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News: India is preparing to enter the blue bond market, with Sagarmala Finance Corporation and Vadodara Municipal Corporation planning bond issues worth a combined ₹1,200 crore.
About India’s First Blue Bond
- A blue bond is a debt instrument where the money raised is earmarked for projects that support oceans, marine ecosystems, water management or the wider sustainable blue economy.
- Comparison between green bond and blue bond:
- Similarity: Investors lend money to the issuer and earn interest, with the principal repaid at maturity.
- Difference: The key difference is that the proceeds are tied to specified water and ocean-related projects like sustainable fisheries and aquaculture, marine conservation, coastal resilience, pollution control, sustainable ports and waterways, water security and marine renewable energy.
- Mandate: As investors are putting money into the bond partly on the basis of its environmental purpose, the issuer has to provide greater transparency on how that money will be used, and what environmental impact the projects are expected to have.
- Reason why India is entering blue bond economy:
- India has already built a sizable sustainable debt market around green bonds, but has not yet had a dedicated domestic blue bond issue.
- India’s blue economy is important to the country.
- It contributes around 4.1% of GDP, while about 95% of India’s trade by volume moves by sea. India also has a 7,517-km coastline and a large Exclusive Economic Zone.
- The government wants to increase the maritime sector’s contribution to GDP from around 4% today to 12% by 2047.
- Achieving this will require major investment in ports, shipping, waterways, shipbuilding and other marine infrastructure.
- To fund this growth, the government is considering options such as blue bonds, blended finance, public-private partnerships and sovereign guarantees.
- Institutions: Sagarmala Finance Corporation, the government’s maritime-focused financing institution, is considering a ₹1,000-crore blue bond issue.
- Vadodara Municipal Corporation is separately seeking approvals for a ₹200-crore blue bond.
- Global Blue Bond Status:
- Seychelles issued the world’s first sovereign blue bond in 2018 with support from the World Bank.
- The Global cumulative issuance reached $15.25 billion by mid-2025, more than doubling year-on-year, according to World Bank data.
- However, Blue bonds account for only around 0.24 per cent of the broader sustainable bond market.
- The market is projected to reach $70 billion by 2030.
- The global green bond market has already crossed $1 trillion in cumulative issuance.
