Download AFD AND INDIA

© John & Mel Kots
AFD and India
Partners for a green
and inclusive growth
However, the energy sources used In India (mainly coal and oil)
means that this catching up process is likely to heavily affect
the climate, as the country already ranks as the world’s third
largest greenhouse gas emitter. The focus of the 2008 National
Action Plan on Climate Change (NAPCC) and the aim of the
cooperation between AFD and the Indian Government are to
reconcile these two targets (scale up infrastructure and control
greenhouse gas emissions).
© AFD – Jean-Pierre Barral
AFD’S OPERATIONS IN INDIA ARE SET
BY A MoU SIGNED BETWEEN THE
INDIAN MINISTRY OF FINANCE AND AFD
INDIA, AN EMERGING COUNTRY
SET TO BECOME THE WORLD’S MOST
POPULOUS COUNTRY BY 2020
India and France are seeking to build closer relations between
the two countries. In 2008, this was expressed through a joint
political decision to enhance the co-operation and join forces
to address some of the main global challenges.
In this context, AFD was authorized to operate in India,
with the mandate to contribute to the sustainable management
of global public goods (GPGs), including climate change,
by providing financial and technical assistance to India’s
central government, regional States, municipalities and public
institutions.
AFD has been entrusted with a strategic mandate tailored
to the Indian Government’s priorities. It is based on three main
areas of cooperation:
India is roughly six times the size of France (3 million km2)
with a population of over 1.2 billion people. It is currently the
world’s second most populous country, but the UN predicts
that it will overtake China by 2020.
he development of renewable energies and the
T
dissemination of best practices for energy efficiency in order
to guarantee sustainable growth,
This subcontinent has around 40 cities with over a million
inhabitants, yet 70% of the population lives in rural areas. Total
GNP stands at USD 4,060 billion (twice France’s GNP),
nonetheless 76% of the population lives on less than $2 a day.
The country is home to various regional States; some with
population comparable to Brazil, Italy and Mexico, but per
capita income similar to Benin, Eritrea and Haiti for the poorest.
he protection of the environment and preservation of the
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country’s biodiversity.
Although India shares common traits with other so-called
emerging countries, it differs substantially when it comes
to poverty levels, economic structure and demography.
The main implication of this gap between population dynamics
and level of development is that the need for economic
growth remains high and poses a major challenge.
This is particularly the case for the infrastructure sector where
the needs are enormous. In the power sector, the structurally
inadequate electricity supply is a major impediment to growth
and to the competitiveness of India’s economy. The situation
in the transport sector also raises concerns as economic losses
caused by congestion and the poor quality of roads amount
to almost 0.6% of GDP. The Indian Government has set out
to close this gap by adopting an ambitious investment program
of approximately USD 1,000 billion for the period 2012-2017.
he development of low-carbon urban infrastructure,
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particularly in the transport and water sectors, in order to
gear up for demographic transition in urban areas,
Breakdown of project portfolio as a percentage
of allocated funds
18
Energy efficiency
and renewable energies
14
68
Biodiversity preservation
Urban infrastructure
SOURCE: AFD
© Lingaraj GJ
The success of these first projects should lead to the
development of this instrument for further operations in India.
For example, in late 2011, AFD allocated a €150m loan to IDBI
Bank Ltd, a key player in financing infrastructure, renewable
energy and energy efficiency projects.
© AFD – Jean-Pierre Barral
IMPROVING ENERGY EFFICIENCY
IN INDIAN MSMEs
(€50M CREDIT LINE TO SIDBI)
Indian MSMEs (Micro, Small
and Medium Enterprises)
are a major driver of the
country’s economy. They
have a direct impact on
employment, industrial production, exports and energy
consumption in the country. Yet they benefit from low levels of bank loans to support their
investments. AFD is working alongside the public bank SIDBI
(Small Industries Development Bank of India) to promote access
to loans for MSMEs making energy responsible investments.
In 2009, AFD allocated €120m of bank loans to two local
financial institutions for this purpose. These loans were
earmarked to finance investments in the renewable energy
and energy efficiency sector. In the first year alone, these
environmental credit lines contributed to the implementation
of some 650 projects in a wide range of sectors. The GHG
reductions from these projects are estimated at over
900,000 teq CO2 every year.
PROMOTING RENEWABLE ENERGY
DEVELOPMENT IN INDIA
(€70M CREDIT LINE TO IREDA)
AFD promotes a lower-carbon approach to economic
development and contributes to a number of public policies for
this purpose. In view of the scale of the challenge of this
national objective, AFD has set out to work alongside the
Indian Government and help it achieve its energy policy targets.
It is doing so by providing financial and technical support to
IREDA, the Indian Renewable Energy Development Agency.
