New Information from Development Finance International Inc. and the Apparel Impact Institute Shows Financing Options and Decarbonization Prospects in India
San Francisco – The Landscape and Opportunities to Finance the Decarbonization of India’s Apparel Manufacturing Sector report, which was released today by the Apparel Impact Institute (Aii), Development Finance International Inc. (DFI), and HSBC, outlines ways to raise sustainable funding to help decarbonize India’s textile and apparel sector.
According to the Fashion Industry Charter for Climate Change, which is run by the UN Climate Change Secretariat, the fashion industry’s absolute emissions must be reduced by 50% by 2030, which calls for significant investments in renewable energy and energy efficiency measures.
One of the biggest producers of clothing worldwide, India, is identified in the report as a key area for effective decarbonization initiatives. In India alone, US$6.5 billion is needed to meet the industry’s emissions reduction goal. The study predicts that an additional US$1.2 billion is already being created by governments, NGOs, and international finance institutions, and it finds at least US$1.3 billion in easily available financing from credit lines and revolving funding programs. Six crucial interventions are identified in the paper, such as working together throughout the whole value chain and quickly mobilizing finance.
Lewis Perkins, president of the Apparel Impact Institute, stated, “This report goes beyond exploring renewable energy and energy efficiency in India’s apparel sector – it provides a clear path forward and offers practical guidance to close the climate finance gap and ensure proven decarbonization solutions receive the critical funding they need.” “The report’s findings on India’s capital potential are encouraging as we continue to work with brands, manufacturers, and international finance institutions to accelerate the uptake of decarbonization efforts across global manufacturing hubs. AII plays a crucial role in connecting our industry’s stakeholders.”
“Decarbonizing its operations is crucial for meeting climate goals and securing the industry’s competitiveness in the future, as India’s apparel sector plays a pivotal role in global supply chains,” stated Emilio Bunge, President and CEO of Development Finance International Inc. “We are happy that Aii collaborated with us on this report, which outlines ways stakeholders can collaborate to hasten the shift to a low-carbon apparel industry.”
The report states:
- Through energy efficiency and renewable energy initiatives, India’s sector emissions are expected to drop by 45% by 2030, requiring an estimated US$6.5 billion in funding. India still has a US$4 billion funding shortage even though there is about US$2.5 billion available.
- India is well-positioned to quickly accelerate its decarbonization efforts because of its established market for energy efficiency service providers.
- Increasing the amount of capital available, especially in the area of blended finance, can lower the cost of decarbonization projects and assist manufacturers in overcoming the obstacles associated with the sustainability transition, such as risk limitations, unfavorable financing, and inadequate infrastructure.
The paper provides concrete steps that policymakers, bankers, and the industrial value chain may take to assist the nation’s continued energy efficiency and renewable energy initiatives as nations consider how they plan to fulfill the NDCs in the run-up to COP29.
One of the most crucial frontiers for the garment and footwear sector to decarbonize in order to maintain global warming within the required 1.5°C range is India, which accounts for 13% of all industrial output. In order to bridge the gap in scaling creative decarbonization solutions, Aii’s most recent research highlights that funding is already available in the area and that more funding is prepared to be unlocked.
