Currency Hedging Costs May Soar Green Project Financing

A CII-IIM Ahmedabad taskforce has warned that currency hedging may increase the cost of financing green projects in India by 6-8%.

According to the report, most green projects generate revenues in Indian rupees while international investors typically lend in hard currencies such as the US Dollar or Euro, creating a currency mismatch that raises the effective cost of overseas financing.

The taskforce said that this currency risk adds to country-risk perceptions, emerging-market risk premia and project-level uncertainties, making it difficult for global institutional investors to commit funds at scale to India's climate-related projects.