Green bonds are a type of debt instrument issued by governments, corporations, and multilateral institutions to raise funds for projects aimed at reducing carbon emissions and enhancing climate resilience. The primary appeal of these bonds lies in their ability to provide lower borrowing costs, commonly referred to as the greenium—a premium that enables issuers to secure funds at more favourable rates than traditional bonds.

Investors in green bonds typically seek stable, long-term returns and often have specific mandates to allocate a portion of their portfolio to environmentally sustainable investments. Despite these advantages, green bonds still represent a relatively small fraction of global debt markets, and their growth hinges on improved reporting practices and investor incentives.

India’s Push for Sovereign Green Bonds

In 2022, the Indian government introduced a framework for issuing sovereign green bonds (SGrBs) to support the country’s transition towards a low-carbon economy. Under this framework, green projects include those aimed at improving energy efficiency, promoting climate resilience, and preserving ecosystems.

Since the launch of SGrBs in the 2022-23 financial year, India has issued these bonds eight times, raising nearly ₹53,000 crore. The proceeds have primarily funded the production of energy-efficient electric locomotives, metro rail projects, renewable energy initiatives, and afforestation under the National Mission for a Green India.

For 2024-25, the revised budget allocations for SGrB-funded projects include:

• ₹12,600 crore for manufacturing electric locomotives
• ₹8,000 crore for metro projects
• ₹4,607 crore for renewable energy initiatives, including the National Green Hydrogen Mission
• ₹124 crore for afforestation projects

The Challenge of Weak Investor Demand

Despite the potential benefits of SGrBs, India has struggled to generate strong investor interest, limiting the ability to secure a meaningful greenium. While global green bond markets see greeniums in the range of 7–8 basis points, Indian SGrBs often achieve just 2–3 basis points, making them a less attractive funding option.

A major hurdle is liquidity. Small issue sizes and the tendency of investors to hold these bonds until maturity have stifled secondary market trading, reducing their appeal. Furthermore, India lacks a strong ecosystem of social impact funds and responsible investment mandates that would otherwise drive demand for green bonds.

Even efforts to ease rules for foreign investors have not led to significant improvements, with auctions witnessing limited participation and a portion of these bonds devolving to primary dealers.

The Impact of Funding Shortfalls

The lower-than-expected demand for SGrBs has had tangible consequences. The government’s initial funding requirement from these bonds for 2024-25 stood at ₹32,061 crore. However, due to investor reluctance and higher yield expectations, the revised estimate has now been lowered to ₹25,298 crore.

This shortfall has forced the government to scale back allocations for critical green projects. Notably, funding for grid-scale solar initiatives has been slashed from ₹10,000 crore to just ₹1,300 crore, highlighting the challenge of relying solely on SGrBs to finance India’s green transition.

Potential Solutions to Boost Green Bond Demand

Addressing the limitations of SGrBs requires a multi-pronged approach. According to a recent World Bank report, emerging market sovereign issuers tend to favour a blend of green and social projects in their bond structures rather than exclusively issuing green bonds.

In this context, India could consider issuing sustainability bonds, which combine green projects with social impact initiatives. Such an approach may attract a broader base of investors, particularly those with a dual focus on environmental and social development goals.

Additionally, enhancing market liquidity through larger issue sizes, improving transparency in reporting green project outcomes, and developing a stronger ecosystem for responsible investing could significantly bolster demand.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

The Indian government is gearing up to invite applications under the Scheme for the Promotion of Manufacturing Electric Cars in India, which aims to attract global original equipment manufacturers (OEMs) by offering a 15% concessional import duty, significantly lower than the existing 70% rate.

Announced in March last year, the scheme has undergone extensive consultations with industry stakeholders. The Ministry of Heavy Industries, responsible for overseeing the initiative, has now drafted implementation guidelines, which are open for feedback.

According to a news report, the government is likely to begin accepting applications as early as late March or early April.

Eligibility and Investment Criteria

Under the proposed guidelines, both greenfield and brownfield investments will qualify for the scheme. However, to participate, companies must commit a minimum investment of $500 million (approximately ₹4,150 crore), regardless of whether they set up new facilities or expand existing ones.

A portion of this investment—5%—can be allocated towards charging infrastructure, ensuring that the ecosystem for electric vehicles (EVs) develops alongside manufacturing capabilities.

Revenue Targets and Compliance Requirements

Participating companies must meet specific revenue milestones:

• ₹5,000 crore by the 4th year of operations
• ₹7,500 crore by the 5th year of operations

Failing to meet these benchmarks could result in penalties ranging from 1% to 3% of the revenue shortfall. To oversee implementation, an inter-ministerial sanctioning committee will be established to monitor compliance and grant approvals.

Tesla’s Participation Remains Uncertain

According to a news report, Tesla has not taken part in recent stakeholder discussions regarding the scheme. While the government has received expressions of interest from multiple global and domestic OEMs, Tesla remains absent from these discussions.

That said, with the scheme set to open soon, the government remains optimistic that Tesla, along with other global automakers, may still apply.

Import Duty Concessions and Domestic Manufacturing

The scheme also defines eligibility for duty concessions on imported vehicles. Any participating OEM can apply for lower import duties on cars priced at $35,000 (₹30 lakh) or more (Cost, Insurance, and Freight – CIF value).

If approved, the company can import up to 8,000 cars annually at a reduced 15% duty rate. However, this benefit comes with a key requirement: the company must commence local manufacturing within 3 years and achieve a domestic value addition (DVA) of 25% within this timeframe. The DVA must increase to 50% by the 5th year of operation.

