The $2 Trillion Opportunity

That Is The Minimum Amount That India Needs To Finance Its Green Push And Meet Its 2030 Emissions Target. Green Bonds Could Be A Big Help.

- Ashish Gupta And Prerna Lidhoo

Amazon founder JeffBezos calls India one of the fastest-growing markets in the world. While cut-throat competition is par for the course in ecommerce, here’s another humongous market that the environment-conscious entrepreneur could consider: Green bonds. And the competition’s not so intense. In fact, even if Bezos—currently the richest person in the world—invested his entire personal worth of more than $100 billion, there would be space for at least another 18 more similar investments in Indian green bonds.

Does this sound unbelievable? No, the numbers are not plucked out of thin air—according to figures we’ve culled from websites of government ministries—including the ministry of housing and urban development and the ministry of new and renewable energy—India needs at least $1,913.7 billion (Rs 120 lakh crore) to finance green infrastructure projects. And it’s open for business.

Before we break it down to what India needs the money for, it is worth considering how much the country spends on infrastructure. According to a Bank of America Merrill Lynch (BofAML) report, the country spends approximately $140 billion annually on infrastructure, growing at 15%-16% every year, of which 30%, or $40 billion, gets categorised as green infrastructure. A minuscule amount of that comes from green financing, including green bonds.

Confused? Let’s tackle what a green bond is. It is a fixed-income debt instrument with a fixed tenor and interest rate and is no different from a regular bond except in one respect: The issuer publicly states that it is raising capital to fund "green projects”, assets or business activities with environmental benefits. Funds can be raised from all hues of investors—financial institutions, sovereign wealth funds, multilateral agencies, private equity firms or even corporate entities.