US-India Launch $1 Bn Initiative To Build Clean Supply Chains

Highlights :

• To launch this partnership, the United States and India are working to unlock USD 1 billion in new multilateral finance through the IBRD for projects that include catalyzing India’s domestic clean energy supply chain buildout

US-India Launch $1 Bn Initiative To Build Clean Supply Chains

The United States (US) and India elevate and expand bilateral technical, financial, and policy support to enhance the complementary manufacturing capacity of clean energy technologies and components.

This policy also lays the groundwork for enhanced cooperation and partnerships in Africa. The Strategic Clean Energy Partnership, led by the US Department of Energy and Indian government ministries, provides technical assistance through US laboratories and establishes novel financial platforms such as the Payment Security Mechanism to support the rapid deployment of electric buses in India.

To launch this partnership, the United States and India are working to unlock USD 1 billion in new multilateral finance through the International Bank for Reconstruction and Development (IBRD) for projects that include catalyzing India’s domestic clean energy supply chain buildout. The funding could support supply-side manufacturing capacity expansion for key technology verticals, focusing on solar, wind, batteries, energy grid systems, and high-efficiency air conditioning and ceiling fan supply chains.

Over time, we seek to mobilize additional financing into priority clean energy manufacturing sectors that harness public and private financial tools and pioneer innovative financial vehicles to meet the rapid demand for flexible climate finance solutions.

The United States and India intend to work with relevant government agencies, civil society, US and Indian private sectors, philanthropies, and multilateral development banks to identify a package of pilot projects across the clean energy value chain that meet our eligibility criteria and meaningfully contribute to supply chain expansion and diversification in identified sectors.

This initially focuses on the following clean energy components:

The US and Indian governments also pledge to work with industry leaders on the following lines of effort to launch and eventually scale this new partnership:

• Identifying near-term investment opportunities to expand manufacturing capacity for specific clean energy supply chain segments.
• Solar wafers and wafer manufacturing equipment & next-generation solar cells
• Wind turbine nacelle components
• Power transmission line components, including conductors, cabling, transformers, and next-generation technologies
• Energy storage components, including batteries
• Battery packs for 2- and 3-wheel electric vehicles (EVs) and zero-emission e-bus and truck components
• High-efficiency air conditioners and ceiling fan components

Collaborating with the private sector to expand the scope of eligible opportunities in the above supply chain segments and support an initial package of pilot projects encourages collaboration with the private sector. It would ideally also include one project focused on clean energy deployment to Africa.

Additional investment plans and sources of funding can be developed over time. This effort would build on private sector partnerships facilitated by the US Development Finance Corporation (DFC) across the solar, wind, battery, and critical minerals sectors to pursue opportunities to finance the manufacture of clean energy components. Such investments may be in scope for India’s Green Transition Fund, which will support renewable energy, storage, and e-mobility investments in India and strengthen demand for localized manufacturing, as well as for Indian private equity fund manager Eversource Capital’s new DFC-supported $900 million fund to invest in clean technologies such as renewable energy, efficient cooling, and electric transportation.

Building Trilateral Relations with Africa

Building trilateral relationships with African partners that have stated political commitments to clean energy deployment focuses on solar and battery storage opportunities. Collaborating and industry to consult on policies that will strengthen demand certainty for locally manufactured clean technologies. The US Bipartisan Infrastructure Law and Inflation Reduction Act were historic laws designed to invest in the large-scale deployment of clean energy technologies while also reinvigorating the manufacturing capacity of the United States to appropriately onshore clean energy supply chains.

Likewise, India’s Production Linked Incentive (PLI) Schemes have invested over $4.5 billion to catalyze nascent clean energy manufacturing. However, additional policies are vital to expand and protect these investments in the face of global market dynamics and thin profit margins. Both countries acknowledge the importance of sharing insights on how to design policy frameworks to reduce demand uncertainties and ensure sufficient input materials, technological expertise, finance, and other manufacturing enablers are available and secure.

This roadmap is intended to serve as a short-term mechanism for driving initial cooperation on projects, to help inform a long-term roadmap, including working together to establish a cadence of meetings and milestones for this partnership. This roadmap is not intended to give rise to rights or obligations under domestic or international law.

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