(Japan Bank for International Cooperation and Indian stakeholders celebrate agreement on JBID’s largest green loan ever to India. (Courtesy JBID website)
In a significant move to bolster India’s renewable energy sector, the Japan Bank for International Cooperation (JBIC) has extended its largest-ever green financing loan to India’s state-owned Power Finance Corporation (PFC). The agreement, signed on January 16, 2025, provides a long-term (20-year) loan amounting to ¥120 billion Japanese yen (approximately $770 million USD).
Details of the Agreement
Under this arrangement, JBIC will directly finance ¥72 billion ($462 million USD), with the remaining funds sourced from commercial banks. The loan is part of JBIC’s ‘Global action for Reconciling Economic growth and Environmental preservation’ (GREEN) initiative, aiming to support projects that harmonize economic development with environmental sustainability.
Strategic Objectives
The infusion of capital is designated for financing renewable energy projects across India. This aligns with India’s strategic shift towards non-fossil-fuel-based energy sources, underscoring the nation’s commitment to sustainable development and reducing its carbon footprint.
Strengthening Bilateral Ties
Kazunori Ogawa, Senior Managing Director of JBIC, highlighted the significance of this credit line, noting that it is four times larger than previous agreements in 2018 and 2022. He emphasized that enhanced cooperation with India’s PFC not only advances environmental goals but also fortifies the broader bilateral relationship between Japan and India.
PFC’s Role in India’s Energy Landscape
Established in 1986 under India’s Ministry of Power, PFC has evolved into a pivotal entity in the country’s energy sector, commanding approximately a 20% market share. Its collaboration with JBIC is anticipated to accelerate India’s transition to renewable energy, contributing to national and global environmental objectives.
Broader Collaborative Efforts
This agreement is part of a series of collaborative initiatives between Japan and India in the green energy sector. Notably, a joint venture between Sumitomo Corporation and New Delhi-based AMPIN Energy Transition aims to supply renewable energy through power purchase agreements with commercial and industrial clients. Additionally, India’s Ministry of New and Renewable Energy has announced a significant offtake agreement to export green ammonia to Japan, involving key players such as Sembcorp Industries, Sojitz Corporation, Kyushu Electric Power Co, and Nippon Yusen Kaisha (NYK) Line.
Vision 2025: A Milestone in India-Japan Relations
The year 2025 marks a decade since the establishment of the “Special Strategic and Global Partnership” under the “India and Japan Vision 2025” framework. Over the past ten years, both nations have witnessed substantial convergence on political, economic, and security concerns. The evolving strategic landscape of the Indo-Pacific region has further elevated the importance of this bilateral relationship.
Conclusion
The landmark green financing agreement between JBIC and PFC not only underscores a shared commitment to environmental sustainability but also signifies a deepening of economic and strategic ties between Japan and India. As both nations navigate the complexities of the modern global landscape, such partnerships are poised to play a crucial role in shaping a sustainable and prosperous future.
Source: https://japan-forward.com/jbic-inks-largest-green-financing-deal-with-india/
