India stares at a “funding gap” of USD 10.1 trillion to honour its net zero emissions commitment by 2070, finance minister Nirmala Sitharaman said on Thursday, as she called for a carbon credit market at the International Financial Services Centre (IFSC) in Gujarat’s GIFT City to address resource constraints for the green transition.
Indian companies will soon be able to access global capital by directly listing on exchanges at the IFSC, a deemed foreign jurisdiction, she said.
“We are going through the process in a systematic manner and I am confident that it will happen at the earliest,” Sitharaman said.
She was addressing a seminar on ‘GIFT City-An Aspiration of Modern India’, organised as part of the Vibrant Gujarat Global Summit 2024 in Gandhinagar.
Extant rules bar Indian firms from listing overseas directly. They are allowed to access overseas equity markets only through depository receipts, such as the American Depository Receipts and Global Depository Receipts, after they go public in India.
Sitharaman said Prime Minister Narendra Modi has suggested that a platform be set up where green credits can be traded. “And I would think the authorities here (GIFT City) should work on getting a platform ready so that green credits can be sold by people who are planting trees,” she said.
Carbon markets typically allow carbon credits to be sold and bought by businesses and others. Carbon credits are the underlying commodities that enable the buyer to retire a stipulated amount of greenhouse emissions and help them meet their targeted emissions cut. These markets are gaining traction, as an increasing number of global firms are committing to net-zero targets.
Boost to ship building
India needs to bolster its ship manufacturing ability given that it’s a major trading nation and there has been a shortage of containers globally, Sitharaman said. There are eight ship leasing entities working at the IFSC which can enable access to global finance, she said.
Her comments come at a time when Indian exporters apprehend a sharp increase in costs in the short term by global shipping companies following militant attacks on vessels in the Red Sea. Domestic exporters have been asking the government to help set up shipping lines in India to reduce excessive reliance on foreign firms.
GIFT City progress
Sitharaman said GIFT City is poised to be the “gateway” for India’s vision to emerge as a developed nation by 2047, with gross domestic product (GDP) exceeding USD 30 trillion (up from about USD 3.4 trillion in 2022-23). The IFSC needs to build a diverse fintech laboratory to aid the country’s economic progress, she said.
She highlighted Gift City’s progress in recent years, stating that it now houses three exchanges, including the International Bullion Exchange; 25 banks, including nine foreign ones; 26 aircraft lessors; 80 fund managers; 50 professional service providers and 40 fintech entities.
