British International Investment (BII), the development finance institution of the United Kingdom has invested three-fourths of its $ 1 billion corpus earmarked for Indian renewable and climate space. More will be invested in the next five years, Shilpa Kumar, MD and head of India, BII tells Raghavendra Kamath.
Where do you position India on sustainability, climate and re-shifts taking place?
Given India is one of the largest economies in the world the opportunity to make an impact from a climate perspective is very high. On the one hand, there is enterprise and innovation, and on the other, government policies that fuel entrepreneurial energy. This rich entrepreneurial spirit, coupled with strong policy-level actions makes it a unique and prospective combination.
This makes India a very attractive geography for institutions like ours. In the renewable energy space, the country has been able to scale at speed with solar energy being a prime example. Now, the effort is also to backward integrate and build capabilities across what is needed to support this transition. Once solar capacity is in place, the next question naturally becomes about peak demand management. This creates further opportunities, where private capital is stepping up to fill the gaps and the government is responding with supportive actions.
How much more does BII plan to invest in climate initiatives after the initial $1bn is allocated?
BII’s current climate finance commitment for India stands at $1 billion. As we move into our new strategy period (2026–2030), starting next year, our approach to climate initiatives will continue to evolve, guided by strategic priorities set during that phase.
India believes the new global climate finance target of $300 billion annually is substantially insufficient to meet the financing needs of developing nations. What is your view on that?
The capital currently flowing into the sector is far short of what is required. India alone needs close to $160 billion annually to meet its climate goals, yet today the inflows stand at only about one- third of that figure. Clearly, there is an urgent need to scale up financing. This is precisely where institutions like BII play a critical role. The UK has a strong focus on climate, and as its development finance institution (DFI), we look at how we can play a catalytic role in addressing this gap. For us, it is not only about providing capital, but also coming in with capital that is patient, flexible, and able to take on early-stage risks.
Could you elaborate on your investment strategy?
In the renewable space, we look at generation, battery storage, transmission and distribution and even solutions like smart meters, which are literally the last mile in electricity supply. In each of these spaces, it’s interesting how we deploy our capital. On the one hand, we are happy to come in early, as we did in the case of Ayana, where we supported the build-out of a platform. We brought in not just equity but also enabled debt, attracted other investors, scaled the platform, and, once there was sufficient outside interest, we exited. That’s one approach, where we started from the ground up. In other cases, we may provide very critical project finance. Take smart metering, for example, in the early days of rollout, commercial capital was often lacking, so we stepped in with project finance to enable progress. A third approach we follow is when another developer is building out a platform but requires mezzanine funding in the early stages of growth. That’s also something we consider. So, there are a variety of ways – equity, debt, or mezzanine through which we can step in. And this is just within the renewable sector. Beyond that, we also intervene in very different ways in areas like electric mobility and the sustainable agriculture space.
Although renewable energy is scaling, the government says that by 2030, thermal power will continue to be a significant supplier of electricity. How do you view this dichotomy?
India had set a target that 50% of its electricity should come from renewables by 2030. So, I think there’s been a lot of progress from a policy perspective, and we’ve seen a strong response from entrepreneurs as well. I genuinely feel the pace has picked up quite substantially.