For INDIA 2 0 2 0 SDG Produced and Compiled By: UNDP India and Invest India INVESTOR Copyright©2020 UNDP India, All Rights Reserved

SDG INVESTOR MAP REPORT for INDIA 2 0 2 0 SDG Produced and Compiled by: UNDP India and Invest India INVESTOR Copyright©2020 UNDP India, All Rights Reserved. Photo credit: UNDP/IND/2020 MAP REPORT Reproduction of this document without written permission from UNDP is prohibited. References from the document is permitted, with full attribution to the original for INDIA producers/authors. For further information, please contact: 2 0 2 0 [email protected] Table of Contents

Foreword 01 • Region ecosystem for the sector 36 • Food & Beverages investment opportunity 78 • Financials investment opportunity 122 areas deep dive areas deep dive • Investment Opportunity Areas - Overview 38 Message from CEO, NITI Aayog 03 • Food & Beverages white spaces deep dive 84 • White spaces in the Financials sector 128 • Education Investment Opportunity 40 Areas deep dive Acknowledgements 04 Renewable Resources & Sustainable Environment 132 • Education white spaces deep dive 44 Alternative Energy 89 Project Collaborators 05 • Sector overview 133 Healthcare 46 • Sector overview 91 • Sectoral development needs 134 Executive Summary 07 • Sector overview 47 • Sectoral development needs 91 • Policy momentum 135 Private Investment Landscape 16 • Sectoral development needs 48 • Policy momentum 92 • Private sector participation 136 • Policy momentum 49 • Private sector participation 93 • Priority subsectors 136 Introduction to Investor Maps and 18 • Private sector participation 49 • Priority subsectors 95 • Investment Opportunity Areas - Overview 136 Methodology Deployed • Priority subsectors 52 • Region ecosystem 96 • White spaces deep dive 136 Development Needs, Policy 21 • Region ecosystem for the 54 • Investment Opportunity Areas - Overview 97 Next Steps 139 Momentum and SDG-enabling Sector healthcare sector • Renewable Resources & Alternative 99 Prioritization for India Annexure I 140 • Investment Opportunity Areas - Overview 56 Energy Investment Opportunity Areas • Policy momentum and sector 23 Deep Dive Experts Consulted for the Report • Healthcare investment opportunity 58 prioritization areas deep dive • Renewable Resources & Alternative 104 Annexure II 142 • Priority sectors 24 Energy white spaces deep dive Sector relevant policy landscape • White spaces in the healthcare sector 65 • Industrial taxonomy used in the report 25 Annexure III 157 Financials 108 • Prioritizing states and regions 27 Food & Beverages 68 Process deployed for investment • Sector overview 109 opportunity areas shortlisting for investments • Sector overview 69 • Sectoral development needs 110 Annexure IV 164 • Sectoral development needs 70 Education 28 • Policy momentum 114 SDG Performance Index for India • Policy priorities 71 • Sector overview 29 • Private sector participation 115 • Private sector participation 72 • Sectoral development needs 29 • Priority subsectors 118 • Priority subsectors 74 • Policy momentum 33 • Region ecosystem for the sector 120 • Region ecosystem for the Food & 75 • Private sector participation 33 Beverages sector • Investment Opportunity Areas - Overview 121 • Priority subsectors 35 • Investment Opportunity Areas - Overview 76 ECCE Early Childhood Care and Education MFI Microfinance institutions PSB Public sector banks ECE Early Childhood Education MGNREGA Mahatma Gandhi National Rural Employment Guarantee PSL Priority Sector Lending EdTech Education Technology Act 2005 PSO Payment System Operators EESL Energy Efficiency Services Limited MHRD Ministry of Human Resource Development PSU Public-sector Undertakings List of EGoS Empowered Group of Secretaries MMR Maternal Mortality Ratio PV Photovoltaic eNAM Electronic National Agriculture Market MNC Multinational Corporations QCI Quality Council of India EODB Ease of doing business MNRE Ministry of New and Renewable Energy QR Quick Response Abbreviations EPC Engineering, Procurement and Construction MoFPI Ministry of Food Processing Industries R&D Research & Development EQUIP Education Quality Upgradation and Inclusion Programme MoHI Ministry of Heavy Industries RBI Reserve Bank of India used in the India EY Ernst & Young MoHFW Ministry of Health and Family Welfare RfS Request for Selection EV Electric Vehicle MoSPI Ministry of Statistics and Programme Implementation RMNCH+A Reproductive-Maternal- Neonatal-Child and F&B Food & Beverages MoU Memorandum of Understanding Adolescent Health Investor Map FAME Faster Adoption and Manufacturing of (Hybrid) and MoWR, Ministry of Water Resources, River Development and ROCE Return on Capital Employed Electric Vehicles RD & GR Ganga Rejuvenation RPO Renewable Purchase Obligations FC Float Charger MSME Micro, Small and Medium Enterprises RPSSGP Rooftop PV & Small Solar Power Generation Programme AAY Antyodaya Anna Yojana FDI Foreign Direct Investment MSP Minimum Support Prices RRB Regional Rural Banks AC Alternate Current FHP Farm Harvest Price MSW Municipal Solid Waste RRR Repair, Renovation and Restoration AePS Aadhar-enabled Payment System FICCI Federation of Indian Chambers of Commerce & Industry MW Mega Watt RTE Act Right of Children to Free and Compulsory Education AH&D Animal Husbandry and Dairying FIES Food Insecurity Experience Scale NABARD National Bank for Agriculture and Rural Development SAMPADA Scheme for Agro-Marine Processing and Development AiMeD Association of Indian Medical Devices Industry FII Foreign Institutional Investors NABCB National Accreditation Board for Certification Bodies of Agro-Processing Clusters AMTZ Andhra Pradesh MedTech Zone FLDG First Loan Default Guarantee NATRIP National Automotive Testing and R&D Infrastructure SANKALP Skills Acquisition and Knowledge Awareness for ANM Agent Network Management FM Finance Minister Project Livelihood Promotion API Active Pharmaceutical Ingredients FME Food Processing Enterprise NBFC Non-Banking Financial Company SBICAP SBI Capital Markets Ltd. APMC Agricultural Produce Market Committees FPI Foreign Portfolio Investors NCCD National Centre for Cold-chain Development SHREYAS Scheme for Higher Education Youth in APY Atal Pension Yojana FY Financial Year NCD Non-Communicable Disease Apprenticeship and Skills ARAI Automotive Research Association of India GDP Gross Domestic Product NDP Net Domestic Product SASB Sustainable Accounting Standards Board ASCI Agriculture Skill Council of India GEAC Genetic Engineering Appraisal Committee NEP National Education Policy SICS Sustainable Industrial Classification System ASER Annual Status of Education Report GEM Global Education Monitoring NFIS National Financial Inclusion Strategy SCORES SEBI Complaints Redressal System ASSOCHAM-PWC Associated Chambers of Commerce and Industry of India GER Gross Enrolment Ratio NFSA National Food Security Act SDG Sustainable Development Goals - Price Waterhouse and Coopers GFSI Global Food Security Index NGMIS National Groundwater Management Improvement SECI Solar Energy Corporation of India ATM Automated Teller Machine GHG Green House Gas Scheme SFB Small Finance Bank ATS Agricultural Technology System GMO Genetically Modified Organisms NGO Non-Governmental Organization SFC State Financial Corporation B2B Business-to-Business GoI Government of India NHS National Health Mission SHC Soil Health Cards B2C Business-to-Consumer GST Goods and Services Tax NIF National Indicator Framework SIDBI Small Industries Development Bank of India BC Business Correspondents GVA Gross Value Added NISA National Independent Schools Alliance SME Small and Medium Enterprise bcm billion cubic metres GW Giga Watt NISHTHA National Initiative for School Heads' and Teachers' SPV Special Purpose Vehicle BESS Battery Energy Storage Systems HDPE High-density Polyethylene Holistic Advancement SRI Self-Reliant India BEV Battery Electric Vehicle HFC Housing Finance Companies NLEM National List of Essential Medicines SRO Self-Regulatory Organizations BFSI Banking, Financial Services and Insurance HWC Health and Wellness Centre NMSA National Mission for Sustainable Agriculture STEM Science, Technology, Engineering and Mathematics BoG Board of Governors IBA Indian Bankers Association NOX Nitrogen Oxide STRIVE Skill Strengthening for Industrial Value Enhancement BoP Bottom of the Pyramid IBEF India Brand Equity Foundation NPA Non-Performing Asset SWM Solid Waste Management BPS Budget Private School IBSC Indian Bio-medical Skill Consortium NPPA National Pharmaceutical Pricing Authority T&D Transmission and Distribution BPSS Board for Regulation and Supervision of Payment and IC Internal Combustion NPCI National Payments Corporation of India TCO Total Cost of Ownership Settlement Systems ICAR Indian Council of Agricultural Research NPDD National Programme for Dairy Development TOP Tomato, Onion and Potato BSBDA Basic Savings Bank Deposit Accounts ICDS Integrated Child Development Services NSQF National Skills Qualifications Framework TPED Total Primary Energy Demand C&I Commercial and Industrial ICMED Indian Certification of Medical Devices NSS National Sample Survey TReDS Trade Receivables Discounting Systems CAD Command Area Development ICRA Investment Information and Credit Rating Agency of India NASSCOM National Association of Software and Service Companies UCB Urban Cooperative Bank CAGR Compound Annual Growth Rate ICT Information and Communications Technology NHB National Housing Bank U-DISE Unified District Information System for Education CAPEX Capital Expenditure IEEFA Institute for Energy Economics and Financial Analysis OECD Organisation for Economic Co-operation and UNCTAD United Nations Conference on Trade and Development CCC Certified Credit Counsellors IFC International Finance Corporation Development UHC Universal Health Coverage CCEA Cabinet Committee on Economic Affairs IMF International Monetary Fund OEM Original Equipment Manufacturer UIDAI Unique Identification Authority of India CDSCO Central Drugs and Standards Control Organization IMP Impact Management Project OOP Out-Of-Pocket ULB Urban Local Bodies CEA Central Electricity Authority INR Indian National Rupee OPEX Operating Expenditure UNESCO United Nations Educational, Scientific CECED Centre for Early Childhood Education and Development IOA Investment Opportunity Area OPPI Organisation of Pharmaceutical Producers of India and Cultural Organization CGWC Central Ground Water Commission IoT Internet of Things P2P Peer-to-Peer UNFAO United Nations Food and Agriculture Organization CIPPB Canada Investment Plan Pension Board IPCC Intergovernmental Panel on Climate Change PACS Primary Agricultural Credit Society UNICEF United Nations Children's Fund CNG Compressed Natural Gas IRDAI Insurance Regulatory And Development Authority of India PAT Profit After Tax UPI Unified Payments Interface CO2 Carbon Dioxide IREDA Indian Renewable Energy Development Agency PCR Public Credit Registry USD United State Dollars COVID-19 Coronavirus Disease IRR Internal Rate of Return PDC Project Development Cell UT Union Territory CUF Combined Utilization Factor IT Information Technology PHC Primary Health Centre VC Venture Capital cu m Cubic metres ITES Information Technology-enabled Services PE Private Equity WASH Water, Sanitation and Hygiene CPCB Central Pollution Control Board ITP Institutional Trading Platform PISC Project Implementation and Sanctioning Committee WHO World Health Organization CSE Centre for Science and Environment IWPA Indian Wind Power Association PLF Plant Load Factor WLAO White Label ATM Operators CSR Corporate Social Responsibility JLG Joint Liability Group PLI Production Linked Incentive WSH Wind-Solar Hybrid CWC Central Water Commission JNNSM Jawaharlal Nehru National Solar Mission PM-AASHA Pradhan Mantri Annadata Aay SanraksHan Abhiyan WTO World Trade Organization CWMI Composite Water Management Index JNNURM Jawaharlal Nehru National Urban Renewal Mission PMFBY Pradhan Mantri Fasal Bima Yojana YoY Year-on-year CY Calendar Year KCC Kisan Credit Card PM-JAY Pradhan Mantri Jan Arogya Yojana ZEV Zero-Emission Vehicle DBT Direct Benefit Transfer KSM Key Starting Materials PMJDY Pradhan Mantri Jan Dhan Yojana DC Direct Current KVK Krishi Vigyan Kendras PMJJBY Pradhan Mantri Jeevan Jyoti Bima Yojana DCGI Drug Controller General of India KW Kilo Watt PMKS Pradhan Mantri Kisan Scheme DEDS Dairy Entrepreneurship Development Scheme KYC Know Your Customer PMKSY Pradhan Mantri Krishi Sinchayee Yojana DHI Department of Heavy Industries LAB Local Area Banks PMMY Pradhan Mantri Mudra Yojana DIKSHA Digital Infrastructure for Knowledge Sharing LFPR Labour Force Participation Rate PMAY Pradhan Mantri Awas Yojana DIDF Dairy Processing and Infrastructure Development Fund LLC Limited Liability Company PM-KISAN Pradhan Mantri Kisan Samman Nidhi DISCOM Distribution Companies LoA Letters of Award PMSBY Pradhan Mantri Suraksha Bima Yojana DPCO Drug Price Control Orders MAT Minimum Alternate Tax PMSMA Pradhan Mantri Surakshit Matritva Abhiyan DPIIT Department for promotion of Industry and Internal Trade M&A Mergers and Acquisitions PMSSY Pradhan Mantri Swasthya Suraksha Yojana DRIP Dam Rehabilitation and Improvement Programme MCI Medical Council of India POS Point of Scale EBITDA Earnings Before Interest, Taxes, Depreciation and MCM million cubic meters PPA Power Purchase Agreement Amortization MeitY Ministry of Electronics and Information Technology PPP Public-Private Partnership Foreword Foreword Dr. Rajiv Lall Mr. Deepak Bagla

Member, Steering Committee, SDG Impact & Co-Chair, CEO and Managing Director, Invest India SDG Finance Facility platform, UNDP

he Sustainable Development Goals (SDGs) (to ensure high quality human capital) and or a country with 1.3 billion people, a exhibits a glorious opportunity to both foreign and the 2030 agenda provide a global industrial sectors to create jobs and gainful number that is equivalent to almost one- and domestic investors to leverage the lucrative Tframework for addressing the most urgent entrepreneurial opportunities. Fsixth of humanity, India occupies a key role market forces in India, aid the nation to realise social, environmental and development in determining the success of the SDGs, globally. its SDG targets and impact lives of millions of The SDG Investor Map report makes a concerted challenges. This is not the responsibility of The Government of India's (GoI) commitment Indians. We hope our data-backed research effort to identify sectoral opportunities that are governments alone, we need the private sector, towards the global SDGs is exhibited by India's and insights serve as useful blueprints to responsive to key development challenges, while its resources and ability to innovate, to achieve mission for inclusive, equitable and sustainable understand how best the SDG financing gap can being economically viable and scalable. The Map the SDGs. growth and is amply resonated by the be narrowed in India. has been developed by deploying a robust developmental motto of 'Sabka Saath, Sabka Businesses and investors are increasingly being research methodology and a highly consultative This initiative is an instrumental stride in India's Vikas, Sabka Vishwas' (Collective Efforts for held accountable for not just profit outcomes but approach that involved over 50 structured development trajectory, and I believe it couldn't Inclusive Growth). GoI has launched several also their contributions to communities and the interviews, highlights investor sentiment in have transpired at a better time. The COVID-19 initiatives and introduced a number of reforms environment. While there is an increase in subsectors and broad opportunity areas, while pandemic has disrupted lives, communities and such as Make in India, Digital India, Swachh investments that target a double or triple bottom also suggesting viable business models that can businesses worldwide. The virus outbreak has Bharat Abhiyaan, Ayushman Bharat and the line, the efforts are not commensurate to be supported. accentuated the exigency and significance of Smart Cities Mission, reforms that demonstrate create the tectonic shifts that are needed as we aligning public and private efforts to ensure that 18 Investment Opportunity Areas (IOAs) across this unparalleled priority. Based on the evidence embark on the 'Decade of Action' to achieve the we achieve growth with purpose, and “reach the sectors like Education, Healthcare, Renewable from the NITI Aayog's SDG India Index, which 2030 agenda. farthest first”. Resources & Alternative Energy, Food & measures progress at the subnational level, the COVID-19 has further challenged development Beverages (F&B) and Financial Services have country has developed a robust SDG localization While policy-centric initiatives have a huge role to models and businesses in myriad ways and have been identified. Over 80 percent of these IOAs model centred on adoption, implementation and play in centralizing SDGs within with governance significantly impacted the gains that were made address productivity issues such as employment monitoring at the State and district levels. framework, the 'Decade of Action (2020-30)' towards SDGs. UNDP estimates show that global generation and over 50 percent of the suggested warrants active participation of not only the Being the national investment promotion and human development – a combination of opportunities leverage technology to bridge the government and public institutions, but also the facilitation agency, Invest India aims to play a education, healthcare and living standards could access gap. Almost all the highlighted private sector. We hope that our efforts will help pivotal role in India's SDG trajectory. Invest India be adversely affected for the first time since opportunities have a focus on populations in low pave the way towards a more promising and not only adopts SDGs as a key driver of its 1990 when the measurements first began1 . India, resource settings. responsible investment ecosystem in the country investment promotion lifecycle but also like many peer economies, has its task cut out to and help bear testimony to the strength of We hope that this results-oriented, data-driven conceptualizes, curates and helps execute boost economic growth at least to its pre- collaborative effort. This development also approach that highlights high impact and bespoke projects targeted at specific SDGs. More pandemic levels and also ensure inclusivity in its comes at an opportune time when the demand innovative business models leads to a greater importantly, Invest India has deployed a series of recovery measures. for financial returns coupled with desired social flow of capital and pathways for collaboration. tools and enablers to make the SDG orientation or environmental impact, is growing manifold. Accelerating the recovery will require directing a key component across the investment We are thankful to Invest India for their Hence, the SDG Investor Map for India is capital flows into sectors and businesses that ecosystem and among its various government collaboration on this important initiative and we uniquely poised to help build fruitful scaffold the overall development of people and and non-government stakeholders. hope that the partnership shifts the discourse in partnerships between investors, industry and planet. These are notably sectors like Agriculture the way commercial funds are invested in India. Invest India is honored to have partnered with policy-makers, as well as reinforce the focus on (to address food security issues), Healthcare (to UNDP India to develop the first-ever, 'SDG the five pillars that shape the SDGs: People, ensure access to universal healthcare), Education Investor Map for India'. The SDG Investor Map Planet, Prosperity, Peace and Partnerships. offers an integrated and functional lens to I would like to wholeheartedly thank everyone respond to India's development needs by Source: who has provided their invaluable inputs to 1. Conceição, P., Hall, J., Nayyar, S. and Melendez, M. (2020). COVID-19 AND HUMAN DEVELOPMENT: Assessing the Crisis, Envisioning the Recovery. undp.org. showcasing 18 IOAs across sectors such as Available at: http://hdr.undp.org/sites/default/files/covid-19_and_human_development_0.pdf. this exercise and express my sincere gratitude Education, Healthcare, Renewable Resources & to UNDP India for undertaking this Alternative Energy, F&B and Financial Services. ambitious endeavour. Product and service delivery in these IOAs 01 02 Message Acknowledgements Mr. Amitabh Kant he Investor Map development process for Investment Promotion Agency for GoI, Think Chief Executive Officer India has been a work of deep Tanks and Industry Networks. These experts National Institution for Transforming India collaboration and participation from encouraged us to organize our research in a Government of India T multiple stakeholders. In this report, we have tangible framework, providing us with critical attempted to capture the rich information and information about the investment landscape in insights received from government and private India and factors that will drive the investor sector colleagues to showcase the diverse sentiment going forward. We would specifically would like to congratulate the country office The SDG Investor Map recognises the investment opportunities that can contribute to like to thank Abhay Kumar Singh (FICCI), Eittee of UNDP and Invest India, Department for progressive strides taken by the country in India's growth story, deliver returns to investors Gupta (FICCI), Sanyukta Samaddar (NITI Aayog), Promotion of Industry and Internal Trade creating an enabling environment for I and make significant contributions to outpace Vikram Singh Mehta (Brookings India), Imran (DPIIT), Ministry of Commerce and Industry, for investments. While the pandemic has brought the development challenges in the country. Jafar (Gaja Capital), Nirav Khambhati (Kaizenvest), launching the SDG Investor Map for India in forth several challenges across all sectors, it has Examples set by audacious investors and Geeta Goel (Michael and Susan Dell Foundation), these apposite circumstances as India embarks further energised and emboldened GoI to bring enterprises that made the idea of commercial Arnav Kapur (Bill and Melinda Gates Foundation), on a journey towards a resilient recovery from about reforms aimed at long-term investments in SDG-enabling sectors and Amie Patel (Elevar Equity), Avinash Mishra the disruptions brought about by the pandemic. transformation. SDG-aligned investments in business models have spurred the production of (Global Innovation Fund), Sheeba D Mello As we focus on building back better, the conjunction with these enabling and this report. We remain grateful to these (Prayog Advisors), Nethra Bhat (Accion), Abhishek private sector will play a vital role in realising the transformative reforms have the potential of innovators. Agarwal (Accion), Nilesh Shrivastava (National 2030 agenda. accelerating progress in realising the 2030 Investment and Infrastructure Fund), Ragini Bajaj agenda as we step into the 'Decade of Action'. We would also like to acknowledge the following It gives me immense pleasure to note that NITI Chaudhary (Caspian Impact Investments Pvt. team members, colleagues, sector experts and Aayog's SDG India Index has been leveraged by Ltd), Simrun Mehta (Kohlberg Kravis Roberts), supporters who made contributions to this UNDP and Invest India in developing the SDG Sanjay Gandhi (Gojo & Company), Praachi report: Investor Map. First released in 2018, the SDG Gandhi (Gojo & Company), Shruti Srivastava India Index and Dashboard has become a UNDP: Karanraj Chaudri, Sebnem Sener, (Omnivore), Shivnath Thukral (Facebook), Noshir powerful tool for measuring progress on the Sara Lisa Orstavik, Riya Saxena, Kaustav Sood, Colah (Aavishkar), Hari Rajagopal (Samunnati), Global Goals at the sub-national level, fostering Vidhi Khabya Abhishek Thanvi (Samara Capital), Barath competitive federalism and catalysing Shankar Subramanian (Accel), Bhanu Mehrotra, Team of consultants: Devahuti Choudhury and localization of SDGs. The index has been bringing Hemant Mandal (International Finance Ritika Mehrotra. Rhea Grover contributed to the together all the sub-national governments to Corporation), Aditi Gupta (Asha Impact), Akash analysis that was used for the development of create a shared understanding of the goals, Singh (Sagana), Sujeet Govindaraju (Canada the report. Pratigya Kalra Khurana was including creating opportunities for Investment Plan Pension Board), Sudershan consultant advisor to the project. cross-learning. Sampathkumar (The Bridgespan Group) and Invest India: Bhaskar Chaturvedi, Dushyant Ramraj Pai (Impact Investor's Council). Anchored by the development needs of different Thakor, Vishal Kumar, Anusha Bhagat, Shubhangi regions recognised through the SDG India Index Prasad, Vipul Nanda, Prerna Soni, Rahul Agarwal, with IOAs, white spaces, sectors and subsectors Gaurav Sisodia, Akriti Bajaj, Shivam Batham, outlined, this report is an important contribution Kanika Verma, Pallavi Bishnoi, Chetan Chopra towards strengthening the means of and Atul Bist implementation and in unshackling the power of partnerships with the private sector for achieving We conducted sector-specific consultations with the SDGs. As part of the methodology, valuable various Venture Capital (VC)/Private Equity (PE) insights elicited in the stakeholder consultations funds, sovereign funds, pension funds, impact with a myriad of investors have further enriched investors, Development Finance Institutions, the development of this tool.

