Context
- SBI Ventures, an alternative asset manager promoted by the State Bank of India (SBI), has announced plans to raise ₹2,000 crore for its third climate-focused fund, aimed at supporting start-ups in the green economy.
Key Highlights
Fund Objective
- The fund will invest in climate-oriented start-ups to boost:
→ Green growth
→ Low-carbon transition
→ Technology-driven sustainability solutions - According to Managing Director & CEO Prem Prabhakar, this approach seeks to unlock climate-linked financial opportunities.
Investment Strategy
- Domestic and global investors will be invited to contribute to the fund.
• Roadshows for fundraising to begin early next year.
Fund Structure
- This is the third climate-focused fund of SBI Ventures — signalling continued institutional confidence in climate finance and green innovation.
Relevant Prelims Points
- SBI Ventures:
→ Alternative asset management platform promoted by State Bank of India.
→ Unlisted subsidiary; focuses on private equity and venture capital investments. - Climate-focused funds:
→ Channel capital toward clean energy, climate tech, circular economy, carbon markets, green hydrogen, electric mobility, and resource efficiency. - Green Growth:
→ A core pillar of India’s Union Budget 2023-24 and Mission LiFE, emphasising sustainable development through market-driven innovation. - Green financing ecosystem components:
→ Climate VC funds
→ Sovereign green bonds
→ ESG-focused investments
→ Multilateral climate finance (GCF, World Bank, ADB programs)
Relevant Mains Points
Significance for India’s Climate and Startup Ecosystem
- Helps scale climate-tech entrepreneurship, an emerging high-growth sector.
• Supports India’s goals on:
→ Net-zero emissions by 2070
→ Renewable energy transition (500 GW by 2030)
→ Electric mobility, green hydrogen & energy storage - Climate finance is essential for translating R&D and pilot-scale tech innovations into commercial deployment.
Economic and Policy Implications
- Signals institutional capital shift towards sustainability-aligned sectors.
• Helps India attract international ESG investment.
• Aligns with global trends including EU Green Deal, US IRA (Inflation Reduction Act), and climate finance focus in emerging markets.
Challenges
- Early-stage climate start-ups often face:
→ High capital requirement
→ Slow returns
→ Policy/regulatory uncertainty
• Need for de-risking instruments, carbon pricing clarity, and stable financing norms.
Way Forward
- Leverage public–private partnerships for climate innovation scaling.
• Increase blended finance using concessional capital.
• Align fund deployment with national missions:
→ National Green Hydrogen Mission
→ FAME Scheme
→ Battery Storage Mission