INVESTING IN LOW-CARBON GROWTH
India’s GDP is experiencing strong growth, which means that
energy demand is on a strong upward trend. The country’s
resources have not been able to meet this demand for a long
time now. The type of energy sources used, mainly fossil fuels
(coal accounts for 68.5% of India’s power generation), has a
major impact on the environment, especially on the climate.
India has become the world’s 3rd largest greenhouse gas
emitter (4th if the European Union is taken as a single “bloc”)
and has seen a sharp rise in its emissions (+ 6% annually). India
also suffers from a major infrastructure deficit (ports, airports,
roads, supply chains, telecoms, etc.), which dampens growth by
several points every year.
Environmental finance:
a tool to make India’s financial sector
the engine for sustainable growth
AFD is supporting several Indian financial institutions in an
approach to promote environmentally responsible investments.
By supporting sustainable growth provided via “green” credit
lines, AFD contributes to achieving India’s priority objectives for
energy efficiency, renewable energies and infrastructure in line
with the NAPCC.
PARTICIPATING IN THE VOLUNTARY
CARBON CREDIT MARKET
BY FINANCING BIOGAS UNITS
AFD has participated in the voluntary carbon credit market by
allocating a €500,000 concessional loan to the Good Planet
Foundation (founded by Yann Arthus-Bertrand), which works
in partnership with SKG Sangha, an Indian NGO well-known
for installing biogas units in rural areas.
Thanks to this project, 1,500 biogas units have been installed in
villages in the Bangalore region. This has given poor rural
families access to sustainable, low-carbon energy and has, at
the same time, contributed to combating deforestation and
therefore conserving biodiversity and mitigating climate change.
It has also improved living conditions for households in rural
India (no more wood chores and less domestic pollution) and
given them additional income (sale of natural fertilizer). There
is a plan to reproduce and upscale this project.
IMPROVING THE DRINKING WATER
NETWORK IN THE CITY OF JODHPUR
The State of Rajasthan is experiencing increasing pressure on its
water, energy and financial resources due to a whole range of
factors (climate change, population growth, extension of irrigated
areas, urban growth and increase in energy prices). This has
prompted the Government of Rajasthan to seek support on ways
to optimize the public service and make it more effective, notably
through the management of the City of Jodhpur’s drinking water
network to make it more energy and cost efficient. AFD has
approved a €71.1m loan to the central government, which will
reallocate it to the State Government of Rajasthan for the re
organization of Jodhpur’s urban water system. BIODIVERSITY CONSERVATION
India is particularly rich in biodiversity. Because of its immense
surface area extending over different latitudes and topography,
India is home to a wide and extraordinary diversity of flora and
fauna. It holds 7.3% of the world’s plant species and 10% of its
animal species. Over 33% of the plant species are endemic to
India, where 26 “endemic centers” have been identified. Areas
of high biodiversity include the Himalayas (in the North and
Extreme East of the country), the North West (Thar Desert
in Rajasthan and Gujarat), the Western Ghats (hills and
lowlands to the west of Deccan) and the Andaman and
Nicobar Islands. India has two of the eight most important
remarkable biodiversity hotspots in the world: the Western
Ghats and Eastern Himalayas.
DEVELOPING THE INFRASTRUCTURE
NETWORK FOR A SUSTAINABLE URBAN
FUTURE
The phenomenon of increasing urbanization in India in recent
years stems from both the massive rural exodus and high
population growth. Over the next 20-25 years, the urbanization
rate is expected to rise from 30% to 40-50%. Over 60 cities
will have more than 1 million inhabitants and will account
for roughly 70% of India’s GDP.
India’s cities suffer from a lack of infrastructure which limits
their settlement capacity. A major challenge for economic
growth and poverty reduction is to improve mobility, establish
an environmentally-friendly development of the water
and sanitation networks and give more equal access to basic
services. AFD’s activities are in line with the priorities of the
Indian Government and aim to support this process in Indian
cities, while combating the negative externalities of urban
concentration.
The important and rapid population and economic growth,
linked with the difficulties to implement central and state level
environmental legislations, apply tremendous pressure and
threaten India’s biodiversity.
FOREST CONSERVATION
AND BIODIVERSITY IN ASSAM
India’s vast forest resources, along
with the rich biodiversity they host,
are today under threat. AFD has
taken action by supporting the
State of Assam in North East India,
which is promoting a sustainable
management of its forest combining
sound exploitation and preservation.
AFD has approved a €54m loan to
the Indian Government for this
purpose. The loan is financing activities to reforest damaged
forest areas, define participative forest management plans
involving local communities more and train State administrative
staff to raise their awareness of the importance of preserving the
natural capital. The ultimate aim of this project is to restore forest
ecosystems in partnership with communities who rely on them
for their livelihood. This will improve the standard of living of
these communities and contribute to the sustainable preservation
and use of forest resources. An international technical assistance,
funded through AFD’s own resources, is provided in order to
support the project launch.