03 04 SDG Investor Map Report for India-2020

Project Collaborators

Invest India is the national investment promotion and facilitation agency of India. It handholds investors in their India investment journey that includes establishing, operating and SDG Impact is a UNDP flagship initiative focused on expanding their businesses in India. It provides comprehensive supporting the mobilization of private sector capital and facilitation including strategic business advisory, policy investments in support of the SDGs. By providing investors guidance, location assessment, issue redressal and expansion and businesses with the clarity, insights and tools required to support. Invest India focuses on sector-specific investor support and authenticate their contributions to achieving the targeting and development of new partnerships to enable SDGs, SDG Impact's vision is a world in which all capital flows sustainable investments in India. Invest India also actively works advance the 2030 agenda. By driving consistency and with several Indian States to build capacity as well as bring in accountability, SDG Impact will work to enable more effective global best practices in investment targeting, promotion and investment towards global good. It will allow investors, facilitation areas. More importantly, Invest India has deployed a businesses and others to confidently authenticate their series of tools and enablers to make the SDG orientation a focus contributions to achieving the SDGs and to identify SDG across the investment ecosystem and among its various investment opportunities in emerging economies and government and non-government stakeholders. In addition to developing countries. This initiative is the first-of its-kind at being the execution agency for GoI's 'Make in India' and 'Startup the United Nations, and the champions and thought leaders India' initiatives, Invest India is also the execution agency for the on the Steering Group represent an influential cross-section national technology commercialization programme, of industries from the global North and South that can 'Accelerating Growth of New India's Innovations' (AGNIi) and collectively influence investing around the world. 'Swachh Bharat Unnat Bharat Abhiyan' from the Office of the Principal Scientific Adviser to the GoI.

UNDP works across 170 countries and territories to eradicate poverty while protecting the planet. We help countries The SDG Finance Facility is a multi-stakeholder platform that develop strong policies, skills, partnerships and institutions so supports the incubation and design of SDG-aligned innovative they can sustain their progress. UNDP has worked in India financial instruments that will crowd-in additional capital to since 1951 in almost all areas of human development, from address the key development challenges in India. It also systems strengthening to inclusive growth and sustainable works to strengthen the sustainable finance market livelihoods, as well as sustainable energy, environment and architecture in India and supports the development of resilience. UNDP's programmes continue to integrate a global innovative finance through actionable research and strategic vision for catalytic change with India's national priorities. With partnerships. The SDG Finance Facility is anchored by UNDP over 30 projects on the ground in almost every state, today, it with support from the Swiss Agency for Development works to achieve the SDGs by transforming traditional models and Cooperation. to do development differently. SDG Investor Map Report for India-2020

Executive Summary

Context

lobal cooperation and collaboration lie at growth. Further, World Bank Group's 'Doing sectors, policy landscape, market ecosystem, and of the pandemic such as a surge in the demand the centre of achieving the SDGs. Business 2020' report credits policy and financial identify areas where their work can have a for healthcare, consumer demand suppression GInvestors, enterprises, civil society reforms under the 'Make in India' campaign in significant development impact. Invest India, in and value chain disruptions across sectors. organizations, international development attracting foreign investment, boosting its role as an Investment Advisor, supported Second-order effects and more long-term needs networks and national governments must participation, particularly in the manufacturing UNDP's SDG Impact in facilitating consultations, such as Productivity (industrialization and collaboratively approach and contribute to the sectors and improving country's overall convenings for the project team with leading employment generation), Inclusion (vulnerable solutions that can help achieve the 17 SDGs and competitiveness, ensuring flow of capital to private investment institutions and contributing and marginalized communities, businesses most their 169 underlying targets by 2030. As we move SDG-enabling sectors, among others. Key steps to analysis around identification of key business affected by the pandemic), Technology into the 'Decade of Action', ensuring financing of such as a progressive tax regime, bolstering models/IOAs. Adoption and Digitization (warranted by social sectors, subsectors and business models, that cross-border trade and stringent steps to distancing norms and alternative solutions to In addition to the SDGs, the Investor Map for are relevant to the SDGs, has never been resolve insolvency are some of the key stay connected), Environmental Sustainability India also took cognizance of the COVID-19 more urgent. factors contributing to the ease of doing and Infrastructure Development were pandemic and the development needs that business in India. identified as key determinants in the selection of In its 2014 World Investment Report, United emerged as focus areas for GoI, private sector investment and business opportunities Nations Conference on Trade and Development The contribution of the private sector to boost and the civil society. To this end, the analytical highlighted in the report. (UNCTAD) estimated that the SDGs would sectoral growth is reflected by the growing framework used for the development of this globally require investments of USD 5 trillion to volume of investments in India. The PE/VC report identified and validated first-order effects USD 7 trillion annually and USD 2.5 trillion of this industry has continued to show positive funding gap was for emerging economies like sentiment towards India as an investment India alone.2 Though investments from the public destination with USD 48 billion invested across and private sectors have grown to meet this sectors in 2019. Between January 2019 and July Methodology The development of the Investor Map followed an eight-step methodology funding requirement, the volume of 2020, India has received ~USD 70 billion from and process that is being replicated by UNDP country offices across the globe. investments is not yet in the order that would institutional investors. This is almost equal to all make a significant dent in the estimated the PE investments received by India between investment gaps3 . 2013 and 20177 . The PE/VC investors are also the The methodology follows a 'funnel' process that begins by taking stock of national development largest source of Foreign Direct Investments (FDI) needs and policy priorities, investment momentum by public and private sectors, priority Home to almost a fifth of the world's population4 , in the country with over 80 percent of total sectors, subsectors, regions with the highest development needs and a conducive environment the advancement of India on its SDG investments made8 . Investments are also fuelled to attract investments commitments is key to the success of the 2030 by the growth and stability in Gross Domestic global agenda. India's commitment to the SDGs Product (GDP) that has been achieved through is reflected in its convergence with the national the development of both economic The methodology finally helps to identify the SDG-relevant IOAs that are fundamentally development agenda as reflected in the motto of infrastructural facilities (energy, transport, marketable, scalable and have shown evidence of private sector investments with 'Sabka Saath Sabka Vikas' (Collective Efforts for irrigation, finance and communication) and favourable returns Inclusive Growth). NITI Aayog, the apex policy social infrastructure (education and health). think tank for GoI, is mandated to oversee the implementation of the global goals in the With these positive tailwinds defining the India's country5 and the Ministry of Statistics and growth story, UNDP in India has collaborated This report also includes white spaces in each sector. These are IOAs with potential for growth in Programme Implementation (MoSPI) is with Invest India, the national investment the 5-7 years horizon aligned with development needs and government policies but have responsible for creating the National Indicator promotion and facilitation agency of India under limited private sector participation Framework (NIF) to help in monitoring the DPIIT, Ministry of Commerce and Industry, GoI, progress made on SDGs and their relevant for the development of an SDG Investor Map targets6 . The contribution is further augmented with guidance from SDG Impact team in UNDP by increased government efforts to commit headquarters. SDG Investor Maps are a market For the analysis of region-specific business environment for the identified sectors and subsectors, 9 public funds to SDG-relevant sectors and to intelligence tool that provides localized data and the report takes into account the regional divergence identified by NITI Aayog's SDG Index report create a favourable ecosystem for the private specific information on investment and business in the achievement of sub-national SDG goals. The regional analysis is further supplemented by sectors to participate in boosting economic opportunities that align with the SDGs. Users can understanding the urban-rural disparities in income distribution, consumption patterns, quality of apply various filters to narrow in on regions, access to services and prevailing ecosystem for private sector participation

07 08 SDG Investor Map Report for India-2020

Priority sectors and regions of the sectors are also part of the 10 SDG- relevant sectors that have been highlighted in The report identified six priority sectors for the UNCTAD World Investment Report. Further, inclusion in the India Investor Map. These are – 13 subsectors have been selected to add more Investment Opportunity Areas Education, Healthcare, Food & Beverages, focus that best respond to India's development Renewable Resources & Alternative Energy, needs and policy priorities. While framing the opportunity areas, it was also Financials and Sustainable Environment. Four ensured that such are sufficiently specific, within which diverse kinds of deals/transactions can take place but also broad enough for investors to have the flexibility to deploy the best-suited funding Specifically, the report highlights the following IOAs under each vehicle. The business models alluded to in the of the five SDG-relevant sectors sector chapters are suggestive and the relevant ecosystem continues to innovate approaches and models to adapt to changing consumer needs. The process for developing the Investor Map for Education India was highly consultative with nearly 50 virtual, structured interviews conducted with government agencies, sector policy experts, think India will be home to the largest workforce in the world by 2027 and has the largest school-going 12 tanks, industry bodies, private sector investors population in the world of over 250 million students. Education and skills development of India's large and international development networks. At each and growing human capital is imperative for the country's socio-economic growth. The sector has seen stage of the process, the project team pressure significant investment momentum from the private sector in the past, with FDI worth USD 3.24 billion tested emergent hypotheses and themes with flowing into Education between April 2000 and March 2020. The COVID-19 pandemic and the social experts to determine the SDG-relevant sectors distancing norms thereof have surged the demand for Education Technology (EdTech) platforms, making and IOAs that are most geared to support India's it an attractive investment area. Overview of our findings for the Education sector are as follows: development needs and policy priorities.10

Market Size Currently estimated to be over USD 100 billion Outputs of the Investor EdTech platforms received 20% of all VC investments in the first Map development exercise Investment Activity two quarters of 2020 The Investor Map for India has identified 18 IOAs and 8 white spaces across 6 sectors and Investment Opportunity SDGs Directly Subsectors 13 subsectors. To standardize the mapping Areas Identified Impacted process and to facilitate comparisons at a global Online K12 Supplementary level with peer UN Country Offices, the Investor Education Technology Maps use Sustainable Accounting Standards Education Board's (SASB) Sustainable Industrial Online Higher Education Formal Education Classification System (SICS) to help categorize and Skill Development investor and enterprise activity using a 11 Education Institute sustainability lens. The Education sector is not Education Financing Financing adequately represented in the SASB SICS and has been added separately. Opportunity areas such as online (low-tech) upskilling platforms for the unorganised workforce have the potential for strong development impact albeit with unproven commercial viability as a standalone business and have been highlighted as a white space in the sector.

09 10 SDG Investor Map Report for India-2020

Renewable Resources & Healthcare Alternative Energy

Focus on Healthcare has seen a surge after the outbreak of COVID-19 pandemic with growing public India's geographical location renders it as favourable for executing Renewable Resources & Alternative sector financing and an equally responsive private sector including civil society organizations coming Energy projects leveraging solar, wind and other sources. GoI has updated its target from 175 Giga Watt together to address immediate and anticipated long-term effects. Areas such as digital healthcare have (GW) to be achieved by 2022 (through funding and investment gap of USD 100 billion15 ) to 450 GW to be especially seen innovations fuelled by increased investor attention, a trend that is likely to continue in the achieved by 2030. Participation of the private sector is imperative to mobilize the requisite capital flows long term. Overview of our findings for the Healthcare sector are as follows: and to achieve such a target. Overview of our findings for the Renewable Resources & Alternative Energy sector are as follows:

Market Size USD 372 billion by 202213 As on April 30, 2020, the installed Renewable Resources & Alternative Market Size Energy capacity stood at 87.26 GW16 PE & VC Investments in Healthcare and Healthcare Technology in 2019 Investment Activity were c. USD 3.62 billion, 16.3% higher than in 201814 By the first half of 2020, the energy sector had received USD 1.8 billion Investment Activity across 8 PE Investments, 7 of which were in Renewable Resources & 17 Investment Opportunity SDGs Directly Alternative Energy Subsectors Areas Identified Impacted Investment Opportunity SDGs Directly Subsectors Low-Cost Hospital Satellite Healthcare Areas Identified Impacted Centres/Care Units Delivery in Non-Metros Rooftop Solar for Residential, Solar Technology Commercial and Industrial Tech-enabled Remote & Project Developers Healthcare Delivery Energy Needs Care Services

Aﬀordable Medical Medical equipment Manufacturing of EVs Electric Vehicle (EV) Devices and Consumables and supplies EV Based Services for Electric Vehicle Active Pharmaceutical Biotechnology Logistics, Hyperlocal Ingredient Manufacturing & Pharmaceuticals Delivery and Micro-Mobility

Solutions for Reducing Wind Technology Variability in RE Power & Project Developers White spaces include opportunity areas such as primary care centres and services in rural areas Generation, Achieving Greater that have high development impact potential but have seen little private sector traction both in Grid Stability and Ensuring terms of innovative business models and investments. Round-the-Clock Energy Generation and Supply

IOAs such as ﬂoating solar projects and charging infrastructure for EVs have been highlighted as white spaces as they have a potential for strong development impact but currently lack scale and commercial viability.

11 12 SDG Investor Map Report for India-2020

Food & Beverages (F&B) Financials

Nearly 60 percent of rural households in India depend upon agriculture and allied activities for their The COVID-19 pandemic has highlighted the need to create financial safety nets, especially for vulnerable livelihoods, making it critical to enhance the income-generating capacities of the farming communities.18 populations that have little recourse in hard times, pushing them into adopting negative coping GoI has an ambitious plan to double farmers' income by 2022, and the private sector can play a key role mechanisms. The pandemic has also highlighted the need to facilitate accessible and flexible credit lines in supporting innovative business models that can address gaps around market access, improve technical to revive Micro, Small and Medium Enterprises (MSMEs) evidenced by a slate of measures announced by capabilities around climate-resilient farming practices, digitization and strengthening of agricultural value GoI to that effect. Overview of our findings for the Financials sector are as follows: chains, among others. Overview of our findings for the F&B sector are as follows: Between FY16 and FY20, credit extended by Banking, Financial 21 Estimated to reach USD 1,183 billion by 2023, growing at a compound Market Size Services and Insurance (BFSI) sector surged to USD 1936.3 billion. Market Size 22 annual growth rate (CAGR) of 12.2%19 Market size for Fintech is estimated to be at USD 92 billion by 2021

F&B sector received USD 883 million across 83 PE and VC Total investments in the BFSI sector, including VC investments in Non- Investment Activity deals in 201920 Investment Activity Banking Financial Companies (NBFCs), was USD 9.1 Billion in 2019, up by 20% from 201823 Investment Opportunity SDGs Directly Subsectors Areas Identified Impacted Investment Opportunity SDGs Directly Subsectors Areas Identified Impacted Digital platforms to service Food Retailers input (seeds, nutrition and & Distributors MSME financing through Consumer Finance pest control) needs of digital and offline channels farmers and increase their market reach Fintech platforms for Consumer Finance facilitating payment Tech-enabled supply chains Food Retailers & transactions for fresh farm produce to Distributors create linkages between Asset lean acceptance Consumer farmers' produce and retail infrastructure for Finance stores/end consumers last-mile banking Food processing of farm Processed Food connectivity produce to reduce wastage and diversify offerings

Production and delivery Meat, Poultry of dairy products and Dairy Digital and offline insurance for low-income segments has been identified as a white space for its potential to provide socio-economic protection and increased financial resilience to low-income consumers but with fewer commercially viable models that work at scale.

Eﬃcient storage infrastructure for agricultural produce to reduce post-harvest losses and risk mitigation products to safeguard farmers from price ﬂuctuations have been shortlisted as white spaces that have strong scale potential but fewer market-proven business models.

