Green India Bonds

India came out with its first ever green India bond, under Prime Minister Modi’s leadership. Mr. Modi has been pushing the country hard on the solar path lately. The country has set up an ambitious target to install 100 GW of solar power by 2022. India was also granted support of $160 billion from the US President Obama, during his last visit to India. The government at the center is highly pro-renewable energy, as is evident by the restored wind-farm tax benefits and several other incentives for solar energy.

Under the strong leadership of Modi, the country has come up with its brand new Green India Bond at 2.75%. The EXIM bank of India has issued the green bonds worth $500 million. This will expand India’s green bond market to $1.5 billion soon. Prior to this, the EXIM bank has already launched two more of such U.S. currency green notes in Asia. The first was 1.75% notes issued by EXIM bank Korea in 2013 and the second was 2.125% securities in Taiwan.

Green Bonds are gaining popularity worldwide lately. It is a great way for investors to put in their money in the expanding renewable energy space, which is gaining a lot of traction globally.

“Green bonds will be a mega trend which we have already seen in Europe,” said Xuanlai He, Singapore-based Asia credit research analyst at Commerzbank.

Source: Bloomberg

However given the history of scams and poor management in India, it remains to be seen whether international players would be comfortable putting their money here when the same options are available outside. I think some amount of government support and incentives might be needed to assure the investors, to invest in the Indian bonds.