Green Bonds In India: Financing Sustainability For Economic And Environmental Growth
- IJLLR Journal
- Feb 28
- 2 min read
Aabis Shelfy, LLM (Corporate and Commercial Law), Christ Deemed to be University, Bangalore
ABSTRACT
Green bonds have emerged as a transformative financial instrument, facilitating investments in projects that promote environmental sustainability while ensuring economic stability. In India, the green bond market has witnessed remarkable growth, fueled by proactive government policies, evolving regulatory frameworks, and a surge in investor interest. These bonds serve as a vital source of capital for funding initiatives that focus on renewable energy, energy efficiency, sustainable urban development, waste and water management, and climate adaptation strategies. By channeling investments into such projects, green bonds align with India's commitment to international climate goals, including the Paris Agreement and the nation’s ambitious target of achieving net-zero emissions by 2070.
The increasing issuance of green bonds in India has played a pivotal role in attracting both domestic and international investors who seek financial returns alongside environmental impact. The Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) have taken significant steps to establish guidelines and frameworks that ensure transparency, accountability, and efficient fund allocation. These regulatory measures aim to prevent greenwashing and maintain investor confidence by ensuring that funds raised through green bonds are genuinely deployed for environmentally beneficial projects. Additionally, initiatives such as the Sovereign Green Bond program have further strengthened India’s position in the global green finance ecosystem, allowing the government to raise capital for sustainable infrastructure and climate-resilient development.
Despite the growing momentum, several challenges persist in the expansion of India's green bond market. The absence of standardized green finance regulations, concerns over the cost of issuing green bonds compared to conventional bonds, and the limited awareness among smaller investors and issuers pose significant hurdles. Furthermore, the need for enhanced verification mechanisms and third-party certifications remains crucial to ensuring the credibility and impact of green bond-funded projects. Addressing these challenges requires a multi-stakeholder approach involving policymakers, financial institutions, and international bodies to create a more cohesive and robust green finance ecosystem.