13 14 SDG Investor Map Report for India-2020

Next steps Private Investment The Investor Map for India is an attempt by UNDP and Invest India to highlight potential business Landscape opportunities with a conducive policy environment that can create a high development impact. The Investor Map will be used to drive the discourse for policy-level interventions to enhance the ecosystem to encourage private sector investors to mobilize and drive commercial capital into the identified SDG- ndia's large consumer base, progressive Furthermore, 2019 saw a total of 200 exit- relevant sectors. economic reforms in key sectors and GoI's transactions, valued at ~USD 12.8 billion, brand-building initiatives have supported its signifying investor confidence in the Indian Further, the convenings and facilitation platforms enabled by the application of insights from the Investor I maturation into an attractive investment ecosystem and healthy public markets. These Map are anticipated to drive an informed and strategic movement toward making the 2030 SDG agenda destination. Opening up key sectors such as exits were dominated by sectors such as central to private sector's initiatives. defence, pharmaceuticals and media to FDI in consumer technology, information technology 2015 and easing regulations in sectors such as and information technology-enabled services single-brand retail and private banking have also (IT and ITES), and BFSI, with the top 10 exits helped encourage multinationals to enter India accounting for 70 percent of the total exit value. and set up operations and invest. Most funds have generated healthy returns on Sources: their investment across most sectors, with Between 2000 and 2020, FDI equity inflow in consumer technology, IT/enterprise tech and 2. UNCTAD (2014). World Investment Report 2014. Switzerland: 15. www.ETEnergyworld.com (n.d.). Another $100-bn investment India reached ~USD 470 billion, with maximum United Nations. Available at: required to meet 175 GW RE target: MNRE Secy - ET BFSI reporting the highest multiples on invested contribution in sectors like services, computer https://unctad.org/system/files/official- EnergyWorld. ETEnergyworld.com. Available at: capital. Returns have seen an upward trend over document/wir2014_en.pdf. https://energy.economictimes.indiatimes.com/ software and hardware, telecommunications, the past years, increasing from an average of 3. UNCTAD (2020). World Investment Report 2020. Switzerland: news/renewable/another-100-bn-investment-required-to-meet- construction, trading and automobile sectors24 . United Nations. Available at: 175-gw-re-target-mnre-secy/73806002 about 3x in 2014-15 to nearly 4x in 2018-19.25 https://unctad.org/system/files/official- 16. www.ibef.org. (n.d.). Renewable Energy Industry in India: Foreign Portfolio Investors/Foreign Institutional document/wir2020_en.pdf. Overview, Market Size & Growth | IBEF. Available at: Investors (FPIs/FIIs) have been the prime drivers 4. data.worldbank.org. (n.d.). Population, total - India, World | https://www.ibef.org/industry/renewable- Data. Available at: energy.aspx#:~:text=Power%20generation%20from%20renewab of India's financial markets investing ~USD https://data.worldbank.org/indicator/SP.POP.TOTL?locations=IN- le%20energy 174.55 billion between 2001 and 2020. 1W. 17. PWC (2020c). Deals in India: Mid-year review and outlook for 5. Niti.gov.in. (2018). Sustainable Development Goals | NITI Aayog. 2020 - pause and consolidation. Available at: Available at: https://niti.gov.in/index.php/verticals/sustainable- https://www.pwc.in/assets/pdfs/services/deals/deals-in-india- dev-goals mid-year-review-and-outlook-for-2020-pause-and- Figure 1: Annual PE investments in India in USD billion 6. www.mospi.gov.in. (n.d.). Role of MOSPI in SDGs | Ministry of consolidation.pdf. Statistics and Program Implementation | Government Of India. 18. KPMG. (2020). Agriculture and irrigation - KPMG India. Available Available at: http://www.mospi.gov.in/role-mospi-sdgs#:~: at: https://home.kpmg/in/en/home/insights/ 2020/08/catalysing- Annual investments in India text=The%20Ministry%20of%20Statistics%20and the-national-infrastructure-pipeline-project- 7. EY (2020). Are you supporting tomorrow's deals with yesterday's india/agriculture.html operations? ivca.in. Available at: https://ivca.in/wp- 19. Markets, R. and (n.d.). India Agriculture Market Report 2018- content/uploads/2020/09/IVCA-EY-PEVC-Roundup-for-Aug- 2023. www.prnewswire.com. Available at: 2020.pdf. https://www.prnewswire.com/news-releases/india-agriculture- 50 8. EY (2020). In today's frenetic world, how does private equity set market-report-2018-2023- 45.1 the pace? ivca.in. Available at: https://ivca.in/wp- 300709483.html#:~:text=The%20agriculture%20industry%20in% content/uploads/2020/02/IVCA-EY-PEVC-roundup-for-January- 20India. 40 2020.pdf 20. EY (2020). In today's frenetic world, how does private equity set Q4 9. sdgindiaindex.niti.gov.in. (n.d.). SDG India Index and Dashboard the pace? ivca.in. Available at: https://ivca.in/wp- 30 | iTech Mission. Available at: https://sdgindiaindex.niti.gov.in/#/. content/uploads/2020/02/IVCA-EY-PEVC-roundup-for-January- 26.8 26.3 22.9 Q3 10. List of sector experts, organizations consulted for the 2020.pdf development of the India Investor Map report can be found 21. IBEF (2020). Banking August 2020. Available at: 20 16.8 https://www.ibef.org/download/Banking-August-2020.pdf. 14.8 15.1 Q2 under Annex I 11.8 22. www.investindia.gov.in. (n.d.). BFSI – Fintech & Financial Services. 10.2 11. Sustainability Accounting Standards Board. (2012). Find Your 10 9.5 Industry - Sustainability Accounting Standards Board. Available Available at: https://www.investindia.gov.in/ sector/bfsi-fintech- Q1 at: https://www.sasb.org/find-your-industry/ financial-services. 12. IBEF (2020b). Growth of Education Sector in India - Infographic. 23. www.ey.com. (n.d.). 2019, A record year for PE/VC investments 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 www.ibef.org. Available at: on the back of large investments in infrastructure: IVCA-EY https://www.ibef.org/industry/education-sector- report on a Y-o-Y basis, investments grew 28%. Available at: Number 380 531 551 696 800 1,049 976 700 793 1,053 india/infographicpresentation#:~:text=India%20has%20over%20 https://www.ey.com/en_in/news/2020/03/record-year-for-pevc- of deals 250%20million. investments-on-the-back-of-large-investments-in-infrastructure 13. Invest India analysis 14. Babu, G. (2019). PE, venture capital deals in healthcare, health tech firms grew 16% in 2019. Business Standard India. 30 Dec. Source: Bain & Company and IVCA (2020). India Private Equity Report 2020. Bain & Company. Available at: https://www.business- Available at: http://ivca.in/wp-content/uploads/ 2020/05/bain_report_india_private_equity_report_2020.pdf. standard.com/article/companies/pe-venture-capital-deals-in- healthcare-health-tech-firms-grew-16-in-2019- 119123000655_1.html#:~:text=%C2%ABBack-

15 16 SDG Investor Map Report for India-2020

Pre-pandemic estimates by industry experts earned returns higher than 15 percent. As of Introduction to Investor showed that 60 percent of India's GDP is fuelled 2019, most impact investments in India were by domestic consumption, a sign of increasing focused in SDG-relevant sectors such as financial Maps and Methodology Deployed per capita disposable income which is expected inclusion, clean energy, education, agriculture to grow into a USD 6 trillion opportunity for India and healthcare. by 2030. Though the COVID-19 pandemic has he SDG Investor Map is a dynamic tool methodology that surfaces IOAs from national However, there is a need to draw in commercial challenged India's growth, the country's growing containing a range of market-specific economic and social development priorities. In capital towards priority sectors, especially income and consumption will continue to attract investment opportunities for SDG-aligned India, UNDP has collaborated with Invest India education, agriculture, healthcare, among others T global PE/VC capital, as these funds shift their capital deployment. Developed by UNDP Country for the production of the first SDG focused that currently lack adequate large-scale focus from Organisation for Economic Co- Offices, SDG Investor Maps are underpinned by a Investor Map for India. investment momentum and interest, despite operation and Development (OECD) countries to being critical to achieving the country's emerging markets. According to expert development targets and aiding India to become consultations, sectors such as financial services, a USD 5 trillion27 economy by 2025. As per Preqin consumer/retail, healthcare, e-commerce and Figure 2: Four-stage process to develop SDG Investor Maps (a company that provides financial data and technology are likely to benefit most from this information on the alternative assets market), growing interest. Methodology global PE/VC funds hold dry powder worth ~USD In the wake of the pandemic, the need for India 2.5 trillion (committed, but unallocated funds). to focus on sustainable development has This figure aligns closely with the estimates for become especially important. To ensure that SDG funding gap for emerging markets like India development is equitably carried out, investors as highlighted by the UNCTAD 2014 World must focus not only on maximising their returns Investment Report. PRIORITY but also on the positive and negative social and SECTORS Define the This report highlights IOAs that are aligned with national priority environmental impacts of their investment SDG-relevant sectors to build a case for private starting point decisions. India is already a prominent PRIORITY sector investors to mobilize funds towards destination for impact-oriented capital. The SUBSECTORS sectors that have potential for healthy returns as Identify priority quantum of impact investment was over USD well as for high development impact. Bridging subsectors to 10.8 billion between 2010 and 2019, growing at a PRIORITY focus on the investment gap in these highlighted areas in CAGR of 26 percent and tripling the average deal SUBREGIONS India, home to nearly one-fifth of the world's Identify priority size from USD 5 million in 2010 to USD 17 million subregions to 26 population, will set the tone for achieving UN in 2019. Majority of these deals were in the INVESTMENT focus on SDGs, which the international community agreed form of equity investment, followed by debt and OPPORTUNITY to fulfil by 2030. AREAS a combination of debt, equity and blended Derive specific instruments. Most of the impact investors Investment Opportunity Areas

Sources:

24. www.ibef.org. (n.d.). Investment in India. Available at: Impact Investing Story- Assessing a decade of Capital plus https://www.ibef.org/economy/investments#:~:text=In%202019 Innovation for Impact; Available at: %2C%20FPI%20investment%20in http://ashaimpact.com/Admin/CMS/PDF/IIC%20Asha%20Impact %20Report_The%20India%20Impact%20Investing%20Story_June 25. Bain & Company and IVCA (2020). India Private Equity Report %202020.pdf. 2020. Bain & Company. Available at: http://ivca.in/wp- content/uploads/2020/05/ 27. EY (2020b). How India is emerging as one of the leading bain_report_india_private_equity_report_2020.pdf. destinations for global PE/VC capital. www.ey.com. Available at: Note: A more detailed 8-step methodology within this 4-level funnel has been developed, including secondary research as well as interviews and https://www.ey.com/en_in/private-equity/how-india-is-emerging- 26. Impact Investors' Council and Asha Impact (2020). The India consultations with investors, companies, governments and a range of other relevant stakeholders. as-one-of-the-leading-destinations-for-global-pe-vc-capital.

17 18 SDG Investor Map Report for India-2020

The methodology consists of a four-stage identify and validate where there is overlap Framework for selection of IOAs: While framing the opportunity areas, it was process that draws from a combination of in- between development need and policy priority ensured that areas identified are also sufficiently depth desk research and focused in-country and refine the opportunity into a specific IOA. IOAs, identified through research and specific to the realm of an 'opportunity area', i.e., stakeholder consultations. Through an iterative The approach and methodology consist of consultations, were tested on three key criteria a field within which diverse kinds of research-intensive process, the objective is to the following: to see if they are: deals/transactions could take place, but broad 1. Fundamentally marketable, i.e., where a enough for an investor to decide what kind of private actor may be able to achieve at- financial vehicle is best suited to deploy. The specific business models within those areas Define the national priority starting point market or above-market return STAGE01 which might have a strong development impact 2. Sufficiently at-scale for investments to be have been highlighted. However, these models able to achieve depth and duration of the Firstly, distil and compare national development needs and national policy priorities to identify are suggestive and multiple business models potential impact sectors where there is demonstrable political/financial commitment to stimulate development and could emerge within each opportunity area as investment. Useful documentation to inform this includes Voluntary National Reviews, national 3. Largely already proven in-market, i.e., by a investments increase and the companies mature strategy documents for development-related priorities, government annual plans and investment transaction that has taken place, and and adapt to the changing consumer needs. promotion plans for policy priorities. return/impact begun to be calculated

Figure 3: Key data points captured for Investment Opportunity Areas STAGE02 Identify priority subsectors to focus on Secondly, prioritize subsectors where there is development need and policy/investment momentum. The documentation analysed here is more sector-speciﬁc, including the SDG Index reports that document a country's progress on SDGs and sector reports from investment promotion agencies.

Need case: Overview: Economic Enabling factors: Risk factors: SDGs/Impact: STAGE Identify priority subregions to focus on what drives the where and to factors: the the regulatory, potential barriers SDG mapping, 03 ‘opportunity’ what end would commercial case ﬁnancial to this IOA’s at what degree behind each IOA investment for investment and partnership potential of impact Third, identify subregions where there is both high development need within each subsector, and take place case scalability strong political/ﬁnancial momentum to spur potential subsector growth. Emerging sectors,

subsectors and subregions are validated through focused consultations with cooperation agencies, Development Priority sector Regulatory Obstacles SDG Return proﬁle national development banks, stakeholders in key ministries, and investment promotion agencies. need and subsector environment to scale alignment

Policy Where: Priority Financial Negative SDG STAGE Derive more speciﬁc IOAs Market sizing 04 alignment subregion environment externalities indicators

Fourth, gather intelligence through primary and secondary research (primarily investors, think tanks, What: Kind Investment Partner industry associations, among others) to identify scalable business models with the potential to of business IMP class** timeframe environment address critical development needs identiﬁed in stages 1-4. Each 'IOA' anchors around a proven model commercial approach with strong potential for achieving at-market or above-market returns and a clear link to the development challenge addressed in relevant subsectors and subregions. The 'case' Who: User or for each IOA is made through datapoints across seven categories ranging from the need case to beneﬁciary economic, enabling and risk factors, the potential development impact of the investment including

the returns achieved by sampled investors in each IOA. This information makes IOAs adequately Source: UNDP Investor Map research granular to be actionable yet broad enough to serve as inputs to investors for their portfolio origination process. ** The Impact Management Project (IMP) is a global standard for organizations to build consensus on how to measure, assess and report impacts on environmental and social issues.

19 20 SDG Investor Map Report for India-2020

The key SDGs requiring the most attention are Strong Institutions). Progress on each of these SDG 1 (No Poverty), SDG 2 (Zero Hunger) and SDGs is interlinked with multiple other SDGs and Development Needs, Policy SDG 5 (Gender Equality). Despite lifting over 270 to ensure that the gains made across the SDGs million people out of poverty in 10 years and are not lost due to the pandemic, investment Momentum and SDG-enabling recording the fastest reductions in the Multi- and development focus should build on the links Dimensional Poverty Index, India is still home to between SDGs and the plausible development Sector Prioritization for India over 30 percent of children living in extreme areas highlighted by the pandemic. poverty, (highest in South Asia) in 2016, To ensure that the impact of COVID-19 is according to UNICEF31 . India was ranked 102 in incorporated as part of the methodology for the he global pandemic has led to a the impact is being felt in India as well, the Global Hunger Index and 112 on the World Investor Map development process, first and suspension of economic activity and the particularly on populations in low resource Economic Forum's Global Gender Gap index. Timpact on global growth is apparent in settings that have little ability to combat the second-order effects of the pandemic were expert projections. As of June 2020, the socio-economic impact of an event of this size Other SDGs where India has made progress but researched and validated with expert International Monetary Fund (IMF) projects a 4.9 and nature. still need attention include SDG 3 (Good Health consultants. The resultant analysis showed that percent contraction in world's GDP due to the and Well-Being), SDG 4 (Quality of Education), while the pandemic and commensurate isolation It is thus necessary to develop an SDG-enabling 'Great Lockdown',28 leaving 170 countries with SDG 8 (Decent Work and Economic Growth), SDG requirements have directly impacted SDGs 3 and Investor Map to view India's development needs lower GDP per capita by the end of 2020. The 10 (Reduced Inequalities), SDG 11 (Sustainable 8, second-order effects have included a and target SDGs in light of COVID-19 and lay out World Trade Organization (WTO) expects a Cities and Communities), SDG 12 (Responsible significant and persistent impact on SDGs 1, 2, 5, the linkages between them; a sentiment that was decline by 13-32 percent in global trade, Consumption and Production), SDG 13 (Climate 4, 10 and 11. reflected in the numerous consultations held contingent upon the length of the pandemic and Action and Peace) and SDG 16 (Justice and throughout the process of developing the map the protracted lockdown policy that most for India. governments will have to adopt. The Investor Map development process started Figure 5: Interlinked impact of COVID-19 on SDG progress The UNCTAD's 'Trade and Development Report with the identification of the SDGs where the 2020' recommends a recovery plan that development need is the highest and therefore COVID-19 effects addresses pre-existing conditions such as where private sector investments are necessary inequality, weak investments, insufficient to plug financing gaps. For this purpose, India's employment opportunities, that have performance on each SDG was reviewed. This exacerbated the impact of the pandemic 01 02 was done at the State level, with each State being across the globe and especially in developing evaluated on its performance on the relevant economies.29 First-order effects: Second-order effects: SDGs as per NITI Aayog's SDG India Index 2019.30 Despite several timely and comprehensive 1. Access to and quality 1. Children pushed out of school The key SDGs where the development gap is the measures to combat the effects of the lockdown, of healthcare 2. Individuals pushed below the poverty line highest have been listed in Figure 4. 2. Limited availability of 3. Reconfiguration of livelihood patterns medical equipment 4. Higher impact on vulnerable groups and small Figure 4: India's Performance by SDG, NITI Aayog's SDG India Index 2019-20 3. Lower incomes and unemployment businesses leading to increased inequalities 4. Labour migration 5. Evolving supply chains impact consumption pattern Top Priority SDGs impacted: 6. Increase in food insecurity Development Needs (SDGs in which India's SDGs impacted: performance is lowest)

Other Strong Development Needs (SDGs in which India's Resultant development needs performance is Technology Industrializaon Social and Environmental Infrastructure relatively low) adopon and employment economic sustainability development and digizaon generaon inclusion

Source: UNDP Investor Map research Source: UNDP Investor Map research

21 22 SDG Investor Map Report for India-2020

Policy momentum and sector prioritization Priority sectors

41 policy priorities have been identified for meet India's key development needs identified in A parallel review of India's development needs These sectors were further pressure tested with India's development by NITI Aayog in its Strategy Figures 4 and 5, helped identify the focus policies and policy priorities revealed seven priority areas policy, government and private sector experts to for New India @ 75. Of these 41 policy priority for this study; policies with sufficient scope for with highest potential to propel India towards understand the common ground between areas, private sector participation has been private sector participation as well as strong attaining the prioritized SDGs, namely development specifically invited in 35 policy areas. Juxtaposing potential to meet development needs. The focus Healthcare, Education, Food & Beverages, needs, policy priorities and private sector these 35 policy priorities with their ability to policy areas have been highlighted in Figure 6. Financial Inclusion, Renewable Resources & investor interest. Alternative Energy, Technology and The final list of priority sectors that constitutes Communications, and Sustainable Environment. the Investor Map for India is presented in Figure 7. Figure 6: Policy areas with High Development needs and Policy Momentum

Figure 7: Sector prioritization for Investor Map

Shortlisted Policy Area with SDG Priorities Policy Priorities S.No. private investment momentum Related SDGs** Top Priority Development Needs Policy Priorities for India (SDGs in which India’s performance is lowest) 1 Growth SDGs 1, 8, 17 41 policy areas highlighted in NITI 2 Balanced Regional Development: SDGs 1, 2, 3, 4, 5, 6, 7, 9, 10 Aayog’s Strategy for New India @ 75 Aspirational Districts OVER- 3 Gender SDGs 1, 2, 3, 4, 5 ARCHING Private sector Participation POLICY 4 Modernizing City Governance SDGs 1, 3, 5, 6, 8, 10, 11, 12 Other Strong Development Needs for Urban Transformation (SDGs in which India’s performance is relatively low) 21 policy areas distinctly inviting AREAS private sector participation 5 Sustainable Environment SDGs 1, 2, 6, 7, 11, 12, 13, 14, 15 6 Optimizing Use of Land Resources SDGs 1, 2, 15

7 Employment and Labour Reforms SDGs 5, 8, 10 Private sector Participation 8 Nutrition SDGs 1, 2, 3, 5, 10 13 policy areas with sector-speciﬁc themes 9 Smart Cities for Urban Transformation SDGs 1, 5, 6, 8, 9, 10, 11, 12 10 Doubling Farmer's income SDGs 1, 2, 8, 9, 10, 12, 13 COVID-19 Impact 11 Digital Connectivity SDGs 1, 4, 5, 9

