Japan’s JICA looks to step up investments in private sector projects in India
2 min read 19 Oct 2022, 01:06 AM ISTPotential investments in private-sector projects exist in transport, water and sanitation
PremiumNEW DELHI : The Japan International Cooperation Agency (JICA) plans to increase its participation in private-sector projects in India. Japan’s development agency is looking to boost its global investments in private-sector projects to $15 billion in the coming years, with a focus on Indian projects.
Funding private sector projects will allow Japan to contribute to India’s infrastructure development efforts without adding to the Indian government’s debt levels, Nakazawa Keiichiro, senior vice-president at JICA, said. The development agency also funds sovereign projects executed by the Indian government.
Investments in private sector enterprises, according to a senior Japanese official, are “estimated around $400-500 million in India comprising six projects". The projects are diverse but tend to focus on social impact. Examples include a 10 billion yen ($67 million) loan to Tata Cleantech Capital for climate change management. This follows a now-established trend of substantial Japanese investments in India’s alternative and renewable energy industry.
The official said potential investments in private-sector projects exist in areas like transport, water and sanitation, where the sectors are already playing an important role. “We are ready to finance companies that can bring about a good impact on the Indian economy. JICA could work on both debt and equity in such projects, with equity support not extending beyond 49%," the official said.
“Investments in technologies like green hydrogen are something we are definitely looking at," said Nakazawa. In addition, carbon capture and other emerging green technologies will remain a matter of interest for JICA.
A $75 million loan has also been made to PNB Housing Finance Ltd and aims to improve affordable housing facilities for low-income households. Other projects have focused on women empowerment, MSMEs and financial inclusion. Besides these, JICA has also put an estimated $30 million into investment funds. A $4 million investment has found its way to Rebright partners, which will look to invest in digital transformation startups. A sum of $26 million was invested in the SVL-SME fund, run by SBICAPS, which will fund MSMEs focused on tackling environmental and social issues.
Japan’s official development agency is also bullish on India’s growth prospects in the years to come. In FY21, the organization committed loans to the tune of $2.3 billion in India. This marked a decline from the commitments made in FY19 that totalled $3.6 billion. Despite the gloomy global economic outlook, JICA believes India to be a bright spot when compared to other economies, and its loan commitment this year would also be at $3 billion. This comes just months after Japanese Prime Minister Fumio Kishida pledged to invest $42 billion in India over five years. According to Nakazawa, JICA is eager to support India as it continues to grow.
“India is a very important country not only for Japan but also for the world", he said.
