Country or Region: India
Sector: Innovative Financing for Development
Client: European Commission
Date: January 2019 – June 2020
The global objective of this contract was to assist EU and India in identifying potential areas and actions for development cooperation which can bring added value to the partnership and generate sustainable impact.
India has a thriving private sector which is keen on developing new business models that will help address social and environmental concerns by increasing the use of energy from renewable sources, improving energy efficiency, building collective transportation systems, reducing waste and strengthening the circular economy, providing education and health services to low-income families, improving agriculture and rural communities.
The huge innovation push by start-ups and impact investors with the support from government at national and local level that we observe in India needs to be scaled up to attain critical mass to achieve meaningful results for the country’s sustainable development agenda. Development aid or government resources will not suffice to cover the massive investments required by such ventures. To meet India’s sustainable development objectives private domestic and foreign investors seeking commercial and near commercial returns will need to be mobilised.
The EU has developed a significant experience in deploying blended finance instruments. Until now, most of the underlying financing was realised by public DFIs and MDBs. The future challenge and real opportunity lies in ensuring that EU blended finance instruments target more private investment that fill the financing gap to achieve the SDGs and bridge demand and offer of impact investment.
The project consisted of two studies. The first identifies i) where the EU should concentrate the use of its investment/blending facilities to respond to nationally identified (central and state) development needs in India, (ii) the type of investment modalities (e.g. social bonds, equity, technical assistance) which fit with the EU’s facilities, (iii) potential partners that have a record of successful delivery (e.g. private sector including financial institutions) and (iv) the potential role that EU can play in mobilizing impact investment, CSR funds, private financing to meet India’s development needs. The study also identifies (v) appropriate government counterparts – central and/or state level – for each opportunity, and (vi) how to ensure that ideas are received, transmitted, and coordinated within the different national entities as relevant through the appropriate channels (e.g. decision making process, relevant ministries and national agencies) to ensure success.
The purpose of the second was (i) to identify specific sectors and countries for opportunities of engagement with India in Asia/Africa, (complementing South-South cooperation with North-South cooperation) (ii) identify potential cooperation modalities – e.g. investment, technical assistance, exchanges, knowledge transfer – including areas where policy dialogue would be required in the pursuit of concrete results, (iii) identify appropriate national counterparts for each opportunity (iv) identify mechanisms to ensure that ideas are received, transmitted, and coordinated within the different national entities as relevant through the appropriate channels (e.g. decision-making process, relevant ministries and national agencies) to ensure success.
Both reports drew on extensive research, expert meetings, and workshops, and led to detailed concept notes elaborating on the intervention ideas identified in each study.