India to hold off on green bonds sale

India is likely to skip selling sovereign green bonds this fiscal year as investors demand higher yields despite their eco-friendly label, said a senior government official.

- 

The earlier plans to issue ₹15,000-16,000 crore in green bonds during the second half of FY24 have been put on hold.

“Green bonds haven’t provided any benefits yet. What is the point of issuing green bonds with so many conditions if it costs the same as other bonds," the person said. “The companies, which have claimed to want to invest in green bonds, are not willing to make sacrifices on the yield front. We should see some yield benefits for the issue of green bonds. But, this is not the case."

The sustainability-linked bond market has experienced a slowdown amid rising interest rates globally, leading to a decline in the issuance of debt for climate projects. The weakness in climate funding marks a shift from past years when governments and companies raised funds for green initiatives at attractive rates.