Domestic Green Bond vs. International Green Bond Issuance in India
Green Bond Issuance in India: Domestic vs. International
India’s Journey in Green Bond Issuance 2
Domestic Green Bonds in India (2025 Scenario) 2
International Green Bonds by Indian Issuers 3
Policy Push & Government Initiatives in 2025 4
To truly scale up, India needs to: 4
Some key Difference Points on Domestic Green Bond and International Green Bond: 4
Introduction:
As the world intensifies its focus on sustainability and climate resilience, green finance has emerged as a crucial tool in driving environmental transformation. Among its instruments, green bonds have taken center stage—directing capital towards renewable energy, clean transport, energy efficiency, and other eco-friendly projects.
India, with its ambitious climate goals and rapidly growing economy, has become an important player in the global green bond market. In 2025, we will witness a significant shift and expansion in green bond issuance from Indian entities—both domestically and internationally.
"This write-up aims to present Domestic and International Green Bonds side by side, focusing on their key differences, challenges, and other relevant aspects."
What Are Green Bonds?
Green bonds are debt securities issued to raise funds specifically for environmentally sustainable projects. These bonds assure investors that the proceeds will be used only for initiatives such as solar and wind energy, climate-resilient infrastructure, or clean mobility.
India’s Journey in Green Bond Issuance
India entered the green bond market in 2015 when Yes Bank issued the country’s first green bond. Since then, both public and private sector entities have followed suit. As of 2025, India has issued an estimated $30–35 billion worth of green bonds, signaling steady growth but still far behind global leaders like China and the USA.
Key issues include:
Public sector units like IRFC, NTPC, REC, PFC
Private players like Adani Green, ReNew Power
The Government of India itself, through sovereign green bonds
Domestic Green Bonds in India (2025 Scenario)
Domestic green bonds are issued in Indian Rupees (INR) and are regulated primarily by the Securities and Exchange Board of India (SEBI). The 2023 SEBI framework on Green Debt Securities provided more clarity and confidence to issuers and investors alike.
Key Features:
INR-denominated
Lower currency risk for Indian investors
Issuers include banks, PSUs, and renewable energy companies
Mostly held by mutual funds, insurance companies, and banks
Advantages:
Easier regulatory compliance
Aligned with India’s energy transition goals
Potential tax incentives and policy benefits
Challenges:
Limited secondary market liquidity
Retail investor participation remains low
Green bonds sometimes priced higher than regular bonds
International Green Bonds by Indian Issuers
To tap global green capital, Indian issuers are also turning to international markets. These bonds are generally denominated in USD, EUR, or JPY, and are listed on international exchanges like London Stock Exchange (LSE) or Luxembourg Stock Exchange.
For example, in 2023, the Indian Railway Finance Corporation (IRFC) raised USD 1 billion through green bonds abroad.
Key Benefits:
Access to large global ESG-focused funds
Potential for lower borrowing costs (the “greenium” effect)
Boosts India’s sustainability brand globally
Key Risks:
Currency exchange fluctuations
Higher compliance and disclosure requirements
Regulatory challenges in repatriating funds
Policy Push & Government Initiatives in 2025
Union Budget 2025: ₹12,000 crore allocation through sovereign green bonds
RBI initiatives to include green finance in monetary frameworks
Development of an official India Green Taxonomy is underway
International support from World Bank, ADB, and IFC
These efforts aim to standardize disclosures, reduce greenwashing risks, and boost investor confidence.
The Road Ahead
As India races toward its climate targets—including net zero by 2070—the role of green finance cannot be overstated. Green bonds will continue to be a key pillar in funding the transition.
To truly scale up, India needs to:
Deepen its domestic green bond market
Broaden the investor base, including retail participation
Promote third-party verifiers and ESG rating systems
Align domestic taxonomy with global standards
Some key Difference Points on Domestic Green Bond and International Green Bond:
Example Highlights
Key Takeaways (2025)
Domestic ESG bond markets are rapidly maturing, aided by SEBI and RBI frameworks.
International markets remain attractive for large-scale dollar needs with tighter pricing.
India’s shift is visible: More PSUs and corporates are now opting for rupee green bonds, strengthening Bharat’s internal ESG capital markets.
International market gives lower interest rate
Conclusion
In 2025, green bonds from India are gaining momentum—both at home and abroad. While domestic issuance helps build local sustainability frameworks, international bonds connect India to the global green capital pool.
Striking the right balance between these two avenues will be key to financing a greener, cleaner future.
Comments
Post a Comment