Given GIFT-IFSC’s role as a gateway connecting India to the global economy, a key challenge is creating an enabling framework for transition finance in a way that attracts international investors while also considering India’s socio-economic realities.
The Expert Committee on Climate Finance has submitted its first report on Transition Finance to K. Rajaraman, the Chairperson of the International Financial Services Centres Authority (IFSCA) on Monday.
The Expert Committee on Climate Finance was constituted by IFSCA to provide a roadmap for IFSCA to develop a climate finance ecosystem and instruments with a special focus on transition finance as well as to provide recommendations on establishing a global hub for climate financing.
The committee includes experts across policy think tanks, standard setters, consultants, industry, and global financial institutions.
The Report on Transition Finance emphasises the role of transition finance in driving investments towards hard-to-abate sectors such as steel, cement, shipping, fertilisers etc. which are crucial for economic growth of India and other developing nations. The report offers strategic recommendations to IFSCA and policy makers by exploring global best practices and regulatory landscapes, to enhance the role of GIFT-IFSC as a gateway for attracting international climate capital flows in order to achieve India’s ambitious goal of achieving net-zero by 2070.
Given GIFT-IFSC’s role as a gateway connecting India to the global economy, a key challenge is creating an enabling framework for transition finance in a way that attracts international investors while also considering India’s socio-economic realities.
The report proposes various alternative approaches for IFSCA to consider, aiming to support India’s journey towards net-zero emissions by 2070.
The report has also delved into policy and regulatory levers in order to increase the mobilization of transition finance through financial instruments. It recognises the need for innovation not just in debt and equity instruments, but also in risk mitigation tools like insurance and guarantees.
The report says that transitioning to a low-carbon economy essentially involves technologies that come in the form of hard physical assets. “In some instances, importing such technologies may become a necessity, while in others, India can play an important role as an exporter of certain technologies.”
