India and the Asian Development Bank (ADB) have signed a USD 500 million loan agreement aimed at supporting green and sustainable infrastructure projects that align with the country’s climate goals.
The agreement, signed on December 20, will see the ADB extend the loan, backed by a sovereign guarantee, to the India Infrastructure Finance Company Limited (IIFCL), as confirmed by a statement from the Union Finance Ministry. The loan agreement, titled Financing Environmentally Sustainable Growth in Infrastructure Project, was signed by Juhi Mukherjee, Joint Secretary at the Department of Economic Affairs, Ministry of Finance, on behalf of the Government of India, and Mio Oka, ADB’s Country Director.
Mio Oka emphasized that the ADB’s financial support will enable IIFCL to provide long-term capital for infrastructure projects focusing on connectivity and energy transition. The funding will also support sectors such as urban development, education, and healthcare, which have traditionally been underfunded.
In a statement, the Ministry of Finance highlighted that India’s commitment to achieving net-zero emissions requires substantial private capital investment. To meet this need, innovative financing platforms and risk-mitigation strategies will be essential to address sector-specific risks and market challenges. As a development finance institution, IIFCL is well-positioned to facilitate these investments.
In a separate agreement last week, the Indian government and ADB also signed a USD 350 million policy-based loan under the second subprogram of the Strengthening Multimodal and Integrated Logistics Ecosystem (SMILE) program. The Ministry of Commerce and Industry explained that this loan aims to boost India’s manufacturing sector and enhance the resilience of its supply chains.
The loan agreement was signed by the Department of Economic Affairs (DEA), Ministry of Finance; the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry; and the ADB.
The SMILE program is a policy-based loan designed to support comprehensive reforms in India’s logistics sector. The program is divided into two subprograms that aim to expand the manufacturing sector and strengthen supply chain resilience. It will also establish a robust policy framework to improve logistics efficiency by enhancing the institutional framework for multimodal logistics infrastructure at the national, state, and local levels.
The Ministry of Commerce and Industry also noted that the program will standardize warehousing and other logistics assets, encouraging greater private sector investment. This will help improve the efficiency of external trade logistics, promote low-emission logistics solutions, and adopt smart systems to further streamline the logistics sector.
The continued development of India’s logistics infrastructure is critical to boosting the competitiveness of its manufacturing sector. Through strategic policy reforms, infrastructure improvements, and digital integration, ongoing efforts are set to significantly enhance the logistics landscape.
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