x

Sign Up

Green bonds catching up fast in India, on way to sustainable development: ASSOCHAM

In sync with the rising global investor interest in sustainable development, India green bond issuance is expected to reach new milestones in 2022, following an exceptionally strong 2021 which saw financing of USD 6.11 billion through these instruments, in the first 11 months of the year, an ASSOCHAM study.

New Delhi, 17th May, 2022: In sync with the rising global investor interest in sustainable development, India green bond issuance is expected to reach new milestones in 2022, following an exceptionally strong 2021 which saw financing of USD 6.11 billion through these instruments, in the first 11 months of the year, an ASSOCHAM study has pointed out. ''2021 was the strongest year since green bonds from the country were first issued in 2015. India will need USD 10.103 trillion by 2070 to be carbon neutral, " the ASSOCHAM study stated, adding that the green bonds have emerged amongst the most prominent financial vehicles catering to climate action specifically for projects requiring long-term finances. It said long-term investors including pension and insurance funds now prefer bonds which invest in green assets. Worldwide, labelled green bond issuance amounted to USD 167.6 billion, led by the United States followed by PRC), France ,Germany and the Netherlands ''We expect bond markets in India to witness further deepening by inclusion in global indices and allowance to diversify investment opportunities,'' ASSOCHAM Secretary General Mr Deepak Sood said. He said India has been amongst the world champions to follow the path of environment-friendly development. As part of an integration effort of the country's financial priorities into measurable metrics, the Bombay Stock Exchange has launched two such indices: S&P BSE Greenex and the S&P BSE Carbonex. The Greenex comprises top 25 stocks having minimum carbon footprint along with market capitalization and turnover from the BSE 100. It assesses the energy efficiency of firms. The BSE Carbonex is a thematic index which measures companies ability to address climate change risk and opportunity. The index is based on the S&P BSE 100, with the constituent weights modified in accordance with the companies relative carbon performance as measured by the level of their greenhouse gas emissions and carbon policies. Product innovation in bond markets has helped in bridging the funding gap. ''We have seen a lot of vibrancy in several new structures like Infrastructure Investment Trusts (InvITs), Coobligor Structures, Covered Bonds, Hybrid Annuity Model (HAM), Sustainability Linked Bonds, Green Bonds, Partially Guaranteed Bonds, Masala Bonds and Foreign Currency Bonds'', the study noted. Overall, India's total bond markets of all types provided a capital of Rs 3.04 trillion during the last 16 months starting January21 to finance infrastructure assets. The strong characteristics of the underlying structures, strengthening regulatory and legal frameworks provide an additional impetus. Further deepening of the bonds markets in India would allow the investors to pump in money in line with their investment requirement for the likes of endowment funds, insurance, pension companies . This would also resolve the issues faced by the banks to free up their capital to reinvest in under construction projects. Overall, the Government and market regulator SEBI have been proactive in easing the InvIT route for investors. The last Budget had incorporated easing of InvITs/REITs guidelines. With InvIT's, small investors can take a small portion of the large Indian infrastructure pie. Since the units of InvITs are listed on the stock exchanges, they also provide liquidity to investors.

Day Image
Day Image Day Image