Technology Industrialization/ 12 Housing for All SDGs 1, 5, 6, 11 Environmental Infrastructure Adoption/ Employment Inclusion Sustainability Development SECTOR- 13 School Education SDGs 3, 4, 5, 8, 16 Digitization Generation SPECIFIC 14 Skill Development SDGs 4, 5, 8, 10 POLICY 15 Financial Inclusion SDGs 1, 8, 10, 16 Emergent Sectors AREAS 16 Human Resources for Health SDGs 3, 5, 8 Renewable Resources Food & 17 Water Resources SDGs 6, 11, 12, 14 Education Healthcare & Alternative Energy Beverages 18 Public Health Management and Action SDGs 2, 3, 6 19 Comprehensive Primary Healthcare SDGs 1, 3

Sustainable Technology & 20 Universal Health Coverage SDGs 1, 3 Financials Environment Communications 21 Swachh Bharat Mission SDGs 1, 6, 11

Source: UNDP Investor Map research Source: UNDP Investor Map research

23 24 SDG Investor Map Report for India-2020

Development needs and policy landscape that Industrial taxonomy used • Electric Utilities & Power Generators • Engineering & Construction Services contribute to the specific sector ecosystem, in the report INFRASTRUCTURE • Gas Utilities & Distributors • Home Builders • Real Estate including distilling of subsectors have further • Real Estate Services • Waste Management • Water Utilities & Services been detailed in the respective sector chapters. Sectors and subsectors selected for the India Investor Map are defined by a taxonomy aligned Expert consultations highlighted that technology • Electronic Manufacturing Services & Original Design Manufacturing with SASB's SICS which helps categorize TECHNOLOGY & is an enabler and should be an underpinning • Hardware • Internet Media & Services • Semiconductors company and investor activity using a COMMUNICATIONS theme for all the other emergent priority sectors. • Software & IT Services • Telecommunication Services As the focus is to highlight the IOAs that serve sustainability lens. SICS builds on and the last mile, low resource markets, it is complements traditional classification systems important to recognize the role of technology in by grouping companies into sectors and RENEWABLE • Biofuels • Forestry Management • Fuel Cells & Industrial Batteries bridging the distance and the affordability industries per a fundamental view of their RESOURCES & • Pulp & Paper Products • Solar Technology & Project Developers 1 gap that exists in taking essential services to business model, resource intensity and ALTERNATIVE ENERGY • Wind Technology & Project Developers • Electric Vehicle last-mile customers. sustainability impacts, and sustainability innovation potential. • Air Freight & Logistics • Airlines • Auto Parts • Automobiles TRANSPORTATION • Car Rental & Leasing • Cruise Lines • Marine Transportation Figure 8: Sustainable Accounting Standards Board’s industrial classification used in the report • Rail Transportation • Road Transportation

• Apparel, Accessories & Footwear • Appliance Manufacturing • Building EDUCATION/SKILLS • Education Financing1 • Education Technology1 CONSUMER GOODS Products & Furnishings • E-Commerce • Household & Personal Products DEVELOPMENT • Formal Education1 • Multiline & Specialty • Retailers & Distributors • Toys & Sporting Goods

Note: 1. We have added sectors and subsectors which were not covered under SASB classiﬁcation. • Agricultural Products • Alcoholic Beverages • Food Retailers & Distributors Source: Sasb.Org Sustainability Accounting Standards Board Sasb's Sustainable Industry Classiﬁcation System (SICS). (n.d.). FOOD & BEVERAGES • Meat, Poultry & Dairy • Non-Alcoholic Beverages • Processed Foods Available at: https://www.sasb.org/wp-content/uploads/2018/11/SICS-Industry-List.pdf. • Restaurants • Tobacco

RESOURCE • Aerospace & Defence • Chemicals • Containers & Packaging • Electrical & TRANSFORMATION Electronic Equipment • Industrial Machinery & Goods

EXTRACTIVES & • Coal Operations • Construction Materials • Iron & Steel Producers MINERALS • Metals & Mining • Oil & Gas - Exploration & Production PROCESSING • Oil & Gas - Midstream • Oil & Gas-Reﬁning & Marketing • Oil & Gas-Services

• Biotechnology & Pharmaceuticals • Drug Retailers • Health Care Delivery HEALTHCARE • Health Care Distributors • Managed Care • Medical Equipment & Supplies

• Advertising & Marketing • Casinos & Gaming • Hotels & Lodging SERVICES • Leisure Facilities • Media & Entertainment • Professional & Commercial Services

• Asset Management & Custody Activities • Commercial Banks FINANCIALS • Consumer Finance • Insurance • Investment Banking & Brokerage • Mortgage Finance • Security & Commodity Exchanges

25 26 Prioritizing states and regions researched to understand policy momentum to invite private sector participation. Review of for investments documents like Industrial Policies for States, As part of the methodology to develop the sector-specific policies including incentives Investor Map for India, an analytical framework such as tax breaks, dedicated credit lines for was developed to understand the States and small businesses working in the sector, were regions in the country where SDG-enabling further analysed to select States with the most investments are most needed across the priority conducive environment for investments to sectors. For this purpose, an analysis was flow in conducted using the following frame: • Third, to further qualify the analysis • First, NITI Aayog's SDG Index that reports conducted under the First and Second steps, comprehensively on the progress made by consultations with sector experts were India's States and Union Territories (UTs) conducted to validate the findings towards implementing the 2030 SDG targets As part of the regional analysis, it is well was studied to prioritize regions. The Index understood that investments will follow States that classifies performance across four with the most conducive environment and the buckets in ascending order – Aspirant, States and regions that are already performing Performer, Front Runner and Achiever was well will be prioritized to ensure commercial distilled to select States that fall under the viability for the investments made. Hence, the Aspirant and Performer buckets indicating analysis presented in the report for regional regions that lag on development indices for priorities is to spur investors to think about the relevant SDG investments in models that concertedly work ·• Second, for the Aspirant and Performer towards making solutions work for the last mile, States, policies specific to the five shortlisted low resource populations in regions where the sectors and relevant subsectors were need for development impact is the highest. EDUCATION EDUCATION EDUCATION EDUCATIONEDUCATION Sources: EDUCATION EDUCATION 28. International Monetary Fund (2020). World Economic Outlook 30. sdgindiaindex.niti.gov.in. (n.d.). SDG India Index and Dashboard EDUCATION EDUCATION EDUCATION Update, June 2020: A Crisis Like No Other, An Uncertain | iTech Mission. Available at: EDUCATION Recovery. IMF. Available at: https://sdgindiaindex.niti.gov.in/#/ranking. https://www.imf.org/en/Publications/WEO/Issues/2020/06/24/W 31. UNICEF. (n.d.). Nearly 385 million children living in extreme EOUpdateJune2020. poverty, says joint World Bank Group – UNICEF study. Available EDUCATION 29. unctad.org. (n.d.). COVID-19: UNCTAD warns of 'lost decade' if at: https://www.unicef.org/media/media_92856.html EDUCATION countries adopt austerity | UNCTAD. Available at: EDUCATION https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID EDUCATION =2474 EDUCATION EDUCATION EDUCATIONEDUCATION EDUCATION EDUCATION

EDUCATION EDUCATION EDUCATION EDUCATION EDUCATION EDUCATION EDUCATION EDUCATIONEDUCATION EDUCATION EDUCATION 27 EDUCATION EDUCATION SECTOR EDUCATION EDUCATION EDUCATION EDUCATION EDUCATION SDG Investor Map Report for India-2020

c. Data below shows a declining trend in GER as education, implying an increasing number of Education one progresses from primary to tertiary drop-outs (declining retention).

Chart 1: Gross Enrolment Ratio in India, by the level of education, 2017

India Gross Enrolment Ratio, 2017

113

100 75

60 28 40 14 20

0 Pre-primary Primary Secondary Tertiary

1. Sector overview

ndia has the world's largest youth population32 with over half of its population of c.1.4 billion33 under the age of 25. With a billion people aged between 15 and 6434, the country will be home to the world's largest workforce by 2027. India also has the largest school-going population in Source: UNESCO Institute of Statistics I 35 the world of over 250 million students . Education and skills development of India's large and growing human capital is imperative for the country's socio-economic growth. As highlighted by the Global Education Monitoring (GEM) report, the 2030 deadline for achieving the SDGs will be 1.1.2. Quality of school education (SDG 4) b. Literacy and numeracy outcomes in the possible only if India achieves significant progress in the Education sector36 . country lag behind. Only c.50 percent of India has made considerable efforts to expand Grade V children can read Grade II level text the school network since the 2009 RTE Act. and only c.28 percent can perform division.41 However, there is a need to further improve the More alarmingly, outcomes among certain 1.1. Sectoral development needs GER for pre-primary and tertiary education quality of education offered and the overall student cohorts have even been declining as remain low. education resources and infrastructure.39 A review of key policy documents, human shown in Figure 9. The COVID-19 pandemic development reports and stakeholder b. As per Annual Survey of Education Report a. The inadequacy of resources is reflected in the has further disrupted education for the most consultations highlighted the most pressing (ASER) 2017 that focused on youth between fact that India has the highest pupil-teacher vulnerable student groups as such students sectoral development needs in India: ages of 14 and 18, the average difference ratio among comparable countries and that are unable to attend school and often between enrolment levels of boys and girls at 78.7 percent of rural government schools had lack access to online learning, widening 1.1.1. Universal access and retention (SDG 4) age 14 are declining and by 18 (when the state no access to computers for pedagogical learning gaps.42 40 a. The enrolment ratios for the primary level are doesn't enforce compulsory education purpose in 2018. close to 100 percent. Besides, the Gross through the Right of Children to Free and Enrolment Ratios (GER) for secondary Compulsory Education (RTE) Act, 2009, 32 education have also increased.37 However, percent girls are not enrolled, compared to 28 percent boys.38

29 30 SDG Investor Map Report for India-2020

Figure 9: Literacy and Numeracy Learning Outcomes in Rural India Chart 2: Workforce that has undergone formal skill training

Reading outcomes in Std. V and Std. VIII by school type, 2012, 2014, 2016 and 2018 120% 96% 100% 53% Year 2012 2014 2016 2018 80%

% of children in Std. V who can read Std. II level text 60% 46.9 48.0 47.9 50.5 (Govt. & Pvt. Schools) 40% 5.4% 20% skill training (%) skill training % of children in Std. VIII who can read Std. II level text

76.5 74.7 73.1 73.0 with formal Workforce 0% (Govt. & Pvt. Schools) South Korea China India

Source: Bawa, R.S.& N. (2015). No jobs, no skills: What a sorry state. @businessline. Available at: https://www.thehindubusinessline.com/opinion/no-jobs-no-skills-what-a-sorry-state/article9545114.ece# Arithmetic outcomes in Std. V and Std. VIII by school type, 2012, 2014, 2016 and 2018

Year 2012 2014 2016 2018

% of children in Std. V who can do division 24.9 26.1 26.0 27.9 (Govt. & Pvt. Schools)

% of children in Std. VIII who can do division 48.1 44.2 43.3 44.1 (Govt. & Pvt. Schools)

Source: Annual Status of Education Report 2018

1.1.3. Skills development and employability of b. Annual output per worker (Public-Private the workforce (SDG 4 and 8) Partnership (PPP) terms) in India (USD 21 thousand) was 49 percent lower compared to a. Over 80 percent of India's workers are the world average (USD 44 thousand) in employed in the unorganised sector, the 2019.45 Accenture estimated that the skill gap highest proportion among South Asian cost India USD 1.97 trillion in GDP growth over economies.43 Only 5 percent of the Indian 10 years in 2019.46 COVID-19 has further workforce has had formal training in skills increased the urgency to productively engage (compared to 96 percent in South Korea) and and reskill the workforce due to disruptions less than a ﬁfth of Indian graduates are across key employment generating industries considered immediately employable.44 such as tourism, agriculture and automotive.47

31 32 SDG Investor Map Report for India-2020

1.2. Policy momentum 1.3. Private sector participation Bottlenecks for private sector NITI Aayog's Strategy for New India @ 75 lays out The gaps in the education system can be the goals of universal access and retention, addressed by private sector participation, investments in the Education sector improvement in learning outcomes and particularly through increased capital flows to The following bottlenecks to private commercial investment in the increased employability through vocational enhance quality and improve employability. education sector were highlighted in consultation with investors: training in school education. According to Union However, despite the large market size, Budget 2020-21, Government allocated USD 8 commercial private investment interest in the billion (0.3 percent of GDP) for the Department sector has been historically limited when of School Education and Literacy.48 The New compared with sectors such as banking and Regulatory hurdles Education Policy 2020 was introduced to improve healthcare. Private investment in skills For-profit operations are not allowed in education segments such as K12 early childhood care and education, increase development and education has historically been (kindergarten to grade 12) schools, limiting the participation from commercial foundational literacy and numeracy skills, by way of private philanthropy and international 01 private players. improve GER in higher education from 26.3 grants. More than a third of the Corporate-Social- percent to 50 percent by 2035, include vocational Responsibility (CSR) spending in India goes modules in the education curriculum for towards Education and Skilling, with many improved workforce preparedness and ensure foundations providing grants to education High capital expenditure (CAPEX) universal access to school education. Further, in institutes.52 However, with individual donations a bid to promote India as a global destination for and corporate contributions drying up amid the Significant upfront capital investment is required to meet the land and premium education at affordable costs, the COVID-19 pandemic,53 funding for traditional CSR 02 infrastructure specifications of setting up an education institute, while cash policy allows top foreign universities to set up activities could be reduced by 30-60 percent.54 flows are spread across several years, impacting the break-even period. campuses in India. A legislative framework International aid for education to India has also facilitating such entry will be put in place, and been volatile in recent years, reducing by 26 such universities will be given special percent in 2017.55 There is a strong urgency Lack of investable assets dispensation regarding regulatory, governance for domestic private participants to bring and content norms on par with other in investments and new technologies into Due to high CAPEX requirements, the lower purchasing power of customers autonomous institutions of India.49 Skilling, as a the sector. and catchment-linked nature of education institutes, many smaller schools and corollary sector to Education and key to the 03 education and training centres emerged across the country. As the result, the With successful exits made by early-stage human capital needs for India, has also been at industry is fragmented and unorganised with fewer investable assets that investors, especially for EdTech business models, the forefront of policy momentum in India. The would be attractive for commercial investors. there is an increased allocation of funds in the budget allocated to the Ministry of Skills space by private sector investors. Between April Development and Entrepreneurship more than 2000 and March 2020, the education sector doubled between 2015 and 2019. Furthermore, attracted FDI worth USD 3.24 billion. Due to the Lack of trained workforce GoI has launched a slew of initiatives to promote pandemic, the use of EdTech platforms to Low levels of education and training in the past also limited the availability of skills development in the country, including 'Skill address social distancing norms and to ensure 04 experienced and capable trainers, thereby acting as a barrier to scale. India' initiative (launched in 2015) which aims to the continuation of education is gaining train 400 million Indians by 2022.50 'Skills importance. Early-stage investments, especially Acquisition and Knowledge Awareness for Venture financing in the education space Livelihood Promotion' (SANKALP) and 'Skill Absence of unified assessment frameworks amounted to USD 80 million in the first six Strengthening for Industrial Value Enhancement' across education levels months of 2020, compared to 65 million invested (STRIVE) schemes were approved by the Cabinet throughout 2019.56 The total PE/VC investment in There is a need to establish a comprehensive and up-to-date national framework Committee on Economic Affairs (CCEA), GoI, in for assessing educational outcomes at the school level and skills at the workforce 51 the Education sector by the end of 2019 is 2017 with an outlay of USD 1 billion. 57 05 estimated to be around USD 500 million. level that are uniformly accepted and recognised by the government, education A detailed list of supportive policies, enabling providers and employers alike. The school education system, which is run by private sector participation in the Education various State boards in different languages, requires the development of uniform sector is documented in Annexure II. standards for evaluation while allowing seamless vertical mobility for students (unlike the general academic system). The National Skills Qualification Framework was introduced in 2013, and while it has made progress, it is yet to be ubiquitously accepted. As a result, providers have to develop their frameworks and gain acceptance from employers, elongating the pay-back period. Further, educational frameworks developed are not transferable across regions, limiting scale.

33 34

SDG Investor Map Report for India-2020

Tailwinds driving private investment in Figure 10: Subsector Shortlist for the Education Sector recent years

Despite these bottlenecks, the emergence of technology and new business models has Alignment to development needs and policy priorities unlocked the potential in the Education sector. Technology has helped businesses overcome High Medium Low catchment barriers to expand their reach, Shortlisted (subsectors highlighted (subsectors mentioned (subsectors not mentioned consolidate fragmented market segments and subsectors as ‘top’ priorities by as ‘priority’ by by development sector development experts) development experts) experts) better utilise limited resources to improve the quality of education. As a result, the number of Subsector: EDUCATION deals in the sector has skyrocketed, mostly TECHNOLOGY* driven by investments in EdTech. EdTech start- Conducive for Online K12 private sector supplementary ups gathered 20 percent of overall VC education 58 investments in India in the first half of 2020. participation Online higher (subsectors education and Private investor interest in EdTech continued to professional skilling with PE remain resilient during the COVID-19 related Subsector: volatility with ~18 EdTech start-ups raising funds investments) EDUCATION FINANCING* amid the pandemic. The disclosed value of Consultations with sector experts, investors and Institute Financing education transactions in 2020 up till September industry bodies helped test the abovementioned have already surpassed all previous years and themes for alignment with development needs, policy priorities and viability for commercial EdTech deals constitute >95 percent of the Significant 59 investments. Experts' suggestions and evidence transaction value for the education deals. If barriers to scale these models are successful in reaching the last from secondary sources show that although Subsector: (subsector with FORMAL EDUCATION* some new universities have come up, mile, they can help bridge the quality and commercial Coaching centres for institutional investment in high-quality tertiary non-Tier 1 cities financing gap in the sector, impacting over 400 bottlenecks to education has remained low. Besides, lack of million students across education levels. investment) investment opportunities and high 1.4. Priority subsectors

fragmentation limit private sector participation in Private investor interest skills development segment for the unorganised Through a review of subsectoral development Subsector: workforce. This area requires policy momentum needs, policy priorities and deep-dive Low scope for FORMAL EDUCATION* to unite efforts across stakeholders (employers, K12 School Chains consultations with sector experts and investors, commercial workers and training centres). Subsector: INFORMAL Subsector: the following themes emerged as areas which investor EDUCATION: EDUCATION participation SKILLS DEVELOPMENT* FINANCING* address key development needs through Education technology and education Vocational Training Centres (subsectors with Student business models: financing are subsectors that lie at the Subsector: EDUCATION Financing intersection of development and policy priorities, regulatory TECHNOLOGY* 1. Use of technology to improve access and Online upskilling as well as commercial private interest, and have barriers) learning outcomes in K12 education platforms for therefore been shortlisted for the Investor Map. unorganised workforce 2. Use of technology to impart vocational, Increasing pre-primary and higher education Note: *Subsector not included in SASB practical and digital skills enrolment ratios, improving quality of education Source: UNDP Investor Map research at the K12 level and imparting employment- 3. High-quality tertiary education oriented skills at the post-K12 level emerged as 4. Skills development of the unorganised key development themes business models 1.5. Region ecosystem for the sector those with the highest development need and workforce (especially vulnerable should seek to address. On the other hand, brick market size. There are no specific physical requirements communities) and mortar education models that may address (such as terrain, resources, etc.) for businesses in Between 45 to 60 percent of the enrolment in these themes such as vocational training centres 5. High quality and affordable education the Education sector to thrive in a particular Daman and Diu, Andhra Pradesh, Rajasthan, and affordable private schools do not offer institutes State. The only limiting factor is the availability of Gujarat, Mizoram, Punjab, Karnataka, Telangana, attractive commercials and operating trainers. However, with education technology, Uttarakhand, Meghalaya and Nagaland are in 6. Education financing environment for private sector participation. even that barrier has been overcome. Therefore, accordance with 2019 Unified District 60 the priority regions for education coincide with Information System for Education (U-DISE).

