Financing Sustainability: The Role of Green Bonds in India's Low-Carbon Transition

Abstract

Green bonds have emerged as a pivotal mechanism in global climate finance, enabling the mobilisation of large-scale investments for environmentally aligned projects. This paper investigates the development, structure, pricing dynamics, regulatory ecosystem, and international comparisons relevant to India’s green bond market from 2020 to 2025. It evaluates the presence of “greenium” in Indian corporate and sovereign bonds, compares the performance of ten major green and conventional bonds, and analyses SEBI’s evolving green debt regulations. Drawing insights from interviews with key stakeholders—including regulators, issuers, and institutional investors—the paper highlights persistent structural barriers such as verification costs, absence of a national green taxonomy, and limited thematic diversification. Comparative analysis with Brazil, China, and Indonesia reveals both opportunities and gaps in India’s current approach. Concluding with actionable recommendations, the study underscores the need for coordinated institutional reform, investor confidence-building measures, and expanded green financial innovation to strengthen India’s climate finance ecosystem and enable a resilient low-carbon transition.