The EU's assistance comes as part of its "strategic partnership" with India and will be made available by the European Investment Bank (EIB) to ICICI Bank, India's one of the largest private bank, in the first-ever cooperation between the two financial institutions.
It is intended to provide long-term financing for investments on a number of electricity generating projects, especially in the areas of solar photovoltaic, biomass and onshore wind power by private companies, thereby making a contribution to India's efforts to reduce greenhouse gas emissions, the EIB said on Monday in a press statement.
The loan is being provided under the EIB's Energy Sustainability and Security of Supply Facility (ESF), a 4.5 billion euro programme designed to reinforce the EIB's goal of promoting renewable energy and energy efficiency in non-EU countries.
This is the first cooperation between the long-term financing institution of the 27-nation EU bloc and India under the ESF programme, the statement said.
The ESF is used when the bank does not need a credit guarantee from the EU because the recipients are investment-grade countries or where appropriate security can be provided.
In addition to the ESF, the EIB has an external lending mandate to implement the EU's lending operations outside the bloc as part of its cooperation with those countries and since 1993, the bank has carried out four successive lending operations for Asia and Latin America.
Under the current mandate, covering the period between 2007 and 2013, the EIB is authorised to lend up to 3.8 billion euros for financing projects that contribute to the avoidance or reduction of greenhouse gas emissions through foreign direct investment or technology and know-how transfer.The lion's share of the funds, amounting to 2.8 billion euros, are earmarked for Latin America, while the Asian region will receive 1 billion euros.
The EIB's loan for India will "support the EU-India strategic partnership, which provides for cooperation in curbing climate change", the statement said.
The projects eligible for financing will bring economic benefits to the region by enhancing the production of energy from renewable resources, reducing the costs for imported energy, expanding the use of domestic resources and curbing greenhouse gas emissions and other airborne pollutants.
"The EIB will ensure that the projects are economically and financially viable, technically adequate and in compliance with the bank's environmental and social requirements," the statement said.