India and ADB Boost Sustainable Infrastructure with $500 Million Agreement

India and the Asian Development Bank (ADB) have signed a $500 million loan agreement to enhance green infrastructure projects, bolstering the nation's climate commitments. ADB's financial support aims to advance sectors like urban projects and energy transition. Additionally, a $350 million loan under the SMILE program will improve logistics efficiency.

India and the Asian Development Bank (ADB) have inked a significant $500 million loan agreement designed to support green and sustainable infrastructure developments, in line with the nation's climate goals. The deal, finalized on December 20, involves a sovereign-backed loan to the India Infrastructure Finance Company Limited (IIFCL), as disclosed by the Union Finance Ministry. Officials signing the Financing Environmentally Sustainable Growth in Infrastructure Project included Juhi Mukherjee, Joint Secretary, Department of Economic Affairs, Ministry of Finance, and Mio Oka, ADB's Country Director.

Commenting on the initiative, ADB's Mio Oka noted, "ADB financing will empower IIFCL to furnish long-term capital for crucial infrastructure projects targeting connectivity and energy transition, along with underfunded areas such as urban initiatives, education, and healthcare." The Ministry of Finance's press release emphasized that achieving net-zero targets demands substantial private capital investment, which requires novel financial strategies and risk mitigation tools to overcome inherent sector risks and market disparities. As a strategic development finance institution, IIFCL is deemed capable of fulfilling these demands.

Just last week, the Indian government, along with the ADB, agreed on a $350 million policy-based loan as part of the second subprogram of the Strengthening Multimodal and Integrated Logistics Ecosystem (SMILE) program. According to an official statement by the Ministry of Commerce and Industry, this policy-based loan seeks to broaden India's manufacturing sector and reinforce its supply chain resilience. The agreement involved representatives from the Department of Economic Affairs, Ministry of Finance, and the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, on one side, and ADB on the other.

The SMILE program represents a programmatic policy-based loan (PBL) initiative to back the government's comprehensive reforms in India's logistics sector. This two-part program is intended to expand the manufacturing sector and fortify supply chain resilience, setting the groundwork for enhanced logistics efficiency by fortifying the institutional framework for multimodal logistics infrastructure development on national, state, and city levels.

The ministry highlighted that this initiative would also standardize warehousing and other logistics assets to bolster supply chains and incentivize increased private sector investment, thereby enhancing efficiencies in external trade logistics and embracing smart systems for sustainable, low-emission logistics operations. These critical reforms, spanning strategic policy changes, infrastructure development, and digital integration, are set to transform the logistics landscape, significantly boosting the competitiveness of India's manufacturing sector. (ANI)

(With inputs from agencies.)