India

India: 1.4 billion inhabitants and a record economic performance. While focusing on improving the quality of life of the Indian people and on developing infrastructures, India is showing proactive climate policies and a strong attention to resilience issues. Since 2008, AFD is supporting India with the implementation of a low-carbon, inclusive and resilient development trajectory, in line with the international climate and Indo-Pacific agenda.

Context

With 1,4 billion inhabitants, India has recently become the world largest population. India now plays a global role, not only on the world economy (it is the 5th world economy) or in global geopolitics, but also on the world global climate trajectory.

However, the country faces a number of challenges. On the one hand, the Indian government has adopted ambitious investment programs to address the “classical” challenges of a developing country: providing access to all to basic services, addressing the huge infrastructure deficit, meeting the increasing energy demand and creating jobs.

On the other hand, climate change in its two-fold dimensions, attenuation and adaptation, is now a new game changer for India, being both one of the biggest emitter and one of the most vulnerable countries (with an increased exposure to extreme temperatures, droughts, floods, cyclones, etc.).

In spite of massive investments in renewables energies or electric vehicles, India transition towards net-zero, planned for 2070, will be challenging. And resilience of the territories is one of the key aspects of future Indian development.

Our approach

"AFD and India : supporting a low-carbon, inclusive and resilient development trajectory"

Energy demand is expected to double by 2035, due to India’s strong population and economic growth. Consequently, ensuring energy security is a crucial political and economic issue for the Indian Government.India has a proactive climate policy. At COP26, it set the objective of achieving carbon neutrality by 2070. In 2022, it revised up its Nationally Determined Contribution (NDC) with an ambition is to reach 50% of non-fossil fuels out of a total installed capacity of 820 GW by 2030 and reduce CO2.

AFD is supporting this transition towards a larger part of the Indian energy mix produced through renewable sources by (i) partnering with several Indian Public Banks, such as the Indian Renewable Energy Development Agency (IREDA), in the form of financial and technical assistance for the implementation of projects led by private developers in the fields of hydro, solar, wind and biomass energy and (ii) directly financing hydropower projects in the State of Himachal Pradesh.

AFD is also supporting all the efforts made by the Indian Government and its agencies to promote energy efficiency. We are working alongside the public financial institution Small Industries Development Bank of India (SIDBI) to facilitate access to credit for SMEs which invest in energy savings and we also helped Energy Efficiency Services Limited (EESL) to promote energy savings in the municipal lighting sector.

Although urban population represents “only” 35 % of the total population in India, the rapid growth of cities poses a number of challenges. A lot of efforts and investments are underway to provide access to basic services like transportation, energy, housing, water, sanitation and solid waste management – supporting the achievement of SDG 11.

More than half of AFD portfolio in India is dedicated to sustain inclusive, liveable and low-carbon cities, through the financing of metros, water and sanitation projects, or innovative climate-oriented pilot projects.

AFD has been financing sustainable urban mobility through the financing of metro lines in 6 Indian cities – 4 or which are in operation: Bangalore, Kochi, Nagpur, Pune, Surat and Ahmedabad. These infrastructures should improve the life of inhabitants. Major impacts are expected in terms of urban productivity, but also air quality and carbon footprint.

AFD also works towards sustainable use of water resources and access to water and sanitation. To meet ever-increasing water demand and improve the quality of resources, we are assisting the cities of Chandigarh, Jodhpur and Puducherry, as well as 6 secondary cities in Himachal Pradesh, in optimizing their water and sanitation services.

Finally, AFD is also supporting, together with the European Union, the CITIIS programme, a national programme embedded in the national Smart City scheme, which promotes a systematic climate perspective in the planning, design and implementation of projects. In a first phase, this programme financed 12 pilot projects in different sectors (urban mobility, public space, housing, governance), bringing French and European expertise. The second phase (CITIIS 2.0) will focus on solid waste management.

India is home to some of the world’s most remarkable natural wealth. The country has two of the world’s eight most important biodiversity hotspots: the Western Ghats and Eastern Himalayas. However, this natural heritage is threatened, despite a strong legislative framework.

Since 2012, AFD has been actively supporting the northeastern state of Assam and, since 2022, the state of Rajasthan, in the proactive implementation of policies for the sustainable and participatory management of their forests. These comprehensive projects involve not only the reforestation of degraded areas but also the promotion of sustainable forest management practices, actively engaging local communities through a participatory approach to conservation. The initiatives extend to protecting wildlife, raising awareness about the importance of preserving natural heritage, and addressing the intricate relationship between biodiversity and climate. Furthermore, efforts are dedicated to mitigating the human-wildlife conflict and introducing alternative livelihood options for forest-dependent communities.

India is also highly vulnerable to the effects of climate change. In a country where temperatures can soar close to 50°C in peak summer, the consequences of warming by the end of the century could be disastrous, causing increased rainfall variability, more frequent droughts, and more severe floods and cyclones. The rising water levels could affect 216 million Indians living in coastal areas and contribute to land salinization. The increasing frequency of extreme climate events directly endangers the lives of people.

AFD is supporting the efforts of the states of Kerala and Himachal Pradesh to increase the resilience of their territories to these effects through comprehensive support to policy reforms and necessary investments for disaster and climate-risk resilience and management -especially at the local (municipality and village) level.

To bolster Indo-French partnerships on technical topics and facilitate knowledge transfer, AFD works with several types of entities given below to foster innovation and enable French or South to South knowledge sharing :

Public organizations (specialized operators, local authorities)
Private organizations (consultancy firms, consultants)
Civil society representatives (NGOs, research institutes)

For example, AFD can mobilize its expertise and its networks (IDFC, FiCS) to tackle the redirection of financial flows towards the energy transition and create “platforms” addressing the priorities of the Indian Government and partners: in 2022, AFD supported the launch of the Greening the Indian Financial System Initiative (GIFS), in close collaboration with Shakti Sustainable Energy Foundation (SSEF) and Small Industries Development Bank of India (SIDBI), which is a Indo-European platform which supports this transition through knowledge exchanges, trainings and networking, targeting like-minded finance practitioners from banks, investment funds and financial institutions. The GIFS initiative also encompasses a gender-focused component named GroW (Greening of Finance by Women), a professional network for women in climate finance.

AFD is also organizing several capacity-building exercises for Indian municipalities: 12 municipalities received support for the maturation of their smart-city project in the context of the CITIIS program while members from the Local Self Government Department from Kerala participated to a study tour in France where they could discover the French experience of embedding disaster and climate risk-information in urban masterplans.