© Yathin
© AFD – Jean-Pierre Barral
Right from its independence, India adopted a sound legislative
framework and proactive policies to ensure the preservation
of its biodiversity. This national legislative framework has been
completed by the ratification of a number of international
conventions including the UN Convention on Biodiversity
Conservation (CBD).
TECHNICAL ASSISTANCE FOR TARGETED
SKILLS TRANSFERS
A number of French stakeholders working in India offer
technologies and skills that could contribute to the preservation
of global public goods. Many partnerships have been
established between French and Indian companies, as well as
with representatives of decentralized cooperation, French
and Indian universities, research institutes and civil society
organizations.
AFD mobilizes its own funds to finance technical assistance
contracts on an ad hoc basis in addition to the loans it allocates
in India. These contracts aim to strengthen the skills and
instruments made available to beneficiaries and, generally,
to develop activities with the aim to ensure a more effective
integration of the preservation of global public goods.
AFD has close ties with the Bureau of Energy
Efficiency (BEE) in India, where a French technical
assistant (TA), an energy expert from ADEME
(French Environment and Energy Management
Agency), has been seconded to BEE since 2008. The
TA provides BEE with skills on the topic of energy
efficiency in buildings and enterprises, particularly
small enterprises.
BEE, AFD and ADEME have established a tripartite
co-operation to support BEE in three sectors:
1. Energy efficiency in MSMEs;
2. Energy efficiency in the building sector
(residential and commercial);
3. Energy Conservation Action Plans at the state
level (SECAP).
Two studies relating to the MSMEs and the Building
sectors have been launched in 2011.
© a4gpa
FRENCH EXPERTISE
AT THE SERVICE OF THE BUREAU
OF ENERGY EFFICIENCY
PROPARCO IN INDIA
PROPARCO was founded in 1977 and is AFD’s private sector
financing arm. Its mission is to support projects that have a
strong impact on development and the fight against climate
change. PROPARCO’s strategy is to be a long-term investor.
It offers a full range of financial instruments – loans, equity
investments and guarantees.
In India, PROPARCO focuses its investments on the
development of renewable energies (wind, geothermal, solar,
hydro and biomass) and energy efficiency. It also finances
the health, education and microfinance sectors as well
as the agrifood chain. In just a few years, India has become
a leading country for its activities with some €200m of
investments at the end of 2011.
© Leadenhall
AFD, the Agence Française de Développement, is a public development
finance institution that has worked to fight poverty and support economic
growth in developing countries and the French Overseas Provinces for
70 years. AFD executes the French government’s development aid policies.
Through offices in more than fifty countries and nine French Overseas
Provinces, AFD provides financing and support for projects that improve
people’s living conditions, promote economic growth and protect the planet:
schooling, maternal healthcare, help for farmers and small business owners,
clean water supply, tropical forest preservation, and fighting climate change,
among other concerns.
In 2010, AFD approved more than €6.8 billion for financing aid activities in
developing countries and the French Overseas Provinces. The funds will help
13 million children go to school, improve drinking water access for 33 million
people and provide €428 million in microloans benefiting more than 700,000
people. Energy efficiency projects financed by AFD in 2010 will save nearly
5 million tons of carbon dioxide emissions annually.
www.afd.fr
AGENCE FRANçAISE DE DéVELOPPEMENT (AFD)
5 rue Roland Barthes
75598 Paris Cedex 12 – France
Tél. : +33 1 53 44 31 31
Fax : +33 1 44 87 99 39
www.afd.fr
agence de new delhi
1/A Janpath
New Delhi 110 001, Inde
Tél. : +91 11 23 79 37 47
Fax : +91 11 23 79 37 38
[email protected]
www.proparco.fr
FFEM
www.ffem.fr
FFEM is a bilateral public facility set up by the French Government in 1994
following the Rio Summit. It aims at promoting global environmental protection
via sustainable development projects in developing or transition countries. The
French Global Environment Facility supports physical projects in recipient
countries. Its operations are learning-based and support experimental, innovative
or exemplary approaches.
This brochure respects the environment and
was printed using vegetal ink on PEFC™ certified
paper (sustainable forest management).
Creation: Planet 7 – March 2012
PROPARCO, AFD’s subsidiary dedicated to private investment, promotes private
investment in emerging and developing countries in order to boost growth,
promote sustainable development and reach the Millennium Development
Goals. Its financing is tailored to the specific needs of investors in the
productive sector, financial systems, infrastructure and private equity investment.