP), which lays down best practices in issuing such bonds," he said.
“The broad ambit of eligible projects means that the government is planning to finance green infrastructure besides renewable energy projects, which have been the primary assets funded through these instruments in India."
Srivastava added that the framework has received a ‘Medium Green’ and a ‘Good’ governance score from a second-party provider, CICERO Shades of Green, which will help it gain credibility from global investors.
Christina Ng, Research & Stakeholder Engagement Leader, Debt Markets, IEEFA said, “An important aspect is that the payment of principal and interest on the green bonds will not depend on the performance of the eligible projects. This makes sure that investors will not bear any project-related risks.“
She added that projects besides renewable energy, which have long-term cash flow visibility, can be funded through the proceeds.