35 36 SDG Investor Map Report for India-2020

This provides an opportunity for private sector internet users (99 percent of internet users use For post-K12 business models, identifying States hurdles and need to develop further before they investors to fund business models that cater to mobile phones to access data).61 The increasing with the highest employment (availability of jobs) attract large-scale commercial private the infrastructure and curriculum needs of these ubiquity of mobile phone and internet access and lowest employability (skills level and investments. schools either through financing or through low can be leveraged to offer education content and participation rate of the current workforce) will Online supplementary K12 education and cost, technology-driven models that can work skill training. Majority of EdTech players currently indicate the skill gap. Both these factors are Education Financing on the other hand not only and scale in low resource settings. focus their operations in urban areas which do important aspects of the skill equation as skills have the potential to address key development not face constraints of connectivity, as well as development will be most effective when Further, given the success of EdTech models in needs but also have demonstrated interest from affordability. However, to fully realise the trainees can seek relevant employment. urban and peri-urban areas, there is an a range of private sector investors. Companies in potential of such businesses there is a need to According to the India Skills report of 2019, opportunity to extend differentiated knowledge these IOAs have been able to demonstrate develop localised, vernacular based models and Andhra Pradesh, Bihar, Delhi, Gujarat, Haryana, products to rural, underserved and rural profitability and offer successful exits to early promote the development of Information and Karnataka, Maharashtra, Tamil Nadu, Uttar populations. Internet connectivity and mobile investors. Continued commercial private Communications Technology (ICT) infrastructure Pradesh and West Bengal are states with the phone penetration are important factors which interest is expected in these 'mature investment to resolve rural-urban divide and ensure last- highest hiring activity.62 The overlapping states, impact various EdTech initiatives. India has over opportunity areas' and these opportunities mile connectivity. Bihar, Uttar Pradesh and Delhi have a high skill 900 million mobile phone users and 452 million have been covered in detail as a part of the gap that can be addressed through skilling Investor Map. models. (State-wise performance of India on SDG 4 and indicators are documented in Annexure IV) While models in the online higher education and Figure 11: Quality of Education by State professional skilling space are still relatively 1.6. Investment Opportunity nascent, they have gained significant traction State-wise Performance on School Education Quality**, 2019 Areas - Overview from venture capital investors over the past few years. Investment activity in this 'emerging While IOAs such as online (low-tech) upskilling opportunity area' is expected to continue platforms for the unorganised workforce and growing in the 3-5 years horizon. These areas student financing came up as IOAs with a have also been included as a part of the Investor potential for strong development impact, the Map. (Please refer to Annexure III for detailed commercial viability of such models remains analysis of the shortlisting process followed to unproven. Business models in these 'white arrive at the final IOAs) spaces' currently face significant commercial

Large states with deteriorating quality of education

States with improving quality of education

States with stable quality of education

Map not to scale

Source: UNDP Investor Map research

37 38 SDG Investor Map Report for India-2020

Figure 12: Investment Opportunity Areas Shortlist for the Education Sector 1.7. Education Investment because of two key reasons. Firstly, it is Opportunity Areas Deep Dive imperative to impact digital skills to students to Education enable them for success in the 21st century. Subsector Education Technology Financing 1.7.1. Online K12 supplementary education Secondly, in a resource-constrained environment with low availability of teachers, technology can Online K12 Online higher Online upskilling India has made considerable efforts to expand Opportunity help reach a larger pool of students. supplementary education and platforms for Institute Financing the school network since the RTE Act, 2009, but Areas education professional skilling unorganised workforce the quality of the education remains a significant Online education models have the potential to Investors identified challenge. Only c.50 percent of Grade V children significantly improve educational outcomes area as fundamentally ? can read Grade II level text and only c.28 percent across student cohorts through personalizing marketable? 63 can perform division. In addition, outcomes student learning, improving student among certain student cohorts have even been engagement, refining learning assessment and c.250 million c.65 million c.400 million c.63 million Scale Potential declining. There is also a strong need for tracking, maximizing the reach of educational school-going children1 students and working workers to be students enrolled in 2 3 4 increased technology adoption in Indian schools professionals trained by ‘22 ‘budget private schools’ programmes. Lower-cost mobile-based models

Proven in-market Models have demonstrated Promising models have Models have demonstrated 1.7.1. Online K12 supplementary education - Market Insights profitability and attracted Few commercial as evidenced by attracted venture capital, profitability and attracted Private Equity investments, but have not yet been models Private Equity investments To address the gaps in quality of education in K12 schools, investors can focus on companies offering investors interest? albeit only recently proven as profitable Overview: low cost, mobile-based B2C software solutions in the vernacular to improve literacy and numeracy outcomes or scalable B2B software solutions to improve literacy and numeracy outcomes in low-cost White spaces: Strong scale private schools and public schools Opportunity Type Mature IOA Emerging IOA potential but not successful Mature IOA business models Learning outcomes in schools have been declining in India due to a lack of resources. Technology models Need case: Low-cost, mobile based Affordable degree Outcomes linked, Credit solutions to low-cost have the potential to improve outcomes with minimal resources Emerging B2C software solutions and non-degree mobile-technology education institutions to This IOA could contribute directly to SDG4 (Quality Education), particularly 4.1. (Improving learning Business Model(s) in the vernacular to courses to impart based skills expand and upgrade outcomes), and indirectly to SDG8, SDG9 and SDG10 improve literacy and employability- development facilities and infrastructure numeracy outcomes oriented skills platforms with delivered through an employer tie-ups Scalable B2B software User or Primary and secondary school students are not meeting minimum literacy and numeracy outcomes online/mobile-based solutions to improve beneficiary: (estimated to be c.50% of the 250 million school children) SaaS platform literacy and numeracy outcomes in low-cost private schools and Economic Early investments in B2C learning platforms have yielded >60% Internal Rate of Return (IRRs), however as public schools factors: the sector matures, the IRRs are expected to be moderated. Overall, investors expect to make a 30% return from EdTech investments for a 3-5-year time horizon in India SDGs impacted Companies in this vertical have taken 5-8 years to turn profitable as they had to incur high sales costs and go through a few academic cycle to demonstrate results to drive adoption

Enabling The vertical has a strong partner environment with signiﬁcant interest from commercial investors factors: Strong policy momentum to improve learning outcomes and increase adoption of technology in school education with GoI launching initiatives such as PM eVIDYA and SWAYAM

Risk The model’s commercial viability has not been proven at a large scale, especially for models targeting factors: lower income cohorts. High-touch sales models may hinder the economics of low-cost solutions, limiting Sources: expansion to lower income groups. Lack of basic digital infrastructure (such as tablets, smartphones and 1. www.ibef.org. (n.d.). Education & Training Sector in India: Education System, Growth & Market Size | IBEF. Available at: internet connectivity) is also a hurdle https://www.ibef.org/industry/education-sector-india.aspx#. Lack of digital literacy and low access to quality digital infrastructure and internet connectivity has limited 2. a. 35 million students enrolled in higher education – Department of Higher Education, M. of H.R.D. (2016). All India Survey on Higher Education (2015-2016). Available at: https://www.mhrd.gov.in/sites/upload_files/mhrd/files/statistics-new/AISHE2015-16.pdf.; adoption in public schools. However, COVID-19 has brought an out-look shift in favour of digital models b. 29 millions skills gap by 2030: Careers Desk, Indian Express (2020). Skill gaps affecting hiring across sectors. [online] The Indian Express. Available The various education boards and complex regulatory environment limits the scalability of solutions at: https://indianexpress.com/article/jobs/skill-gaps-affecting-hiring-across-sectors-6193029/#:~:text=In%202019%2C%20several%20new%2Dage. from one state to another 3. Pradhan, B. (2015). Narendra Modi wants to train 400 million people to avert demographic mess. Mint. Available at: https://www.livemint.com/Politics/11kPLkrAvrsHmLjHULjx9I/Narendra-Modi-wants-to-train-400-million-people-to-avert-dem.html. 4. Centre for Civil Society and EdelGive Foundation (2018). FACES OF BUDGET PRIVATE SCHOOLS IN INDIA Report 2018. New Delhi. Available at: Impact Investments falling under this IOA in their current form are likely to benefit stakeholders (IMP https://ccs.in/sites/default/files/attachments/faces-of-bps-in-india-report2018.pdf. IMP management: classification B), given that this business model yields an important and intended outcome that can 5. 35 million students enrolled in higher education – Department of Higher Education, M. of H.R.D. (2016). All India Survey on Higher Education (2015- improve the quality of education for an underserved group. Models that target rural areas, vernacular 2016). Available at: https://www.mhrd.gov.in/sites/upload_files/mhrd/files/statistics-new/AISHE2015-16.pdf populations, public schools or ‘budget’ private schools can impact the most underserved groups to contribute to solutions (IMP classification C)

Source: UNDP research for India Investor Map

39 40 SDG Investor Map Report for India-2020

which can be adopted by the public school cost India USD 1.97 trillion in GDP growth over Skills gap can cost India USD 1.97 trillion in GDP growth. COVID-19 has further increased the need to Need case: system and low cost private schools have a 10 years by 2019.67 Skills training has thus found productively engage and reskill the workforce due to disruptions in high employment generating industries strong potential to create deep and lasting a strong place in the Government's priority list. This IOA could contribute directly to SDG4 (Quality Education) and SDG8 (Decent Work and Economic Growth), particularly 4.4. (By 2030, substantially increase the number of youth and adults who have impact. Several companies in this space have The government has set a target of skilling 400 relevant skills, including technical and vocational skills, for employment, decent jobs and entrepreneurship), already raised significant capital and even million people by 2022 and launched many and indirectly to SDG5, SDG9 and SDG demonstrated profitability.64 In terms of initiatives aimed at realising this objective. investment timeframe, business models under COVID-19 has further increased the need to User or Direct: The unemployed and underemployed population that has completed schooling and/or this IOA provide favourable returns in medium- productively engage and reskill the workforce. beneficiary: employees at risk of replacement through automation term (5 to 15 years), given the high cost of There is a strong need for affordable skilling Indirect: Economy growth and worker productivity, and companies seeking skilled workers customer acquisition for Business-to-Consumer platforms that can skill India's future workforce. (B2C) models that requires heavy deployment on To this end, eSkill India (National Skills Economic Overall, investors expect to make a 30% return from EdTech investments for a 3-5-year time horizon in factors: India. However, most online higher education/skilling models are nascent and have not posted a profit yet the ground. Similarly, for Business-to-Business Development Corporation's e-learning Companies in this vertical are expected to take 5-10 years from their year of establishment to yield (B2B) models, the business model is required to aggregator) partnered with private players to attractive returns due to high customer acquisition costs and lead time to demonstrate outcomes due to navigate multiple levels of sanctions and provide online skill development courses amid the length of academic cycles required buy-in from school management, the COVID-19 pandemic.68 teachers, among others. An event like the COVID- Enabling Strong policy momentum towards skills development with initiatives such as ‘Skill India’ The area has also seen growing private sector 19 pandemic has pushed for a quicker factors: Favourable regulations as higher educational institutions in the country have been allowed certificate, interest with various institutes now offering their diploma and degree programmes in online mode under the University Grants Commission (Online turnaround in the adoption of digital education degrees online and some online skilling Courses) Regulations, 2018 (3.12). In 2020, the government also announced plans to allow 100 top models leading experts to believe that the platforms raising significant capital.69 The universities to launch online courses investment timeframe may get shorter in the investment timeframe for models in this space is future. In terms of returns, particularly for the Stakeholder Participation Risk: The impact of the model may be limited to urban areas and high-income medium-term (5 to 15 years) since skilling Risk B2C models in the K12 EdTech space have factors: students as lower income students may not possess the required financial capacity and digital exposure, platforms need to demonstrate employment provided more than average market returns with leading to lower adoption and/or high drop-out rates outcomes that take at least two to three investors expecting to make a 30 percent return The model faces external risks too as lack of job opportunities, especially as the economy recovered enrolment cycles. Online platforms have further from the effects of a pandemic, and recognition from employers for traditional degrees may limit in a medium-term. Early investors in the space costs of customer acquisition, increasing the outcomes and thereby the depth of impact have also realised a 7x return (>60 percent IRR). capital requirements at the start of the business The models are relatively new and the commercial viability of such models has not yet been proven However, as valuations in the sector soar, to enable rapid growth. Online skilling models investors expect that returns to stabilize though are relatively new in India where the investments Impact Investments falling under this IOA in their current form are likely to benefit stakeholders they are anticipated to remain well above the management: (IMP classification B), given that this business model yields an important and intended outcome that are at an early stage and IRRs have not been average market returns.65 help mitigate the skills gap in the country. However, most online models today focus on white-collar reported even though some companies have workers as the skills required for blue-collar workers are challenging to impart online, limiting impact on Therefore, online K12 supplementary education reported a jump in revenue. Many providers the most underserved communities Source: UNDP research for India Investor Map has been identified as a key IOA. have not yet posted a profit and the space is also experiencing a high volume of consolidation 1.7.2. Online higher education and activities, especially by the larger players. 1.7.3. Education institute financing handful of private schools. For example, an ASER professional skilling Investors remain positive about the IOA 2019 survey shows that only 65.1 percent of NITI Aayog has suggested that central and State India has a large share of youth in its population generating returns close to 30 percent, as is the Class 5 students in private schools can read funding on education (across all levels) should be but only 2.3 percent of the Indian workforce has trend with EdTech platforms in India. Class 2 text.71 increased to at least 6 percent of GDP, instead of had formal skills training. GoI's skill gap analysis 70 Therefore, online higher education and the current spending of 3 percent. Due to COVID-19 pandemic has led to a catch-22 concludes that by 2022, another 109 million or professional skilling has been identified as a inadequate funding in the public education situation for these 'budget' private schools as it so skilled workers will be needed in key sectors key IOA. system, the country relies on c.450,000 low-cost further increased the need for them to upgrade of the economy.66 Skill gap was estimated to have and 'budget' private schools to cater to over 60 their offerings and adopt new technologies million of its low to middle-income students. while limiting their revenue flows through 1.7.2. Online higher education and professional skilling - Market Insights These are small schools with inadequate disruption in fee collections. In this scenario, the infrastructure that charge less than 60-70 USD a need for financing such institutions assumes To address the skills gap in India, investors can focus on companies offering affordable degree and non- Overview: year. Majority of 'budget' private schools operate even greater importance. degree courses to impart employability-oriented skills delivered through an online/mobile-based platform as stand-alone entities with limited institutional While the non-profit structure that is mandated support in terms of budget, managerial in school education limits equity investments in expertise and robust operational systems. As a schools, providing debt funding to improve the result, the learning outcomes have been low for quality of education in schools is imperative to all schools, government or private, except for a

41 42 SDG Investor Map Report for India-2020

improve the declining learning outcomes in Performing Assets (NPAs). Early-stage investors 1.8. Education White Spaces Deep Dive platforms (for the unskilled and semi-skilled India. Many companies, especially Non-Banking have exited with 5X returns from Education workforce) can be harnessed to facilitate the Financial Companies (NBFCs) have emerged in Finance NBFCs. Late-stage investors are 1.8.1. Online upskilling platforms for delivery of social protection mechanisms, in this domain, which have been successful in not expected to make lower returns, but investors unorganised workforce addition to other opportunities, business models only providing much needed capital for still expect to make above industry average Even though globalization has benefited the should include employer-tie up to incentivize the improvements to these 'budget' private schools returns driven by healthy profit margins middle to high-income white-collar workers, uptake of these models by the informal sector, but also in offering attractive returns to private demonstrated by companies and the headroom employment needs of a majority of the and also help build a revenue model whereby investors. The investment timeframe for for growth in the large and unorganised 'budget' population, especially those that form part of the commissions can be received from employers. business models in this space is short term with private schools segment.72 informal sector (i.e., over 90 percent of India's GoI introduced National Policy on Skill companies having turned a profit in less than 5 Given its strong potential to meet India's workforce or ~400 million people) were not Development, 2015 to provide a framework for years. Specializing in a single sector has also development need, a favourable policy adequately addressed. Such unorganised and skill development activities in India, and has helped companies achieve profitability with momentum and significant private sector untrained workforce resulted in low levels and encouraged private sector participation, shorter turnaround time with fewer Non- interest, Education Financing is a key IOA. quality of productivity for India (in comparison to especially through the PPP model. However, as a countries like US and China). India's labour 1.7.3. Education Institute Financing - Market Insights purely commercial venture, this segment of the productivity per person employed (in PPP terms) business has not been able to attract investors To address the gaps in infrastructure and quality of education in K12 schools, investors can focus on stood at USD 4,941 in 1990 (China's USD 3,323; Overview: as it continues to face systemic hurdles such as companies offering credit solutions to ‘budget’ private schools, enabling these schools to upgrade their US's USD 79,437) and at USD 13,637 in 2015 lack of employment/placement opportunities, infrastructure and deliver superior quality education and learning outcomes 73 (China's USD 23,809; US's USD 117,970). lower awareness among employers, the low purchasing power of the target audience and ‘Budget’ private schools have mushroomed in India. While these schools offer an educational avenue for With the emergence of digital platforms targeted Need case: lower/middle-income students, they offer poor quality education due to a dearth of resources, at blue and grey-collar service workers, systemic unfavourable cost economics. However, given its contributing to the declining literacy and numeracy outcomes in the country. Financing can help these inefficiencies can be eliminated, while boosting strong potential to meet India's development schools upgrade their offerings and provide quality education to lower/middle-income students productivity and creating value for the economy. needs, this space has been recognized as a This IOA could contribute directly to SDG4 (Quality Education), particularly 4.a. (Build and upgrade Such platforms offer soft and hard-skill training white space which may attract private education facilities), and indirectly to SDG8, SDG9 and SDG10 and placement support to workers, thereby investment if there are gains in policy attempting to semi-formalize India's informal momentum and innovations to build low cost User or Over 60 million lower/middle-income students enrolled in ‘budget’ private schools technology-based models. beneficiary: The model can also have a positive impact on the entrepreneurs/owners of the schools, who are workforce. Although, the potential of digital struggling to stay afloat due to disruptions in fee collections amid the COVID-19 pandemic 1.8.1. Online upskilling platforms for unorganised workforce - Market Insights

Economic Private equity investments in the education sector returned a healthy 21.5% IRR. Investments in factors: education financing has provided IRRs of >30% to early investors To help address the skills development needs, specifically for India’s unorganised workforce, improving Overview: Enrolment in private schools continues to grow as they gain share over public schools their employment prospects and level of income earned, by imparting soft and hard skills training through online/offline mobile-based platforms Companies in this vertical have achieved scale and profitability in <5 years due to the large number of schools and strong demand. Specializing in a single sector has also helped companies achieve profitability faster Such models can help in formalizing the unorganised sector and improve India’s productivity levels Need case: This IOA could contribute directly to SDG4 (Quality Education) and SDG8 (Decent Work and Economic Growth), particularly 4.4. (By 2030, substantially increase the number of youth and adults who have Enabling Government's policy on the not-for-profit school structure disincentivizes equity investments in relevant skills, including technical and vocational skills, for employment, decent jobs and factors: education. Therefore, there is a strong need for education financing companies entrepreneurship), and indirectly to SDG5, SDG9 and SDG11 The vertical has a strong partner environment for this vertical with participation from commercial as well as impact investors and foundations User or Direct: The unemployed and underemployed population forming part of unorganised workforce. beneficiary: Employers would benefit as they would be able to hire trained workforce, thereby eliminating time-cost Risk Lack of incentives for low-cost private schools to upgrade facilities due to the not-for-profit school involved in training workers factors: structure. Affordable private schools charge a fee of

Impact Investments falling under this IOA are likely to contribute to solutions (IMP classiﬁcation C), given that Impact Investments falling under this IOA are likely to contribute to solutions (IMP classiﬁcation C), given that IMP management: this business model yields an important and intended outcome that can improve the quality of management: this business model yields an important and intended outcome that help mitigate the skills gap in the education for an underserved group country for an underserved population (unorganised workforce), while also contributing to improvement in India’s productivity levels Source: UNDP research for India Investor Map Source: UNDP research for India Investor Map

