India Extends $100 Billion Financing to Sri Lanka; Encourages Renewable Energy Sector

India has extended a line of credit of $100 million to Sri Lanka. The financing was extended through the Export-Import (Exim) Bank of India for projects in the solar energy sector. 

The agreement for the project was shared between the High Commissioner of India with Sri Lanka’s Gopal Baglay and between the Sri Lankan Secretary to the Treasury S. R. Attygalle in the presence of President Gotabaya Rajapaksa in Colombo.

The Indian High Commission stated that the line of credit would finance multiple projects under the solar energy sector in Sri Lanka. There are already a few planned projects in the pipeline announced during the founding conference of the International Solar Alliance (ISA) in March 2018. The list in the pipeline includes rooftop solar photovoltaic systems for households and government buildings.

The solar power generation in India has increased from about 2.6 GW in March 2014 to 34.6 GW in 2021. The National Solar Mission of India aims to further raise the levels to 100 GW and more.

Sri Lankan President, Mr Rajapaksa, and High Commissioner, Mr Baglay, highlighted that the two countries have similar national objectives with respect to the renewable energy sector and the way the two countries approach sustainable development. The collaboration is said to benefit both countries to reduce emissions and tackle climate change.

Prime Minister Narendra Modi and the former French President Francois Hollande jointly launched ISA in November 2015. About 89 countries have joined hands to promote large-scale installation and harvesting of solar energy and have signed the pact of ISA.

Exim Bank has extended about 272 lines of credit to 62 countries in Africa, Asia, Latin America, and others, with credit commitments worth $26.84 billion made available for financing exports from India. When it comes to Sri Lanka, Exim Bank has extended nine lines of credit, including the current one, amounting to $1.68 billion. Projects, such as petroleum products, railway projects, defence, and infrastructure, are covered through them.

For any clarifications/feedback on the topic, please contact the writer at apoorva.n@cleartax.in

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