Corporate green bond sales in India has already got going, with companies issuing more than $26 billion of debt, mostly for renewable energy projects. Image Credit: Shutterstock

Mumbai: India plans to issue Rs160 billion ($2 billion) of sovereign green bonds in the fiscal year ending March, as it seeks cheaper funding to meet renewable energy targets.

The government will provide details of the planned green debt issuance for the year later, according to a statement from the nation’s finance ministry on the second half borrowing plan released on Thursday.

India has lagged in a global rush for green debt in recent years, with others in Asia, including Singapore, Indonesia, and South Korea, already having made their debuts. Officials have said they will seek a significant “greenium” , the premium investors often have to pay for such bonds, to lower the nation’s borrowing costs for funding environmental projects.

That may prove challenging to achieve given the absence of domestic green debt funds, while foreign investors will face significant exchange-rate risks. The rupee has fallen nearly 10 per cent so far this year.

“The much-awaited Indian debut sovereign green bond is certainly a way to give the required fillip to the local green bond market creation and set a benchmark by adhering to international best practice,” said Neha Kumar, head of the India Program at Climate Bonds Initiative.