43 44 Sources:

32. Jack, I. (2018). India has 600 million young people – and they're set to 53. FSG. (2020). The Impact of COVID-19 on CSR Funding for Indian change our world | Ian Jack. the Guardian. Available at: NGOs. Available at: https://www.fsg.org/blog/impact-covid-19-csr- https://www.theguardian.com/commentisfree/2018/jan/13/india- funding-indian-ngos. 600-million-young-people-world-cities-internet. 54. Nanda, P.K. (2019). International aid for education to India down 33. Un.org. (2017). Population. Available at: https://www.un.org/en/ 26%, shows UN data. Available at: sections/issues-depth/population/. https://www.livemint.com/education/ news/international-aid-for- 34. Sharma, M. (2017). India's burgeoning youth are the world's future. education-to-india-down-26-shows-un-data-1558027674962.html. Livemint. Available at: https://www.livemint.com/Opinion/ 55. UNESCO. 2020. Global Education Monitoring Report 2020: Inclusion 2WSy5ZGR9ZO3KLDMGiJq2J/Indias-burgeoning-youth-are-the- and education: All means all. Paris: UNESCO. Available at: worlds-future.html. https://unesdoc.unesco.org/ark:/48223/pf0000373718/PDF/373718e 35. www.ibef.org. (n.d.). Education & Training Sector in India: Education ng.pdf.multi System, Growth & Market Size | IBEF. Available at: 56. PWC (2020). Deals in India: Mid-year review and outlook for 2020 – https://www.ibef.org/industry/education-sector-india.aspx# pause and consolidation. PWC. Available at: https://www.pwc.in/ 36. UNESCO (2016). Global Education Monitoring Report. Available at: assets/pdfs/services/deals/deals-in-india-mid-year-review-and- https://en.unesco.org/gem-report/report/2016/education-people- outlook-for-2020-pause-and-consolidation.pdf and-planet-creating-sustainable-futures-all. 57. www.ibef.org. (n.d.). Education & Training Sector in India: Education 37. Niti Aayog (2018). Strategy for New India @ 75. Niti Aayog. Available System, Growth & Market Size | IBEF. Available at: at: https://niti.gov.in/writereaddata/files/Strategy_for_New_India.pdf. https://www.ibef.org/industry/education-sector-india.aspx# 38. ASER Centre (2017). The twelfth Annual Status of Education Report 58. Majumdar, R. (2020). Ed-tech startups witness massive jump in VC (ASER 2017: Beyond Basics).asercentre.org. Available at: investments in H1 2020. Available at: https://www.livemint.com/ http://img.asercentre.org/docs/Publications/ASER%20Reports/ASER% news/india/ed-tech-startups-witness-massive-jump-in-vc- 202017/aser2017pressreleasenationalenglishfinalrevisedjan23.pdf. investments-in-h1-2020-11593341966216.html. 39. UNESCO. 2020. Global Education Monitoring Report 2020: Inclusion 59. S&P Capital IQ data and education: All means all. Paris: UNESCO. 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Coronavirus lockdown | COVID-19 at: https://niti.gov.in/writereaddata/files/Strategy_for_New_India.pdf. widened educational divide: UNESCO report. The Hindu. 24 Jun. 64. Byju's turns in net profit for FY19, revenue up nearly three-fold. Available at: https://www.thehindu.com/education/coronavirus- (n.d.). The Economic Times. Available at: HEALTHCARE SECTOR HEALTHCARE HEALTHCARE lockdown-covid-19-widened-educational-divide-unesco- https://tech.economictimes.indiatimes.com/news/internet/byjus- report/article31907857.ece. swings-to-profitability-in-fiscal-2019-revenue-almost- SECTOR HEALTHCARE SECTOR 43. ILO (2018). Women and men in the informal economy: A statistical trebles/72857182. HEALTHCARE HEALTHCARE picture, Third Edition. Geneva: ILO. Available at: 65. UNDP research for India Investor Map https://www.ilo.org/wcmsp5/groups/public/---dgreports/--- 66. International Labour Organization (2019e). Inclusive Future of Work dcomm/documents/publication/wcms_626831.pdf. HEALTH Republic of India. ilo.org. Available at: https://www.ilo.org/wcmsp5/ HEALTH 44. BBC News. Making Indian labour more employable. (2015). 17 Jul. groups/public/---dgreports/---cabinet/documents/publication/ Available at: https://www.bbc.com/news/world-asia-india-33550853. wcms_732868.pdf. CARE HEALTH 45. ILOSTAT. (n.d.). Labour productivity. Available at: HEALTHCARE 67. www.fortuneindia.com. (n.d.). Skill gap can cost India $1.97 trillion in HEALTHCARE CARE https://ilostat.ilo.org/topics/labour-productivity/. GDP growth: Accenture. Available at: https://www.fortuneindia.com/ CARE 46. www.fortuneindia.com. (n.d.). Skill gap can cost India $1.97 trillion in macro/skill-gap-can-cost-india-197-trillion-in-gdp-growth- GDP growth: Accenture. Available at: https://www.fortuneindia.com/ accenture/102841. macro/skill-gap-can-cost-india-197-trillion-in-gdp-growth- 68. Moneycontrol. (n.d.). COVID-19 impact | NSDC chief says e-learning accenture/102841. course enrollments grew 162% in April over March. Available at: HEALTHCARE SECTORHEALTHCARE 47. www.ilo.org. (n.d.). Sectoral impact, responses and https://www.moneycontrol.com/news/business/economy/nsdc-ceo- recommendations (COVID-19 and the world of work). Available at: says-e-learning-programmes-grew-162-in-april-amid-covid-19- HEALTHCARE https://www.ilo.org/ global/topics/coronavirus/sectoral/lang-- lockdown-5349761.html. en/index.htm. 69. S, S. (2020). Edtech Startup Harappa Grabs James Murdoch's First 48. www.ibef.org. (n.d.). Education & Training Sector in India: Education Investment In India. Inc42 Media. Available at: HEALTHCARE System, Growth & Market Size | IBEF. Available at: https://inc42.com/buzz/edtech-startup-harappa-grabs-james- https://www.ibef.org/ industry/education-sector-india.aspx# murdochs-first-investment-in-india/. HEALTHCARE 49. Ministry of Human Resources Development, GoI (2019). Draft 70. NITI Aayog Strategy for New India @75, SDG India Index, New SECTORHEALTHCARESECTOR HEALTH National Education Policy 2019. Available at: Education Policy, MHRD policy briefs https://www.mhrd.gov.in/sites/ 71. Central Square Foundation and Omidyar Network (2020). State of HEALTHCARE HEALTH upload_files/mhrd/files/Draft_NEP_2019_EN_Revised.pdf. The Sector Report: Private Schools in India. HEALTHCARE SECTOR 50. BloombergQuint. (n.d.). Budget 2019 Must Tackle Missed Skill centralsquarefoundation.org. Available at: CARE Development Targets Even As Ministry's Funds Go Unutilised. https://centralsquarefoundation.org/State-of-the-Sector-Report-on- HEALTHCARE SECTOR CARE Available at: https://www.bloombergquint.com/union-budget- Private-Schools-in-India.pdf. SECTOR 2019/budget-2019-must-tackle-missed-skill-development-targets- 72. UNDP research for India Investor Map even-as-ministrys-funds-go-unutilised. HEALTHCARE 73. Goyal, M. (n.d.). How online startups are reshaping the informal jobs 51. www.ibef.org. (n.d.). Education & Training Sector in India: Education sector in India. The Economic Times. Available at: System, Growth & Market Size | IBEF. Available at: HEALTHCARE https://economictimes.indiatimes.com/small-biz/startups/how- https://www.ibef.org/ industry/education-sector-india.aspx# online-startups-are-reshaping-the-informal-jobs-sector-in- 52. CRISIL (2019). The CRISIL CSR Yearbook 2019. Available at: india/articleshow/55514767.cms. https://www.crisil.com/content/dam/crisil/crisil-foundation/generic- HEALTHCARE SECTOR pdf/rs-50000cr-the-crisil-csr-yearbook-2019-new.pdf. HEALTHCARE HEALTH 45 HEALTHCARE SECTOR SECTOR HEALTHCARE SECTORCARE SDG Investor Map Report for India-2020

1.1. Sectoral development needs spending towards the Healthcare sector. The Healthcare resultant gap makes for a viable opportunity for A review of key policy documents, human the private sector, making them the development reports and expert consultations predominant healthcare provider in India. highlighted the most pressing sectoral development needs for the Healthcare sector 1.1.2. Cost of healthcare that offer opportunities for policy and private There has been a significant shift in health sector intervention: insurance coverage with 28.7 percent of 1.1.1. Resource scarcity households with at least one member covered in 2015-16, up from 4.8 percent in 2005-684 . A lack of both human and capital resources However, Out-Of-Pocket (OOP) expenditure on constrains healthcare delivery in India. In 2018, healthcare remains high at 62.4 percent of total 81 India had only 0.9 physicians for 1,000 people . expenses, compared with the world average of In 2017-18, India's Government Health 18.2 percent85 . Besides, a lack of clear regulations 82 Expenditure was 1.26 percent of GDP compared has led to variations in quality and costs of private 83 to the world average of 5.9 percent . While the sector services further driving up the costs for the GoI's expenditure increased over the past end consumer. High OOP medical expenses is a 1. Sector overview decade from 1.12 percent in 2009-10 to 1.6 key factor affecting the financial resilience of percent of GDP in 2020, there is a significant households and has been found to push nearly ndia's progress on SDG 3 (Good Health and Well-Being) was given a score of 61 out of 100 on the scope for improvement to ensure optimal 60 million Indians into poverty each year86 . SDG India Index since a number of States have scope for improvement on their health-related 74 Itargets . GoI has taken progressive steps to improve citizen access to good quality and Chart 3: Out-Of-Pocket expenditure as a % of total health expenditure - affordable healthcare. Concerted efforts have led to significant milestones such as elimination of India and peers compared polio, maternal and neonatal tetanus, among others. Similarly, strides have been made to reduce imbalances in health indicators such as under-five mortality rate that has reduced significantly from 75 76 74 in 2005-6 to 26 in 2018 . GoI has also taken steps to bolster health insurance coverage for low- 62.40% income groups, particularly those from the unorganised sector through Pradhan Mantri Jan Arogya Yojana (PM-JAY), also referred to as the Ayushman Bharat Mission. PM-JAY aims to expand health insurance coverage for nearly 100 million Bottom of the Pyramid (BoP) population and create access 36.05% 77 33% to secondary and tertiary care procedures. 27.40% 18.20% With these progressive steps, there is also a stronger need to identify gaps in inter-State and intra- State performance on health indicators with a particular focus on low-income segments and populations in low resource settings. The rising burden of non-communicable diseases (NCDs) along with the persisting challenges presented by communicable diseases further creates resource constraints both for policymakers as well as healthcare practitioners. For example, child and maternal undernutrition are still the single largest risk factor in India, responsible for 15 percent of India China Rep. of Korea Brazil World 78 the total disease burden in 2016 . At the same time, NCDs, including cardiovascular conditions, Source: Data.worldbank.org chronic obstructive respiratory diseases, diabetes, mental health conditions and cancers are now the leading causes of health loss in India, with 55 percent morbidity and premature mortality attributable to these conditions79 . 1.1.3. Regional disparities more than two and a half times as that of the bottom-most performer87 . Opportunities for the private sector participation in India is made evident by the fact that 80 percent Nearly 75 percent of dispensaries, 60 percent of of service delivery in healthcare is through business models supported by the private sector. The hospitals and 80 percent of doctors are located 1.1.4. Changing disease burden healthcare industry in India is expected to reach USD 372 billion by 2022 providing significant in urban areas, highlighting the need to balance In India, NCDs such as heart disease, diabetes opportunities for healthcare enterprises and investors80 . Leveraging GoI's commitment to further out the urban-rural access related disparity, and respiratory diseases are expected to healthcare delivery through adequate incentives and regulations for private entities can provide a according to a 2019 report released by KPMG comprise 75 percent of all diseases by 2025, level and competitive playing field to strengthen private sector participation. The COVID-19 and the Organisation of Pharmaceutical compared to 45 percent in 201088 . NCDs require pandemic has also led to increasing dependence upon digital platforms to ensure delivery of Producers of India (OPPI). According to NITI attention at a very early stage and once healthcare services further providing opportunities to the private sector to innovate disruptive Aayog's State Health Index Report 2019 (Healthy developed, medication solutions that harness the increasing mobile phone and internet coverage to reach customers States, Progressive India), the overall health continues throughout the lifetime89 , increasing beyond Tier I and Tier II cities. index score of India's best-performing state is

47 48 SDG Investor Map Report for India-2020

the burden on the healthcare system across the Examples include 'Ayushman Bharat' that Chart 4: Total Reported Transaction Value (USD Million) of Healthcare, India, 2012-2018 care continuum. includes components such as Health and Wellness Centres (HWCs) to boost 1.1.5. Gaps in healthcare delivery capacities comprehensive primary and preventive care for More than 64 percent of healthcare delivery in underserved populations; and the PM-JAY Total and Average disclosed deal value (USD million) the private sector is done by small scale entities insurance schemes to cover the bottom 40 that are subscale with low capacities and percent of the population for secondary and 90 efficiencies . There is a need to consolidate and tertiary care. As these initiatives are implemented, 2000 1886 120 integrate the fragmented service delivery market opportunities for private sector participation at 1800 1646 108 1552 for providing better quality services at scale, different levels of the healthcare continuum are 1600 100 particularly for the last-mile population given, especially in rural, underserved markets 1400 1263 1201 1247 segments. Global disruptions in supply chains that remain an untapped opportunity. 80 1200 have also impacted the sector where a massive 979 More specifically, to boost private sector 1000 60 rise in demand for protective health products participation, GoI has introduced key policies and 800 45 50 created critical shortages. As the country looks to 41 41 40 financial incentives spanning different sub- 600 37 'Make in India', there are likely to be several segments of the Healthcare sector such as 400 opportunities for local companies that need to 20 Telemedicine, Medical Tourism, Hospitals and be boosted through adequate investments and 200

91 Diagnostic centres, Pharmaceuticals and drugs, deal value (USD million) Total 0 0

capacity building support . deal value (USD million) Average medical devices, equipment and supplies and 2012 2013 2014 2015 2016 2017 2018 1.2. Policy momentum medical insurance. A detailed list of supportive policies, enabling private sector participation in The policy momentum in the Healthcare sector the Healthcare sector are documented in Total deal value (USD million) Average deal value (USD million) reveals a strong narrative that the GoI is working Annexure II. to build, simultaneously addressing different aspects of the sector that are currently 1.3. Private sector participation Source: Praxis Global Alliance fragmented. It also presents a strong There continues to be considerable need for opportunity for multiple stakeholders to augmentation from the private sector to collaborate to ensure development impact with complement GoI's efforts to achieve its goals in commercial gains. The National Health Mission The Healthcare sector also saw significant exit volume, Fintech being the first93 . It is also the Healthcare sector. Private sector healthcare which aims at strengthening the overall public activity for PEs in 2019 with the sector being one important to note that Insurtech models, that operators are already the primary service health system, together with other initiatives and of the top five sectors with the highest exits leverage digital platforms to provide and service providers and have raised significant capital from schemes has laid down a strong foundation for made by investors. From 2015 through 2019, insurance products, including for healthcare, has commercial investors as shown in Chart 4. the development of a robust health system. healthcare subsectors with the largest deal also seen investment activity with USD 41.8 values were pharmaceuticals (USD 2.16 billion), million invested through 7 deals. If these hospitals (USD 1.63 billion) followed by wellness Insurtech models can scale to underserved products (USD 397 million), clinics (USD 337 populations in low resource settings, significant million), biotech (USD 226 million), MedTech development impact can be achieved with (USD 61 million) and diagnostics (USD 40 exponential scale potential. million)92 . Besides, multiples on invested capital Investments in the Healthcare sector continue to for exits in the sector averaged at 3.4 between be an interesting space for investors. Going 2012 and 2019 compared to the average of 3.5 forward, the business models supported by across sectors. Specifically, in the overall investors can look more concertedly at technology related investments, HealthTech was expanding the market reach to rural areas and second only to Fintech in terms of deal value and address challenges around the fragmented shared the second spot with EdTech for deal healthcare system.

49 50 SDG Investor Map Report for India-2020

In addition, the COVID-19 pandemic has Domestic production and asset-light models Bottlenecks for private sector highlighted the need to improve the healthcare such as telemedicine, micro-hospitals and retail investments in the Healthcare sector system in India that needs to balance out the clinics will help to improve the affordability of regional disparities and advance access to healthcare services. The roll-out of GoI's Historically the following bottlenecks limited the expansion of private healthcare provision quality healthcare services. Advancements in the 'Ayushman Bharat', a national health protection to less-affluent population groups. Consultations with experts and secondary research healthcare sector have far-reaching economic scheme that aims to cover 100 million poor and suggest the following as the key reasons hindering optimal private sector participation: repercussions binding the quality of healthcare vulnerable families103 may stimulate demand for to the economic status of the country. With the healthcare products, providing players with an private sector constituting a key market share entry point to the non-urban Indian market. Also, in the sector, there are collaborative changes in consumer behaviour due to the High capex and cost of operations for opportunities for building and scaling COVID-19 pandemic such as increased time healthcare delivery sustainable business models. spent on healthcare consumer apps are Healthcare is a capital-intensive business because of the real estate involved in reshaping use cases and opportunities for 01 Tailwinds driving private investments setting up facilities as well as the cost of medical equipment, hiring qualified disruptive technology-based business models in in the sector staff and updating medical technologies. the healthcare sector.104 With new social distancing norms and increased Finally, investors see Healthcare as an attractive uptake of digital platforms to access services, sector in India. According to Bain's Private Equity there are immense opportunities for business Lack of affordable domestic medical devices report for 2020, market disruptions caused by models like Telemedicine to address access COVID-19 will likely see growth in select sectors 75 percent of the current demand for medical devices is met through imports, related challenges across population segments. 02 increasing the cost of healthcare delivery94 . such as Healthcare with significant investment Policy initiatives such as India's telemedicine opportunities. In addition, even though the guidelines issued in March 2020 have clarified investments in healthcare have spiked in the regulations for start-ups and investors clearing a short term due to the immediate surge in Cost, availability and quality of drugs pathway for spurring innovations and scale-up of demand, the Bain's report suggests the growth According to estimates by the Central Drugs and Standards Control Organization successful business models. In addition, momentum continue especially in subsectors (CDSCO), around 84 percent of the Active Pharmaceutical Ingredients (APIs) for diagnostics and Point of Care services are slated such as Digital Healthcare.105 drugs manufactured in India are imported, driving up the cost of drugs95 . to reach over USD 535 million by 202399 , with a 03 Expenditure on drugs is one of the largest constituents of OOP payments and focus on India's elderly population. Further, the 1.4. Priority subsectors accounts for 40 percent of overall healthcare expenditure for low-income introduction of the Medical Devices (Safety, Through a review of the subsectoral 96 households . In addition, while spurious and substandard drugs as a percentage Effectiveness and Innovation) Bill, 2019 that aims development needs and policy priorities, of total drug supply have reduced over the years, the quality of drugs remains a to improve quality of devices, enhance following are the key development themes that persistent issue. As of September 2020, 1.6 percent of the total drug supply was transparency, promote ease of doing business, emerged as priority areas for the Healthcare 97 found to be substandard . The complex drug retail and distribution network among others will help promote domestic sector with particular emphasis on increasing accentuated by hurdles such as low consumer affordability, lack of storage production creating employment and access to and reducing the cost of healthcare 98 100 facilities further increases the cost to consumers and limits accessibility . entrepreneurship opportunities for MSMEs. that business models should seek to address: This push for domestic production was bolstered through post-pandemic fiscal measures with GoI 1. Low-cost delivery of Healthcare at last mile Low purchasing power and high Out-Of-Pocket expenditure announcing a ~USD 935 million Production 2. Use of technology to improve accessibility and 04 High cost of healthcare delivery coupled with low purchasing power and/or low Linked Incentive (PLI) scheme to boost local bulk affordability of healthcare delivery insurance adoption amongst lower-income groups have limited access to drug manufacturing in July 2020. The 3. Affordable healthcare equipment and supplies private healthcare models. government also notified a scheme to promote 4. Managed care including insurance bulk drug parks. For selected parks, financial 5. Life sciences innovations assistance to the tune of 70 percent of the Low availability of healthcare professionals outside project cost of common infrastructure facilities 6. Alternative medication systems and wellness urban centres will be provided.101 Further, the PLI scheme will products 05 According to estimates, urban centres are home to almost 80 percent of the also promote domestic manufacturing of Consultations with sector experts, investors and doctors despite having less than 30 percent of the total population. Scarcity of high medical devices and will encourage private industry bodies helped test the abovementioned quality trained medical professionals for different cadres such as specialist doctors sector participation by providing incentives such themes for alignment with development needs, and trained nurses has limited the reach of healthcare delivery models. as pay-out of 5 percent of incremental sales over policy priorities and viability for commercial the base year of 2019-20 for identified segments investments. Experts' suggestions and evidence of medical devices.102 51 52 SDG Investor Map Report for India-2020

