From Green to Greener: IFSCA’s Push for Transition Finance in India
- GIFT CFO
- Apr 22
- 4 min read
✨ Earth Day Special Edition
On this Earth Day 2025, as the world reflects on its collective climate commitments, it's time to spotlight an emerging tool that could shape the future of our planet: Transition Finance.
India, home to one of the fastest-growing economies, also carries the weight of climate responsibility. The path to net-zero by 2070 isn’t paved with solar panels alone—it also needs heavy industries to decarbonize, innovate, and transition.
This Earth Day let’s dive into how IFSCA’s new framework for Transition Bonds is setting the tone for a just, inclusive, and finance-driven transition—right from the GIFT City.
India’s commitment to achieving net-zero emissions by 2070 is a bold but necessary step toward climate resilience. However, not all sectors can switch to “green” overnight—especially the “hard-to-abate” industries like cement, steel, shipping, and aviation that contribute nearly 40% of global emissions. Enter: Transition Finance — a bridge between today’s carbon-intensive realities and tomorrow’s net-zero dreams.
The International Financial Services Centres Authority (IFSCA) has taken a major stride in building a Transition Finance ecosystem at GIFT City, India’s international gateway for sustainable finance. Two key documents now lay the groundwork:
IFSCA Consultation Paper on “Framework for Transition Bonds” (April 2025)
IFSCA Expert Committee Report on Transition Finance (July 2024)
Let’s break down what this means and why it matters—for industries, investors, and India’s climate leadership.
🔍 What is Transition Finance?
Unlike traditional Green Finance, which funds projects already aligned with net-zero goals, Transition Finance supports sectors currently reliant on high-carbon processes to gradually reduce emissions. It’s about financing the journey, not just the destination.
Global bodies define it as:
OECD: “Finance to support dynamic transition—not just what’s already sustainable.”
ICMA: “Investments aligned with the Paris Agreement that reduce climate-related risks.”
CBI: “Funding to halve global emissions by 2030 and achieve net-zero by 2050.”
⚙️ Why Does India Need Transition Finance?
🔸 $10 Trillion+ in investments required for India to hit net-zero 🔸 87% of India’s green finance currently comes from domestic sources 🔸 Limited Green Bond impact on heavy industries — only ~1% of global ESG debt has gone to “transition” efforts
IFSCA sees GIFT-IFSC as a unique opportunity to channel global capital into India’s transition journey.
🧩 The Missing Piece: Transition Bonds
💡 What are Transition Bonds?
They are debt instruments (like Green Bonds) but aimed at financing the decarbonization of high-emission sectors, through:
Cleaner technologies (e.g., hydrogen in steel)
Interim solutions (e.g., energy efficiency in cement)
Phasing out polluting assets (e.g., coal-powered furnaces)
⚖️ The Problem So Far?
No clear definitions or taxonomies
Credibility concerns = low investor trust
Just $15.26 billion in global issuance between 2019–2023 (less than 1% of ESG bonds)
🧭 What is IFSCA Doing About It?
🧠 1. Formation of an Expert Committee (2024)
Led by thought leaders from CEEW, IFC, JSW, IndusInd, Tata Steel, and more, the committee delivered a 3-pillar roadmap:
Definition & Scope
Policy & Regulation
Instruments & Financial Mechanisms
📜 2. Draft “Framework for Transition Bonds” (2025)
Issued under IFSCA’s Listing Regulations, the draft lays out:
✅ Eligibility:
Use of taxonomies from ASEAN, EU, Japan, Singapore, and Indian sources
🛣️ Transition Plan:
Clear emission reduction targets, Paris-aligned goals, and robust governance
🔍 External Review:
Mandatory third-party assessments (second opinions, certifications, ratings)
📢 Disclosures:
Short-medium-long term GHG targets
Capex roll-out aligned with decarbonization
Climate risk & asset lock-in transparency
🧰 Tools IFSCA Proposes to Boost Transition Finance
🔹 Sustainability-linked Bonds & Loans
🔹 Credit Guarantees for high-risk sectors
🔹 Capex-linked milestone reporting
🔹 Use of Indian & Global taxonomies to classify transition activities
🔹 Support for innovation in "brown-to-green" technologies
🏗️ GIFT City: India’s Climate Finance Launchpad
As international investors look for credible, transparent transition stories, GIFT-IFSC is positioning itself as:
A gateway for global capital into India’s net-zero transition
A hub for innovative debt products
A reliable marketplace anchored in disclosure, verification, and sustainability
📣 Final Call: Shape the Future of Finance
IFSCA is inviting comments on the draft Framework for Transition Bonds till April 29, 2025. Stakeholders—issuers, investors, regulators—are encouraged to share inputs and co-create a finance-first climate future.
📧 Email:
💬 Let’s Talk
Would you invest in transition bonds? Should India fast-track its taxonomy? Share your views in the comments or reach out for deeper insights on GIFT-IFSC’s evolving green finance landscape. 🌱
#TransitionFinance #GIFTIFSC #SustainableFinance #GreenBonds #ClimateAction #IFSCA #NetZeroIndia #GIFTCFO
🌏 Why This Matters on Earth Day
Earth Day is more than a symbol—it’s a call to action. And financial flows are the fuel that powers that action.
IFSCA’s initiative is not just regulatory—it's transformational. It recognizes that the fight against climate change cannot leave behind the toughest sectors. It creates credible pathways for steel, cement, aviation, and shipping to decarbonize with financial backing and investor confidence.
This Earth Day, let’s go beyond awareness. Let’s build frameworks, raise capital, and finance the future—one transition bond at a time.
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