As China plans to invest more than $100 billion through its Belt and Road Scheme, the Beijing-based Asian Infrastructure Investment Bank (AIIB) has sanctioned $1.5 billion in credit to India for infrastructure related projects in 2018.
Through its Belt and Road initiative, China plans to build highways, rail lines, ports and other infrastructure linking Asia, Europe and Africa and the funds granted to India would be used for investment in India’s energy, roads and urban development projects.
AIIB’s loans include a $200 million assurance to India’s National Investment and Infrastructure Fund to spend on roads, housing and urban development. The bank will let the Indian government determine how to utilise that money and will consider dispersing more funds for similar projects next year, D.J. Pandian, AIIB’s chief investment officer, said.
Without elaborating on any further details, Pandian also added that energy-related projects will for the most part, be focused on renewables.
China-backed lenders are taking a more lenient approach to overseas development financing, unlike the western banks whose financing usually comes with social and environmental strings and offers more support to the voice of non-profits.
Unlike most of its rivals who have campaigned against further investments in coal, the Asian Infrastructure Investment Bank wants to support the transition to renewable energy but is not against investments in coal-related projects.
Any foreign investment in renewables is crucial for India, which needs at least $125 billion in investments to complete its ambitious target of adding 175 GW in clean energy by the end of 2022.