Impact on Electric Car Pricing in India

As per estimates, if a carmaker secures approval under this scheme, pricing for imported electric vehicles could become more competitive:

• A $35,000 (₹30 lakh) imported EV would cost around ₹36 lakh after factoring in concessional duties and a 5% GST rate.
• A $50,000 (₹42 lakh) imported EV would cost approximately ₹52 lakh under the same conditions.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

India is exploring a multi-sector bilateral trade agreement with the United States amidst growing global trade tensions. The move comes as the US, under former President Donald Trump’s leadership, sought to impose reciprocal tariffs, citing trade imbalances.

According to reports, India’s tariff structure is shaped by its lower per capita income relative to developed nations, existing manufacturing capabilities, and competitive pressures from neighbouring economies with surplus export capacity.

US Trade Actions: Addressing Deficits and Fairness Concerns

Reports indicate that the US has been taking measures to address its trade deficit, citing unfair trade practices and the need to revitalise domestic industries. By imposing tariffs, the US aims to make foreign goods costlier, thus incentivising local production. However, such actions may also lead to higher prices for American consumers.

The approach has sparked debates about the balance between economic protectionism and consumer affordability, with experts cautioning against potential negative repercussions.

India’s Tariffs: Justified or Trade Barriers?

According to a news report, most of India’s tariffs on American imports are reasonable and necessary to support domestic economic conditions. While critics argue that such measures act as trade barriers, proponents highlight that India’s tariff policies reflect its developmental stage rather than an attempt to restrict global trade.

Trade diversion, a natural market phenomenon, was also addressed, with sources indicating that India shifting crude oil imports from Russia to the US would not be a cause for concern.

Country-Specific Trade Probes and Uncertainty

With the US conducting country-specific investigations into its trade deficits, pinpointing the precise impact of such policies remains challenging. Reports indicate that these investigations could reshape trade dynamics but may not yield clear-cut solutions.

As India and the US navigate their trade relationship, the outcome of negotiations and policy shifts will likely have far-reaching implications for global trade and economic diplomacy.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

As per news reports, trade barriers, whether tariff-based or non-tariff, influence global commerce. However, according to a news report, non-tariff barriers impact trade 2.5 times more than tariffs, making them a crucial aspect of trade negotiations. These barriers include regulatory standards, licensing requirements, import quotas, and complex certification procedures, all of which add to the cost and time of trading goods and services across borders.

India’s Trade Strategy with the US

With India aiming for a multi-sector bilateral trade agreement with the US, the focus is on increasing industrial imports from the US while enhancing labour-intensive exports from India. According to reports, India plans to quantify the impact of non-tariff barriers in its trade discussions and will also ensure the protection of domestic interests in key sectors such as dairy and agriculture.

Consultations and Negotiation Strategies

To devise an effective negotiation strategy, the Indian government is engaging with various sectors, including pharmaceuticals, to gather industry feedback. Reports indicate that India is also evaluating the global impact of key international regulations such as:

• European Union Deforestation Regulation (EUDR) – A regulation that could affect Indian exports related to agriculture and forestry.
• EU Carbon Tax – A move that might impact carbon-intensive industries and exports.
• Rupee Devaluation and Wage Suppression – Factors influencing India’s competitive edge in global trade.
• Evergreening of Patents – A significant concern for India’s pharmaceutical industry, as it affects generic drug manufacturing.

Sectoral Meetings and Auto Tariff Revisions

The Indian government has already extended lower auto tariffs under the Scheme for Promotion of Manufacturing Electric Cars in India, aiming to attract investment in the electric vehicle sector. Additionally, sectoral meetings are expected to be conducted in the coming days to streamline trade discussions and address key concerns across industries.

Awaiting Bilateral Trade Discussions

As India awaits confirmation of all government appointments by the Trump administration, government sources indicate that bilateral discussions will soon commence at the trade ministry level. Reports highlight that, so far, only a limited number of concessions have been granted from the existing 12,000-odd tariff lines, and both countries are yet to finalise the structure of a potential trade deal.

Generalised System of Preferences (GSP) Status

According to reports, the reinstatement of the Generalised System of Preferences (GSP), a key trade benefit for developing countries, remains uncertain. The programme is currently awaiting reauthorisation by the US Congress, making its restoration contingent on legislative approval.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

The Indian government has issued an order to block 119 apps available on the Google Play Store, with a majority linked to developers in China and Hong Kong. According to data disclosed by Google on the Lumen Database, a Harvard University-operated platform that tracks content removal requests, these apps primarily include video and voice chat platforms.

Implementation Status: Only 15 Apps Blocked So Far

Despite the directive, only 15 of the 119 apps have been withheld in India so far, while the rest remain available for download as of February 20, 2025, according to reports. A smaller number of affected apps also originate from countries such as Singapore, the United States, the United Kingdom, and Australia.

Legal Basis: Section 69A of the IT Act

The blocking order has been issued under Section 69A of the Information Technology Act, which grants the Indian government the power to restrict public access to online content in the interest of national security, sovereignty, or public order. This legal provision has previously been used to block Chinese apps, particularly following geopolitical tensions between India and China.

Response from Affected App Developers

According to reports, some developers of the affected apps were informed by Google about the blocking order. Many of these developers have expressed willingness to cooperate with the Indian government to resolve the issue and regain access to the Indian market.

Google’s Disclosure on Lumen Database

Details of the Ministry of Electronics and Information Technology’s (MeitY) order emerged through Google’s disclosure on the Lumen Database. The disclosure, which was initially published on February 18, 2025, has since been removed. However, Google has not clarified whether the delay in enforcing the ban on the remaining apps is due to technical or procedural reasons.

Uncertainty Over Complete Enforcement

With only 15 out of 119 apps currently inaccessible in India, questions remain about how and when the remaining applications will be blocked. Google’s disclosure did not specify a timeline for enforcement, leaving uncertainty over the complete implementation of the directive.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.