from secondary sources show that there are intersection of development and policy priorities, 1.5. Region ecosystem for the investment of ~USD 2.7 million and an average significant commercial hurdles in primary and commercial private interest and have Healthcare sector turnover of ~USD 6.9 million. These healthcare infrastructure development and therefore been shortlisted for the Investor Map. manufacturers broadly exist in six Medical training of healthcare professionals, especially in Investing in Affordable Pharmaceuticals can also Identification of priority regions for investments Devices manufacturing 'clusters' in the country. rural areas, and in research and development. help in spurring of opportunities for small and in Healthcare was gleaned from understanding These clusters have 'Medical Device Parks' Besides, while several wellness platforms have medium enterprises (SMEs) that are engaged in the parallels between development need, a developing around them and States have also gained private sector traction, these models tend manufacturing and production related activities conducive environment created by policy committed to set-up dedicated industrial parks to cater to high-income cohorts and do not in this subsector. Though the Pharma sector momentum as well as already existing where efficient domestic manufacturing at immediately address India's most pressing already has significant private investments, the private sector participation in different regions of lower costs. In 2019, Andhra Pradesh, Telangana, development needs. Other themes such as development of affordable medication is difficult the country. Tamil Nadu and Kerala have got in-principle managed healthcare services, life sciences since these companies import the APIs. Given approval from GoI for new medical devices For identifying regions that have a conducive innovations were also filtered out due to the the existing price caps and thin margins, more parks.106 However, there is little investment environment for private sector participation in absence of viable business models operating affordable solutions are most likely possible if momentum in bolstering manufacturing and the Healthcare sectors, national and State level at scale. APIs can be manufactured in the country and at production capacities in the States where the investment promotion plans were reviewed. competitive price thresholds. development need is the highest that the Healthcare Delivery and affordable Medical There are approximately 800 domestic Medical following section describes. Equipment are subsectors that lie at the Devices manufacturers in India, with an average

Figure 13: Subsector shortlist for the Healthcare sector

Alignment to development needs and policy priorities Chart 5: Manufacturing clusters for medical devices in India High Medium Low Shortlisted (subsectors highlighted (subsectors mentioned (subsectors not mentioned subsectors as ‘top’ priorities by as ‘priority’ by by development sector development experts) development experts) experts)

Subsector: HEALTHCARE DELIVERY Subsector: Tertiary care outside HEALTHCARE DELIVERY Haryana Tier-1 cities Primary care Low-End Medical Consumables Conducive for Specialty Centres Subsector: infrastructure Chandigarh, Ballabhgarh, private sector Decentralized preventive, primary and secondary care LIFE SCIENCES Faridabad, Manesar participation Subsector: MEDTECH centers APIs manufacturing Subsector: MEDTECH Content platforms Gujarat (subsectors Drugs manufacturing Telemedicine/digitally- Pharmaceuticals with PE enabled remote treatment Subsector: Ahmedabad, Vapi investments) Subsector: AFFORDABLE MANAGED CARE HEALTHCARE EQUIPMENT Medical insurance Industrial Corridors & SUPPLIES products B2B hospital equipment (ventilators, etc.)

Signiﬁcant Subsector: LIFE Subsector: MEDTECH barriers to SCIENCES Data management Maharashtra scale (subsector Vaccine manufacturing in healthcare Pharmaceuticals Andhra Pradesh, Telangana with commercial Drug development and Mumbai, Pune, Nagpur Medical Electronics bottlenecks to research Hyderabad, Andhra Pradesh MedTech Zone (AMTZ) investment)

Private investor interest MedTech Park in Vishakhapatnam; Sultanpur Karnataka (Upcoming in Telangana) Low scope for Subsector: AFFORDABLE Insulin Pens, Stents commercial HEALTHCARE investor EQUIPMENT & SUPPLIES & Implant, B2B diagnostic equipment Medical Electronics participation Tamil Nadu (subsectors B2B Consumables Bengaluru, Mangalore B2B2C services e.g., stents Medical Electronics with regulatory B2C: Medical devices barriers) HLL Medipark, Chennai

Notes: *Subsector not included in SASB Source: UNDP Investor Map research **SASB subsector biotechnology and pharmaceuticals were broken into 2; while affordable Map not to scale pharmaceuticals were not highlighted as a top priority, API manufacturing has gained significant momentum during the COVID-19 pandemic due to its impacts on India's self-sufficiency and the sectors Source: Invest India value chains. Therefore, API manufacturing has been included for further analysis. https://www.investindia.gov.in/sector/medical-devices

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Chart 6: Pharmaceutical Clusters in India Chart 7: Medi-cities in India

Gurugram Captive R&D Units Medanta Medicity Fortis Medicity Contract R&D Units Investment: 293 Investment: 293 Established Bulk Drug Cluster No. of Beds: 1,600 No. of Beds: 800 Established Formulation Cluster Lucknow Emerging Bulk Drug Cluster Fortis Medicity Emerging Formulation Cluster Investment: 122-195, Baddi No. of Beds: 800 Pantnagar, Haridwar Durgapur NCR Bengal Health City Sikkim Investment: 487 No. of Beds: 500 Nagpur Ahmedabad Nagpur Health City Ankleshwar Investment: NA Hyderabad Vapi, Baroda No. of Beds: 2,000 Apollo Health City Investment: 243 Tarapur Aurangabad No. of Beds: 700 Mumbai Hyderabad-Medak Pune Bengaluru Chennai Narayana Health City, Global Hospital Visakhapatnam Investment: 488 Investment: 245 No. of Beds: 1,000 Bengaluru No. of Beds: 5,000 Mysore Chennai

Source: Invest India Map not to scale https://www.investindia.gov.in/sector/healthcare Pondicherry Map not to scale

Source: Invest India https://www.investindia.gov.in/sector/pharmaceuticals GoI's policy design and implementation also have fewer choices in accessing care. These gaps have a regional focus. For example, the are exacerbated in States that lag on SDG production linked incentive scheme to boost healthcare indices. (State-wise SDG Maps and A 2018 Brookings study observes that many indicators ranging from Maternal Mortality Ratio local bulk drug manufacturing will provide Indicators are documented in Annexure IV) states lie below the national level figure of 0.55 (MMR), the proportion of institutional deliveries financial assistance to the tune of 70 percent of 1.6. Investment Opportunity Areas - beds per 1,000 population. These include Bihar, to family planning methods and total physicians the project cost of common infrastructure Jharkhand, Gujarat, Uttar Pradesh, Andhra and nurses per 10,000 population. 19 States fall facilities for selected parks. It will be increased to Overview 90 percent of the total costs in the case of Pradesh, Chhattisgarh, Madhya Pradesh, in the Aspirant or Performer categories and Consultations with experts and the research Northeast states and hilly states (Himachal Haryana, Maharashtra, Odisha, Assam and require policy and investment momentum to methodology to develop the investor map Pradesh, Uttarakhand, Union Territory of Jammu Manipur. These 12 states together account for address regional imbalances in healthcare helped identify IOAs such as improving primary 108 & Kashmir, and Union Territory of Ladakh).109 close to 70 percent of the total population in access. On the other hand, there are States like healthcare services in rural areas that came up 107 India. Further, NITI Aayog's SDG Index ranks Kerala that have outperformed on most of the Overall, while there is a significant investment with the potential for high development impact. States on their performance on SDG 3 (Good targets set out by GoI for SDG 3 relevant momentum in different regions of the country, However, the commercial viability of such Health and Well-Being) across four performance indicators. For example, against a countrywide around manufacturing and production of models remains unproven even though there are categories – Aspirant, Performer, Frontrunner target of 45 physicians, nurses and midwives per pharma and medical equipment, there is a scope start-ups that have ventured into this space. and Achiever (lowest to highest). Specifically, for 10,000 population, Kerala reported 112. for further investment, particularly in the space Business models in these 'white spaces' currently SDG 3, States' performance was measured on of healthcare delivery through quality services. face significant commercial hurdles and need to As seen in Chart 7, most of the medi-cities are develop further before they attract large-scale based in urban areas and last-mile populations commercial private investments. There are

55 56 SDG Investor Map Report for India-2020

emerging business models in this area since the have seen significant investor momentum with hospitals can close this significant gap. Manufacturing, production and distribution potential for scale is immense, as seen in Figure established brands setting up multi-speciality Companies in this space have been able to of low-cost medical equipment and 14 with models that can leverage tech-enabled units serving secondary and tertiary care. This demonstrate profitability within a timeframe of 3 pharmaceuticals are established areas and have platforms and asset lean models to reach the also helps plug in the access gap by reducing the to 4 years.110 seen investment momentum in the past with last mile. distance that a rural household will need to favourable returns. These sectors are also slated Tech-enabled remote care facilities are fast cover to access quality healthcare. India needs 3 to grow significantly with their contributions to On the other hand, low-cost hospital satellite gaining momentum and are particularly million beds to reach the WHO mandated ratio, increasing production and manufacturing centres and care units in Tier II and Tier III cities important due to the increasing share of an and the potential to scale satellite network capacities within India to lower dependence ageing population in India.111 There is a strong upon imports. Growing policy momentum aside, demand for these platforms especially for Figure 14: Investment Opportunity Areas Shortlist for Healthcare Sector these investment opportunities also have generic healthcare and has been accentuated available infrastructure that can be leveraged, Affordable Medical Affordable due to the COVID-19 pandemic. In relation to the Subsector Affordable Healthcare Delivery such as existing manufacturing/production Equipment and Supplies* Pharmaceuticals pandemic, digital healthcare is also seen as an clusters, thereby making for an attractive Low-cost hospital Tech-enabled area where demand has spiked in the short term Affordable medical Active Pharmaceutical Opportunity Primary care satellite centres/ remote care investment timeframe. (Please refer to Annexure III equipment Ingredients and growth momentum will remain positive in Areas in rural areas care units in services (such as and consumables manufacturing** for detailed analysis of the shortlisting process non-metros Telemedicine) the long term, thereby indicating the potential 112 followed to arrive at the final IOAs) Investors identified for strong returns on investments. area as fundamentally marketable? ?

Primary care market The hospital industry is Telemedicine market is Estimated market size of medical India's bulk drugs market Scale Potential is valued at estimated to be worth expected to worth devices industry in India is (APIs and intermediaries) is worth USD 13 bn1 USD 62 bn1 USD 5.5 bn2 USD 11 bn2 USD 13 bn3

114 Proven in-market 1.7. Healthcare Investment hospitals as part of its network. Also, to Models not A number of Promising models Models have Models have as evidenced by existing players have attracted demonstrated demonstrated yet commercially encourage the private sector to establish investors interest? are adopting these venture capital, profitability and profitability and Opportunity Areas Deep Dive viable models, but models but have not yet attracted private equity attracted private equity hospitals in smaller cities, the government has have not yet been established investments investments 1.7.1. Low-cost hospital satellite centres/care provided various incentives to hospitals such as proven as profitable profitability units in non-metros a tax holiday for private healthcare providers in White space: strong non-metros for a minimum of 50 bedded Opportunity type scale potential but Emerging Emerging Mature Mature India's 'bed to people' ratio is lower than the not successful hospitals. New hospitals with 100 beds or more WHO's recommended standard of 5 beds per business models that are set up in rural areas are entitled to a 100 1,000 people and is only a third of the global 115 Low-cost percent deduction on profits for 5 years. Emerging Primary and Technology- Scalable mobile- Manufacturing of APIs average. This gap is wider in rural India. business model(s) preventive care enabled, asset-light based software manufacturing and for affordable drugs for centres in rural scalable satellite solutions and distribution of high-burden disease Moreover, a large section of the population An increasingly favourable regulatory framework, areas centres/small care mobile workforce consumables and categories, such as units that offer models that allow equipment for Cardiovascular diseases, travels more than 100 km to access basic accelerated due to vulnerabilities exposed by secondary and for remote/at- hospitals and care Diabetes and healthcare, incurring high opportunity costs and COVID-19 pandemic, is encouraging many centres tertiary care home medical Tuberculosis and drugs 113 Technology- consultation and included under the loss of income. India has made efforts to plug private hospital chains to expand into Tier II and enabled, asset-light symptom- National List of Essential the gap in access to basic quality healthcare Tier III cities116 and the hospital industry is scalable specialist management for Medicines (NLEM) care centres chronic diseases facilities by encouraging the private sector to set expected to reach USD 132 billion by 2023 from up infrastructure in and beyond Tier I cities. Part USD 61.8 billion in 2017. SDGs impacted of the encouragement is also driven by the In terms of investment timeframe, an Ernst & massive demand for healthcare services, with Young (EY) study estimates that a 200-bed nearly 62.4 percent of total healthcare hospital can break-even in 3 years, assuming an expenditure as OOP. 85 percent utilization rate.117 However, the Under Universal Health Coverage, insurance current utilization rates reported by hospitals are schemes such as 'Ayushman Bharat' are being c.60-70 percent. Thus, returns for hospital chains Sources: 1. Bajaj, Akriti. “Healthcare Industry in India – Invest in Healthcare Sector.” www.investindia.gov.in, driven to contain risks related to economic are expected to be between 5-15 percent Available at: www.investindia.gov.in/sector/healthcare#:~:text=The%20diagnostics%20industry%20in%20India. shocks in accessing healthcare by last-mile depending on the size of the facility and the 2. India Brand Equity Foundation. “Healthcare Industry in India, Indian Healthcare Sector, Services.” Ibef.Org, Ministry of Commerce and Industry, 2019, Available at: www.ibef.org/industry/healthcare-india.aspx. populations. Such insurance coverage has occupancy rate. High valuations have lowered 3. KPMG. INDIAN API INDUSTRY - REACHING THE FULL POTENTIAL APRIL. Confederation of Indian Industry, 2020. Available at: improved the purchasing capacity of lower- returns in the past, but the valuations are https://www.mycii.in/KmResourceApplication/65765.IndianAPIIndustryReachingthefullporentialCIIKPMGreport2020.pdf income groups, thereby providing a larger 118 Notes: expected to be moderated going forward. *Wearables and costly B2C medical devices have been excluded because they do not fit the “affordable” theme addressable market for the healthcare centres. Therefore, low-cost hospital satellite centres/care ** API manufacturing has gained significant momentum during the COVID-19 pandemic due to its impacts on India's self-sufficiency and the sectors By September 2020, the scheme enrolled 23,334 value chains. Therefore, API manufacturing has been included for further analysis units have been shortlisted as IOAs.

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1.7.1. Low-cost hospital satellite centres/care units in non-metros - Market Insights and Family Welfare (MoHFW), in collaboration teleconsultation and prescription for medicines

Technology-enabled, asset-light scalable satellite centres/small care units that offer secondary and with NITI Aayog and Board of Governors (BoG), by medical practitioners, with certain restrictions. Overview: tertiary care or specialist care centres that can help improve access to healthcare outside Tier I and Tier II Medical Council of India (MCI). In March 2020, To boost the growth of this space, the cities the government's revised telemedicine Government is offering a 250 percent deduction guidelines were notified under the Indian for approved expenditure incurred on India has 1 hospital bed per 879 people including private hospitals, which is only a third of the global Medical Council (Professional Conduct, Etiquette operating technology-enabled healthcare Need case: average. A large section of the population travels more than 100 km to access basic healthcare. and Ethics) Regulations, 2002.121 The guidelines services such as telemedicine.122 According to estimates, urban centres are home to almost 65% of the country’s hospital beds despite made relaxations to the way Telemedicine is having less than 30% of the total population practiced and made it legal to provide This IOA could contribute directly to SDG3 (Good Health and Well-Being), particularly 3.8.1. (Coverage of essential health services), and indirectly to SDG1, SDG5, SDG8, SDG10 and SDG11 1.7.2. Tech-enabled remote care services - Market Insights

User or Direct: Patients in areas where public healthcare system does not provide adequate coverage. India Investors can focus on scalable mobile-based software solutions and mobile workforce models that Overview: beneﬁciary: needs 3 million hospital beds to meet WHO’s minimum prescribed ratio allow for remote/at-home medical consultation and symptom management for chronic diseases to Indirect: Providing broader treatment options to more Indians can help reduce the strain on an improve access to healthcare underfunded public health network

According to estimates, urban centres are home to almost 80% of the doctors despite having less than Need case: Economic The hospital industry is expected to reach USD 132 billion by 2023 from USD 61.8 billion in 2017; growing 30% of the total population. Telemedicine can bridge the rural-urban divide in terms of medical factors: at a compounded annual growth rate of 16-17% personnel, extending low-cost consultation and diagnosis facilities to the remotest of areas via internet Returns for hospital chains are expected to be between 5-15% depending on the size of the facility and the and telecommunication, especially in the backdrop of a changing disease burden towards non- occupancy rate communicable diseases It is likely to take at least 3-5 years for a greenﬁeld project to break-even This IOA could contribute directly to SDG3 (Good Health and Well-Being), particularly 3.8.1. (Coverage of essential health services), and indirectly to SDG1, SDG5, SDG8, SDG9, SDG10 and SDG11

Enabling Government has provided various financial incentives for hospitals in smaller cities factors: Strong policy momentum driven by a number of strategic interventions in National Health Mission and User or Direct: Populations in areas with lower access to healthcare, particularly rural and communities living in the national disease control programmes beneficiary: remote areas Indirect: Public healthcare system, as telemedicine solutions will allow the public healthcare system to cope with demand Risk Execution Risk: Hospitals have just started to adopt the model and so the unit economics are not factors: proven, and this may affect the breadth of impact. Given the tight margins, the economic viability is attractive only to existing chains that can share resources among the different hospitals to improve Economic Telemedicine market in India is expected to reach USD 5.5 billion by 2025 margins. This may limit the success potential for smaller hospitals factors: 80% of the investors surveyed reported a median IRR of 10-20% in healthcare investments in India. Stakeholder Participation/External Risk: The model will be most impactful when accompanied with Industry experts suggest that telemedicine can offer >20% returns continued efforts to ensure universal health coverage by the Government under Ayushman Bharat. In Companies in this vertical are expected to take <5 years to turn profitable due to low the absence of the scheme, the impact may be limited to those who can already afford private infrastructure requirements healthcare services

