India is being seen as one of the most important economies that are on the cusp of the energy transition, experts at the IVCA Conclave noted. Anita Marangoly George, Founding Partner at Edhina Capital, however, highlighted that India needs a lot of capital, especially in the cleantech space.
She was speaking at the conclave in Mumbai on Tuesday.
George noted that while the cleantech sector is booming in India, some of the events happening in other parts of the country are playing spoilsport. “If you look at the US, they have introduced the Inflation Reduction Act. A lot of the subsidies are going towards sectors like green hydrogen, solar panel manufacturing, battery manufacturing, recycling of battery, etc”
The result of which is that capital that could have found its way to India is going elsewhere. “Suddenly the US cleantech market has become very attractive. That has been a dampener for all emerging markets, not just India," she said.
Even conditions in the European market are creating a similar predicament, “In Europe, because of the Ukraine-Russia war, there is a lot of focus on accelerating the energy transition in that region itself. That is also a detractor to capital that could have come to India,” George said.
George concluded by saying that the scenario may not be as optimistic as one would want it to be, but there’s still hope. She said that investors including family offices from the US are waking up to the importance of infusing capital in emerging markets. “I, myself, am in the process of closing one such deal,” she said.
Another panellist had a contrarian view.
Siddharth Jhunjhunwala, Executive Director and Head of the Fund of Funds at Waterfield Advisors said that there’s a lot of buzz around India. He said that this is the reason why India stands to benefit from the reallocation of funds happening within Southeast Asia. “For instance, investors who are moving away from China. So, will there be a lot of capital coming into India? Yes,” he said.
Jhunjhunwala said that Asian LPs (Limited Partners) know the innovation happening within the Asian geographies. “LPs who were writing cheques worth $75 million are happy to write cheques worth $200 million now,” he stated.
However, the challenge with American LPs is that they need to come down to India to understand how the scenario is changing or evolving to allocate capital, he said.
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