India continues to see increased traction in its ESG debt market space, with issuances for sustainability-linked bonds touching $15.6 billion so far this year as per Bloomberg data.
However, the overall volumes still lag behind major Asian players like China and Japan indicating headroom for further growth. In its effort to give an impetus, market regulator SEBI has proposed bolstering the infrastructure for such instruments.
SEBI’s consultation paper outlines bringing social bonds within the ambit as well as adding eligible asset-backed securities. Sustainability-linked and sustainable bonds may also be incorporated going ahead.
Significantly, independent reviews for all ESG debt issues have been recommended for greater transparency. Experts laud the move, terming it conducive for channelizing more fixed-income capital to eligible projects.
Currently, green bonds form the dominant category though the expansion aims to facilitate raising funds across a wider impact spectrum. This aligns with Prime Minister Narendra Modi‘s stress on green growth pathways.
It also gains significance with Chinese volumes slowing and dragging the global market trend lower in recent times as per Sustainable Fitch. A robust India framework could bolster overall Asian leadership and support in this critical sustainability financing space.
Stakeholder discussions will continue till September on finalizing SEBI’s roadmap to spur the country’s ESG debt market toward its full potential.
