Enhancing India’s Readiness to Climate Finance

Enhancing India’s readiness to access and deliver international climate finance
projects/programmes in specific sectors – IDFC and IDBI for large infrastructure, IFC and
SIDBI for energy efficiency in industries, NABARD for agriculture, and IREDA for renewables).
Promote collaboration between DFIs and the private sector to capitalise on sector-specific
skills, knowledge and capacities for the development of bankable projects.
Allow DFIs to directly fund projects or to channel capital through other financial institutions
(e.g. Gramin banks, national banks and private sector institutions), in order to enhance the
geographic and sectoral reach of climate-related investment.
Undertake a detailed review of each National Mission where international climate finance or
national funds could be used more strategically to develop large programmes (e.g. NAMAs).
Design a training programme at the sub-national level for project developers, provincial and
local governments and other professionals engaged in climate-related projects to help them
develop a pipeline of bankable projects and attract funding.
Develop standardised processes/systems for disbursement of funds so that private sector
developers are able to access finance directly from DFIs.
Apply for GCF Readiness support, bilateral technical assistance, and use funds from the
national budget to enhance DFIs’ capacities to deliver climate finance and develop bankable
projects. Support could include project development, market analysis, technical evaluations,
use of new financing instruments, environmental & social due diligence, MRV, etc. Fourteen
countries 58 have already sent requests for readiness support and are being actively followed
up the GCF. Requests range from support to create strategic frameworks for engagement with
the fund, programme and pipeline development, identification of implementation arrangements
as well as requirements for accreditation of national implementing entities 59 .
Readiness Gap 5
Climate finance delivery institutions (e.g. DFIs) have limited ability to match finance needs with a
blend of climate finance sources and instruments.
In India, climate finance is delivered primarily through grants and concessional loans. Beyond these
conventional financing instruments, there is a lack of experience and capacity in using alternative
financing instruments to fund climate-related projects activities in line with NAPCC priority actions. 60
Recommendation #5
DFIs should develop the capacity to blend different sources and instruments (grant, loan, equity,
debt) of finance when allocating funds to implementing entities. This should include the use of
public funds to leverage private finance for climate-related activities.
Actions:
To improve the capacity of DFIs to deliver climate finance using new and innovating financing
instruments (including blending), India should:
Undertake a detailed study on best practices in linking private financial actors 61 with
investment types 62 (blending) across various mitigation sectors and activities to scale-up
climate finance.
58 Antigua and Barbuda, Belize, Cook Islands, Dominica, Eritrea, Ethiopia, Indonesia, Mali, Mauritius,
Mongolia, Namibia, Palau, São Tomé and Príncipe and Rwanda.
59 Green Climate Fund. Readiness and Preparatory Support Programme Update July 2014.
http://www.gcfund.org/fileadmin/00_customer/documents/Readiness/Readiness_Newsletter_July_2014_FI
NAL.pdf
60 See for example: Vivid Economics (2014). While the study does not go into extensive detail on different
financial instruments, it does highlight the fact that the use of conventional financial instruments has the
effect of limiting investment to a narrow group of sectors and project types, ultimately causing countries to
miss their climate change targets.
Ref: Ricardo-AEA/R/ED59216/Final Report
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