ADB Approves $500M Loan to Bolster India's Sustainable Infrastructure Development

IIFCL will use the funds to provide long-term capital to under-resourced sectors and anchor investments to attract private sector participation.

The Asian Development Bank (ADB) has approved a $500 million loan to support India’s robust economic growth by promoting environmentally sustainable and resilient infrastructure. This initiative aims to address the critical climate challenges facing the country while fostering inclusive and sustainable development.

“India’s economy is among the fastest-growing in the world. Robust infrastructure that aligns with the country’s climate commitments is critical to sustaining this growth,” said Sanjeev Kaushik, ADB’s Principal Finance Sector Specialist. “ADB is committed to strengthening its partnership with the government to ensure that India’s infrastructure development is both inclusive and sustainable.”

Addressing the Climate Finance Gap

India is one of the most climate-vulnerable economies globally, regularly confronting hazards like floods, droughts, and cyclones. These challenges demand infrastructure designed to withstand and mitigate climate risks. However, the country faces a massive $1 trillion climate financing gap, which public resources alone cannot cover.

The ADB’s loan, backed by a sovereign guarantee, will be extended to the India Infrastructure Finance Company Limited (IIFCL). This funding aims to advance critical infrastructure projects with a focus on connectivity, energy transition, urban development, education, and healthcare.

Driving Sustainable Development

IIFCL will use the funds to provide long-term capital to under-resourced sectors and anchor investments to attract private sector participation. By playing the role of a government-backed investor, IIFCL can create a consortium of public and private lenders to bridge the financing gap and encourage greater private sector engagement in sustainable infrastructure.

Capacity Building for Green Practices

The initiative will also strengthen IIFCL’s institutional capacity to integrate green and best practices into infrastructure projects. A dedicated sustainability unit will be established within IIFCL, alongside an environmental sustainability framework and scoring methodology to evaluate the sustainability rating of projects.

This comprehensive approach ensures that the projects funded under the initiative adhere to global environmental and social governance (ESG) standards, aligning with India’s commitment to the Paris Agreement and its ambitious renewable energy targets.

Long-term Impact

The Financing Environmentally Sustainable Growth in Infrastructure Project is expected to catalyze a transformational shift in India’s infrastructure development paradigm by fostering projects that are both climate-resilient and socially inclusive. It will contribute to the government’s goals of achieving net-zero emissions by 2070 and addressing critical gaps in sectors such as urban infrastructure, healthcare, and education.

This partnership marks a significant step forward in addressing the dual challenge of climate resilience and economic growth, setting a benchmark for regional and global infrastructure development initiatives.