Japan’s JICA plans to increase investment in private sector projects in India


NEW DELHI : The Japan International Cooperation Agency (JICA) plans to increase its participation in private sector projects in India. The Japanese development agency is looking to increase its global investment in private sector projects to $15 billion in the coming years, with a focus on Indian projects.

Financing private sector projects will allow Japan to contribute to India’s infrastructure development efforts without adding to the Indian government’s debt load, said JICA Senior Vice President Nakazawa Keiichiro. The development agency also funds sovereign projects executed by the Indian government.

Investments in private sector companies, according to a senior Japanese official, are “estimated at 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, which follows a now-established trend of large Japanese investments in India’s alternative and renewable energy industry.

The official said that potential investments in private sector projects exist in areas such as transport, water and sanitation, where the sectors already play an important role. “We are ready to finance companies that can have a positive impact on the Indian economy. JICA could work both debt and equity in such projects, with equity support not exceeding 49%,” the official said.

“Investments in technologies such as green hydrogen are something we are definitely considering,” Nakazawa said. In addition, carbon capture and other emerging green technologies will remain a topic of interest for JICA.

A loan of $75 million was also granted to PNB Housing Finance Ltd and aims to improve affordable housing for low-income households. Other projects have focused on women’s empowerment, MSMEs and financial inclusion. In addition to this, JICA has also invested about $30 million in investment funds. A $4 million investment has found its way to Rebright’s partners, who will seek to invest in digital transformation startups. A sum of $26 million has been invested in the SVL-PME fund, managed by SBICAPS, which will finance MSMEs focused on solving environmental and social problems.

Japan’s official development agency is also optimistic about India’s growth prospects in the coming years. In FY21, the organization committed $2.3 billion in loans in India. This marked a decline from commitments made in fiscal year 2019 which totaled $3.6 billion. Despite the bleak global economic outlook, JICA believes that India is a bright spot compared to other economies, and its loan commitment this year would also amount to $3 billion. It comes just months after Japanese Prime Minister Fumio Kishida pledged to invest $42 billion in India over five years. According to Nakazawa, JICA looks forward to supporting India as it continues to grow.

“India is a very important country not only for Japan but also for the world,” he said.

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