Research Report

Green municipal bonds are gaining traction, with cumulative issuances of ~Rs. 1,550 crore since FY2021 and nearly half of FY2026 municipal bond issuances being green. Despite this progress, green municipal bonds represented only 24% of municipal bond value and 28% of issuance volume over the last decade, indicating substantial headroom for growth.

• Large urban infrastructure financing requirement creates a sizeable funding pool:
• ICRA estimates India’s urban infrastructure investment requirement at around Rs. 56 lakh crore over FY2027-FY2030 (excluding affordable housing).
  Availability of eligible green projects is unlikely to be the key bottleneck: Water supply, sewerage and wastewater treatment, solid waste management, renewable energy and climate-resilient infrastructure are integral to municipal service-delivery mandates and substantially overlap with recognised green-finance categories.