NIIF's India-Japan Fund To Ramp Up Climate Investments Over Next 18-24 Months

India's sovereign fund, the National Investment and Infrastructure Fund (NIIF), plans to accelerate investments in the country's climate sector through its India-Japan Fund (IJF), which will deploy its remaining capital over the next 18 to 24 months, according to a Mint report.

The IJF is NIIF's first bilateral fund, backed by $600 million in commitments. The Government of India contributes 49% of the target corpus, while the Japan Bank for International Cooperation (JBIC) contributes the remaining 51%. The fund is managed by NIIF Limited, with JBIC IG, a JBIC subsidiary, supporting efforts to promote Japanese investments in India.

The IJF focuses on environmental sustainability and low carbon emission strategies, targeting sub-sectors including mobility, energy efficiency, energy transition and waste recycling. It has so far backed Ather Energy, Eka Mobility and Mahindra Last Mile Mobility.

Krishna Kumar, partner at the IJF, told Mint that the fund is looking at opportunities arising from the India-Japan corridor, where Japanese companies can bring expertise or technical know-how to the Indian market, as well as opportunities to invest in India alongside Japanese companies. "From an overall portfolio perspective, we expect climate-focused investments to account for around two-thirds, with the remaining one-third in the India-Japan corridor," Kumar said.

NIIF is a government-anchored infrastructure investment platform managing about $5 billion in capital commitments across four funds. The Government of India has committed $3 billion and serves as the anchor investor. Other backers include the Abu Dhabi Investment Authority, Temasek, Ontario Teachers' Pension Plan, AustralianSuper and the Asian Infrastructure Investment Bank.

NIIF invests through four strategies, infrastructure, private markets, climate (through the IJF) and growth equity.

Notably, the IJF will invest ₹500 crore in Eka Mobility to support India's transition to sustainable transportation, according to an ET report. Sudhir Mehta, founder and chairman of the Pune-based electric commercial vehicle maker, said the capital would help the company expand manufacturing capacity, strengthen research and development, and build out supply chain infrastructure to serve both domestic and international markets.

The investment is expected to more than double Eka Mobility's annual production capacity for electric buses, from 2,500 units currently to between 6,000 and 8,000 units. The company operates two plants in Pune, one for electric buses and another for small commercial vehicles.