Over the years, the Government of India has taken up several initiatives and implemented various policy changes to maintain a balance between environmental sustainability and economic growth. In this regard, India adopted an ambitious Nationally Determined Contribution (NDC) under the Paris Agreement in 2015. One of the key targets which was envisaged as a part of the NDCs was to significantly reduce the carbon intensity of the economy. In line with this, the Government of India, in the Union Budget 2022-23 had announced the issue of Sovereign Green Bonds (SGrBs), with an aim to mobilise resources for green infrastructure. The proceeds from the issue of SGrBs would be deployed in public sector projects, thereby contributing in reducing the overall carbon intensiveness.
Consequently, on 9 November 2022, the Department of Economic Affairs (DEA) released the draft Framework for Sovereign Green Bonds (the framework). It explains the obligations of the Government as a green bond issuer and clarifies that payments of principal and interests under this framework are not conditional on the performance of the eligible projects. Further, investors in bonds issued under this framework do not bear any project related risks.
To access the text of the framework, please click here