India’s first-ever green bonds will focus on financing solar power projects, followed by wind and small hydro projects, as Asia’s third-largest economy tries to tap into the domestic debt market to finance its own projects.
The government said that proceeds from the green bonds would not be used to finance hydropower plants of more than 25 MW, nuclear projects and any biomass-based electricity generation with biomass from protected areas as part of the green bonds published on Wednesday.
Finance Minister Nirmala Sitharaman announced the sovereign green bond issuance plan in the 2022/2023 budget as part of the global market borrowing to use the funds to build green infrastructure.
The government aims to issue 160 billion rupees ($1.93 billion) of such bonds between October and March.
A Green Finance Task Force led by Chief Economic Advisor V Anantha Nageswaran will select public sector projects for green finance from those submitted by ministries
The committee will be guided by environmental specialists and representatives of the Ministry of Environment, Forests and Climate Change in choosing the projects, the government said.
The committee will identify new projects to be financed by green bonds each year.
The panel will ensure that the proceeds of the bonds are allocated within 24 months from the date of issue.
The Indian government had sought help with its green bond framework from the World Bank and CICERO Shades of Green. This Danish company helps with environmental assessments on green bond frameworks.