Japan to finance India's power grid under new initiative
What's the story
Japan has agreed to finance India's power grid with up to $492 million. The funding comes under the first project of its new POWERR Asia initiative, according to Nikkei Asia. The announcement was made during the 16th India-Japan Annual Summit, where Prime Minister Narendra Modi and Japanese PM Sanae Takaichi discussed clean energy, infrastructure, and economic security cooperation.
Project details
Funding for high-voltage direct current transmission project
The financial package for the power grid project will be led by Japan Bank for International Cooperation (JBIC) along with Sumitomo Mitsui Banking Corp. (SMBC), Kansai Mirai Bank, and other lenders. The funding will go toward a high-voltage direct current (HVDC) transmission project being developed by Power Grid Corporation of India. The initiative aims to connect Gujarat's Khavda renewable energy hub with Nagpur in Maharashtra through a nearly 1,200-kilometer-long transmission corridor.
Tech benefits
HVDC technology for long-distance electricity transmission
The HVDC technology will allow electricity to be transmitted over long distances with lower losses than conventional alternating current systems. This makes it ideal for integrating renewable energy generated in remote locations into the national grid. The transmission line is expected to begin operations in 2029, with the overall project estimated at around 550 billion yen (approximately $3.4 billion).
Future plans
Agreements on clean energy and economic security
The India-Japan summit is also expected to yield a broad package of agreements on clean energy, advanced manufacturing, and economic security. Modi and Takaichi are likely to announce measures supporting green hydrogen and renewable ammonia production in India. This move is part of both countries' efforts to reduce reliance on imported fossil fuels and accelerate decarbonization.
Investment boost
Japanese private companies to announce investments
Japanese private companies are also said to be preparing to announce nearly $12.5 billion in investments through some 120 cooperation agreements related to the summit. This shows growing corporate confidence in the Indian market. The two nations will also discuss strengthening supply chains in critical minerals, AI, pharmaceuticals, and semiconductor manufacturing, while reviewing progress on flagship infrastructure projects like the Mumbai-Ahmedabad High-Speed Rail corridor.
Trade facilitation
Proposed rupee-yen settlement framework at the summit
A proposed rupee-yen settlement framework will also be discussed at the summit. The initiative aims to facilitate bilateral trade by reducing reliance on the US dollar. This is part of India's broader strategy to diversify its energy sources and strengthen economic resilience with key strategic partners in the Indo-Pacific region.