Impact Investments falling under this IOA are likely to benefit stakeholders (IMP classification B), given that this Enabling The vertical has a very strong partner environment with significant interest from commercial investors as management: business model yields an important and intended outcome that can improve access to healthcare in factors: well as existing healthcare providers non-metros Strong policy and regulatory momentum towards telemedicine were fueled further by the COVID-19 pandemic. GoI has introduced a number of initiatives to leverage the potential of digital healthcare such Source: UNDP research for India Investor Map as introducing the Aarogya Setu app (an open-source application for COVID-19 contact tracing, syndromic mapping and self-assessment) and revising the telemedicine practice guidelines to encourage 1.7.2. Tech-enabled remote care services Health Centres (PHC)s, there was a shortfall of the industry 47.9 percent for female health assistant and 59.8 In 2018, India had only 0.9 physicians per 1,000 percent for male health assistants. A significant Risk Limited connectivity in parts of the country where distance healthcare is most needed and limited digital people as compared to the global average of 1.6 factors: literacy in the most vulnerable groups may limit impact percentage of sanctioned posts were found to be per 1,000.119 Besides, 60 percent of hospitals, 75 While the model is proven in urban areas, external factors such as limited connectivity and digital literacy vacant at all levels. percent dispensaries and 80 percent of doctors of target populations might limit efficacy of service in more rural/remote areas are serving only 28 percent of India's total Telemedicine can bridge the rural-urban divide Telemedicine is a relatively new domain with nascent regulations and standards. As the models continue to operate, new challenges may emerge with respect to data collection and quality of service population, living primarily in urban areas.120 The to access medical facilities and personnel, growing disease burden, especially for NCDs is extending low-cost consultation and diagnosis Impact Investments falling under this IOA in their current form are likely to contribute to solutions (IMP not competitively met with strong healthcare facilities to the remotest of areas via internet and management: classification C), given that this business model yields an important and intended outcome that can infrastructure and skilled medical professionals telecommunication. The pandemic-induced improve the access and quality of healthcare across cohorts. Even if telemedicine platforms’ adoption with the gap widening for rural, last mile, low lockdown saw a surge in teleconsultation, rates take time to increase at the last mile, they can help free up public and private healthcare capacity resource populations. The Rural Health Statistics especially after the issuance of the long pending for all (2018-2019) indicate that in the case of Primary telemedicine guidelines by the Ministry of Health Source: UNDP research for India Investor Map

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If the market adoption of such platforms for serving the ageing population in India that is investment of USD 2.3 to 2.7 million and an (5 to 15 years) since product development and continues in a post-pandemic scenario, resulting expected to increase to 6 percent of the total average turnover of USD 6.2-6.9 million. An building manufacturing capabilities requires a in behavioural shifts in how people access population by 2021.124 increasing number of multinational corporations gestation period. In the past, companies have healthcare, the Telemedicine model is here to (MNCs) are setting up their manufacturing bases taken approximately 6 years to break even.132 In terms of investment timeframe, the business stay. Pre-pandemic projections show that the in India. Based on benchmark deals, investors have been models for this IOA report a payback within a Telemedicine market in India was expected to estimated to have made 3 to 3.5X return on a short term (<5 years) since the technology is The investment timeframe for business models rise at a CAGR of 20 percent during FY16-20, 6-year horizon.133 readily available and major hospitals have in the medical devices space is medium-term reaching USD 32 million. However, the stimulus already adopted the model within a short period. created due to the pandemic projects the The COVID-19 pandemic has helped in doubling telemedicine sector to grow at a CAGR of 31 the growth in the number of online consultations percent between 2020 and 2025 and reach USD 1.7.3. Affordable medical equipment and consumables - Market Insights indicating a demand side behaviour change that 5.5 billion. Of the USD 5.5 billion, 95 percent is Investors can invest in business models to help reduce the cost of healthcare in India, by focusing on the is likely to stay in the long term, building a strong Overview: projected to be constituted by telemedicine and manufacturing and distribution of low-cost medical equipment and supplies for hospitals and care value proposition both for consumers as well as e-pharmacy.123 Major hospitals have adopted centres (B2B) service providers. Overall Health-tech remains a telemedicine, and the specialized companies short to medium term bet. 80 percent of the now offer home care. In a similar vein, online c.75% of the current demand for medical devices is met through imports, increasing cost of healthcare investors surveyed reported a median IRR of 10- Need case: platforms aggregating information about delivery. According to PM-JAY estimates, out-of-pocket medical expenses are estimated to push 60 20 percent in healthcare investments in India million Indians into poverty every year. Medical technology constitutes 20-25% of healthcare costs specialist medical professionals have seen an according to Praxis Global Alliance's Healthcare This IOA could contribute directly to SDG3 (Good Health and Well-Being), particularly 3.8.2. (Proportion uptake in the past few years, recording a surge Investor Sentiment Spotlight 2019.125 Therefore, of households with large medical expenditures), and indirectly to SDG1, SDG8, SDG9, SDG10 and SDG11 during the pandemic with similar trends being tech-enabled remote care services have been recorded for online diagnostics and testing. Also, shortlisted as IOAs for the SDG Investor Map. Telemedicine and remote diagnostics are useful User or Direct: Public and private hospitals, clinics and diagnostics centres catering to lower income groups beneficiary: Indirect: Patients, particularly those under the public healthcare system, who could benefit from more affordable healthcare services

Economic The medical devices market is expected to reach USD 50 billion by 2025 1.7.3. Affordable medical equipment and significant financial incentives to invest in factors: Investors typically expect a return of 20-25% in this space consumables manufacturing in India. Under the scheme, GoI Companies in this vertical are expected to take 5-10 years from their year of establishment to yield earmarked ~USD 54 million for financing Over 75 percent of the current demand for attractive returns common facilities in the four parks in Andhra medical devices is met through imports, thereby Pradesh, Telangana, Tamil Nadu and Kerala. increasing the cost of healthcare delivery.126 As a Enabling Strong policy momentum as India is looking to improve self-sufficiency in MedTech as a part of the ‘Make Earlier in 2015, GoI had passed a motion to allow result, 20-25 percent of OOP healthcare factors: in India’ initiative 100 percent FDI through automatic route for expenses costs for patients is on medical Favourable regulations with the National Medical Devices Policy launched to encourage the sector medical device manufacturing in India. According technology.127 Thus, to fully address the gaps in Favourable financing environment with government-approved production-linked incentive (PLI) scheme to the PLI scheme, an incentive over 5 percent of for promoting domestic manufacturing of medical devices healthcare at last mile, there is a need for the incremental sales over the base year 2019-20 will medical device industry to focus on increased be provided on segments of medical devices affordability.128 The hurdle that India needs to Risk While B2C medical devices have traditionally scaled faster due to high pricing (albeit limited to higher identified. The Government is offering a factors: income groups), B2B affordable devices will have to compensate through volumes. While a few such cross is to manufacture and distribute medical reduction in customs duty and other taxes on companies have been successful, the model has not yet been proven at a large scale. Capital-intensive devices that are cost-competitive, effective and business with high upfront cost driven by high-touch sales model, training and onboarding efforts and life-saving equipment and income tax exemption of the requisite quality to increase penetration R&D costs to update technology may hamper commercial viability of the model for 15 years for domestically manufactured and democratize healthcare delivery at last mile. Lack of trained professionals for in-country product design and R&D may limit scale. Medical devices medical technology products. It is in this context that the 'Make in India' require a mix of technologies such as engineering, electronics, material sciences and information technology. India has not been able to bridge the skills gap in some of these domains initiative becomes significant for the medical The growth projections for the medical devices devices industry that has otherwise been industry also validate it as a viable IOA with the Impact Investments falling under this IOA are likely to benefit stakeholders (IMP classification B), given that this suffering a cost of manufacturing disability of market expected to reach USD 50 billion by management: business model yields an important and intended outcome that help reduce the cost of healthcare 129 130 around 12 percent to 15 percent . 2025, backed by an increase in ageing Affordable products which target the public healthcare system have the highest potential to serve the population, growth in medical tourism and most underserved communities. These devices can significantly bring down the cost of healthcare in the To boost the growth of medical device industry declining cost of medical services due to resource-strapped public system, increasing the impact of the model to ‘C’ category and to improve self-sufficiency in MedTech as a indigenous manufacturing and production.131 part of the 'Make in India' initiative, GoI's PLI There are 750 to 800 domestic Medical Devices Scheme and the Scheme for Promotion of Source: UNDP research for India Investor Map manufacturers in India, with an average Medical Devices Parks (2020) offer investors

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(KSMs) could improve 1.7.4. Active Pharmaceutical Ingredients manufacturing - Market Insights backward integration over the Manufacturing of Active Pharmaceutical Ingredients (APIs) for aﬀordable drugs for high-burden next few years and curtail Overview: disease categories, such as Cardiovascular diseases, Diabetes and Tuberculosis and drugs included supply-chain disruption risk under the National List of Essential Medicines (NLEM) can help improve consistent supply of medication for Indian drug makers.135 in the country

Several financial incentives are provided to API manufacturers 63.5% of the total OOP Expenditure (which, in turn, constitutes 62% of all healthcare expenditure in Need case: including a 15-year tax holiday India), is on outpatient care. Of this, the largest expenditure (71%) is on medicines. A significant for cluster developers/ proportion of the country’s population lacks access to essential medicines. participants, and Income Tax Around 84% of the APIs for drugs manufactured in India are imported, driving up the cost of drugs and making the supply chain less resistant benefits for an initial period of This IOA could contribute directly to SDG3 (Good Health and Well-Being), particularly 3.8.2. (proportion 10 years for each product of households with large medical expenditures), and indirectly to SDG1, SDG8, SDG9, SDG10 and SDG11 from its launch date. Also, in 1.7.4. Active Pharmaceutical Ingredients the case of fermentation- manufacturing based products, the rate of incentive is 20 User or Direct: Drug manufacturers struggling to produce drugs due to the government-imposed pricing caps on percent for the first four years while for beneficiary: 376 drugs (8.6) and global supply chain disruptions Localizing and democratizing API manufacturing chemically synthesized products, the incentive is Indirect: Patients, particularly those with chronic diseases, with a high OOP spending on medications in India can have far-reaching effects. For one, due to lower price volatility as import-dependence decreases and more availability of affordable drugs 10 percent for six years. access to affordable drugs can help in due to more resilient supply chains addressing challenges around catastrophic OOP The projects for API manufacturing also show a towards healthcare expenses. Additionally, with very promising growth trajectory and is expected Economic India's bulk drugs market (APIs and intermediaries) is worth USD 13 billion the transition of disease burden in India now to expand and grow at a CAGR of around 8.6 factors: 80% of the investors surveyed reported a median IRR of 10-20% in healthcare investments. API towards chronic diseases, there is an increased percent during 2020–24, signifying its future manufacturing is expected to provide similar returns demand for specialized drugs which are potential and evolving global importance. It has Companies in this vertical are expected to take 5-15 years from their year of establishment to yield currently more expensive than acute drugs in contributed significantly to the global generics attractive returns India. The industry is well placed to address this market fulfilling 20 percent of the global demand need through affordable, high-quality drugs for in generics in terms of volume, making India the Enabling Strong policy momentum with the Government approving a package of USD 1.3 billion in 2020 to boost chronic diseases and has the potential to create largest provider of generic medicines globally. factors: the domestic production of bulk drugs and exports over 1 million additional jobs by 2030, boosting There have been more than 15 public offerings There are various financial incentives being provided to API manufacturers such as land and other 134 consumption in the economy. and significant M&A activity in companies infrastructural facilities at concessional rates, interest subsidies on bank loans, tax holidays, etc. developing and manufacturing APIs between Growing interest from private equity investors provides a strong partner environment for the vertical The regulatory environment has been historically 2014 and 2019136 . complex taking 2 to 3 years and a deeply layered approval process with multiple stakeholders. GoI In terms of investment timeframe, the payback Risk Execution Risk: Due to the lack of raw material availability, it may not be possible to produce APIs at has been taking multiple measures to increase on investments in API manufacturing is a factors: globally competitive rates. This risk is medium to high considering the cost of production in China is the ease of doing business such as introducing medium (5-15 years) term horizon since there is currently 20-30% lower than in India. Further, there is also an external risk where even if lower cost of production is achieved, pharmaceutical companies may not pass on the benefits to patients as their the Draft Pharmaceutical Policy 2017. GoI has a high upfront capital expenditure. Besides, API margins are already thinning also liberalized the FDI policies in the manufacturers cannot typically charge higher Multiple regulatory bodies with cumbersome regulations and approval procedure increases operational pharmaceuticals sector with 100 percent FDI – 74 prices to drug manufacturers due to high complexity percent under automatic route for brownfield competition and pricing controls. The business, projects and 100 percent for greenfield projects. therefore, is a high-volume and a capped price Following the COVID-19 pandemic and the business. As a result, companies can only break- Impact Investments falling under this IOA are likely to act to avoid harm (IMP classification A), given that management: outcome is likely to be positive because domestic manufacturing of APIs in an affordable manner can strategic initiatives thereof, GoI has also notified even when they have built a significant scale. 80 ensure consistent availability of drugs by offering a more resilient supply chain to the pharmaceutical four schemes in July 2020 to promote domestic percent of the investors surveyed reported a industries but also generate employment. The model also has the potential to reduce the cost of manufacturing of bulk drugs and medical median IRR of 10-20 percent in healthcare medication, however, given the existing price caps and higher cost of in-country production (production devices, entailing a combined budgetary outgo of investments in India according to Praxis Global of APIs costs 30% more in India as compared to China), domestic manufacturing may not have the desired impact on the price of medication about ~USD 1.6 billion over multiple years. The Alliance's Healthcare Investor Sentiment Source: UNDP research for India Investor Map schemes include production-linked incentives Spotlight 2019.137 Also, industry benchmarks and assistance to production infrastructure indicate that pharmaceutical companies had an creation. According to Fitch Ratings, the recent average annual Return on Capital Employed announcements by GoI to boost domestic (ROCE) ratio of 10-20 percent.138 manufacturing of APIs and Key Starting Materials

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1.8. White spaces in the Healthcare sector Innovations in this space necessitate the building User or Direct: Population across age groups with low access to low-cost healthcare services, especially living in of low resource and affordable models that can beneficiary: rural parts of India 1.8.1. Primary care centres and services in significantly ease the healthcare OOP burden for Indirect: Private and public healthcare network rural areas low-income households. The investor map also seeks to identify potential Risk Financial sustainability without external aid (government subsidies, significant tax breaks/incentives) In addition, technology can be a key enabler to factors: restricts expansion into all regions 'white spaces' defined as opportunity areas service last-mile markets. India has over 900 Quality of service may suffer in the absence of strong regulations that ensure consumer protection and that have the potential for high development million mobile phone users that can be high quality assurance impact but where either government-initiated leveraged to overcome brick and mortar Passing on digital literacy about interface/apps/software/technology to rural citizens is challenging policy momentum is low or private sector play infrastructure related challenges to provide is limited. services in remote areas. Non-profit and Impact Investments falling under this IOA are likely to contribute to solutions (IMP classification C), given that For the healthcare sector, improving primary philanthropic organizations are already management: these business models yield an important and intended outcome that can offer basic and affordable primary healthcare solutions to underserved populations with significant impact on household’s socio- healthcare services in rural areas came up with leveraging mobile phones to impart simple economic resilience the potential for high development impact education and discussion programmes around Source: UNDP research for India Investor Map though the commercial viability of such healthcare best practices and such mediums models remains unproven. Business models in can also be used to offer information services Sources: these 'white spaces' currently face significant about rights and entitlements from the health commercial hurdles and need to develop delivery system. 74. Niti Aayog and United Nations (2019). SDG India Index and 87. Niti.gov.in. 2020. SDG India Index And Dashboard 2019-20. Dashboard 2019-20. [online] niti.gov.in. Available at: Available at: https://niti.gov.in/sites/default/files/2019-12/SDG- further before they attract large-scale Start-up business models are setting up primary https://niti.gov.in/sites/default/files/2019-12/SDG-India-Index- India-Index-2.0_27-Dec.pdf commercial private investments. However, the healthcare clinics enabled with inbuilt webcams, 2.0_27-Dec.pdf. 88. Advamed.org. 2017. Medical Device Industry In India: Evolving need case is very clear with significant gaps in the 75. Rchiips.org. 2020. National Family Health Survey (2015-16). Landscape, Opportunities And Challenges. Available at: and relevant clinical equipment to deliver Available at: http://rchiips.org/nfhs/pdf/nfhs4/india.pdf https://www.advamed.org/sites/default/files/resource/medical_i healthcare infrastructure and last-mile delivery of standardized care, including bespoke clinical 76. Office of the Registrar General & Census Commissioner, India, ndustry_in_india__the_evolving_landscape_oppurtunities_and_ch services to low-income households in low decision support system, and capability of deep Ministry of Home Affairs (2018). Sample Registration System allenges_white_paper.pdf resource settings. Statistical Report 2018. [online] Available at: 89. Barik, D. and Arokiasamy, P., 2016. Rising Health Expenditure Due learning-driven diagnosis, treatment and https://censusindia.gov.in/Vital_Statistics/SRS_Report_2018/SRS_ To Non-Communicable Diseases In India: An Outlook. Available 139 Statistical_Report_2018.pdf. at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5126101/ The government is the largest provider of monitoring. Such models can bridge the gaps 77. Health and Family Welfare, M., 2020. National Health Profile 90. Niti.gov.in. 2019. Health System For A New India: Building Blocks. healthcare in the country at the primary and between poor access, robust referral systems (NHP) Of India- 2019 :: Ministry Of Health And Family Welfare. Available at: https://niti.gov.in/sites/default/files/2019- secondary levels while it is the largest buyer of and continuation of care without creating Cbhidghs.nic.in. Available at: 11/NitiAayogBook_compressed.pdf http://www.cbhidghs.nic.in/showfile.php?lid=1147 such services at tertiary and quaternary care financial barriers for consumers. Apart from 91. Stakeholder consultations 78. The Lancet (2015). The India State-Level Disease Burden Initiative 92. Praxis Global Alliance. 2019. Healthcare Investor Sentiment levels. Private sector investments have been connecting villagers to doctors, the cloud-based | Public Health Foundation of India. [online] Phfi.org. Available Spotlight. Available at: driven largely by a free market economy and the health management platform also has the at: https://phfi.org/the-work/research/the-india-state-level- https://www.dropbox.com/s/o6vaek2i0o3o29l/Healthcare%20Inv potential to rope in the nearest medical disease-burden-initiative/. estor%20Sentiment%20Spotlight%202019%20-%20Praxis%20 pricing of such services are influenced by 79. Menon, G.R. and Kalaskar, S. , et al(2019). National Burden Global%20Alliance.pdf?dl=0. investment costs. Consequently, these services stores/pharmacies to ensure better access to Estimates of Healthy Life lost in India, 2017: an analysis using 93. Bain and Company, and IVC Association. India Private Equity medications. Therefore, given the scale potential direct mortality data and indirect disability data. The Lancet Report 2020.Available at: www.bain.com/globalassets/noindex/ have remained inaccessible by last-mile Global Health, [online] 7(12), pp.e1675–e1684. Available at: of primary healthcare in rural areas and the 2020/bain_report_india_private_equity_report_2020.pdf. populations due to significant cost https://www.thelancet.com/journals/langlo/article/PIIS2214- 94. Niti Aayog (2018). Strategy for New India @ 75. Niti Aayog. considerations. Primary healthcare services for market opportunities present therein, 'Primary 109X(19)30451-6/fulltext. Available at: https://niti.gov.in/writereaddata/files/ care centres and services in rural areas' has been 80. Invest India analysis Strategy_for_New_India.pdf. rural and underserved areas need to ensure easy 81. Data.worldbank.org. 2020. Physicians (Per 1,000 People) | Data. selected as white space. 95. Niti Aayog (2018). Strategy for New India @ 75. Niti Aayog. access without the fear of financial hardships. Available at: Available at: https://niti.gov.in/writereaddata/files/ https://data.worldbank.org/indicator/SH.MED.PHYS.ZS Strategy_for_New_India.pdf. 82. Health and Family Welfare, M., 2020. National Health Profile 96. India, KPMG (2015). Healthcare in India: Current State and Key (NHP) Of India- 2019 :: Ministry Of Health And Family Welfare. Imperatives. Available at: https://Home.Kpmg/Xx/En/ 1.8.1. Healthcare white space - Market Insights Cbhidghs.nic.in. Available at: Home.Htmll, 2015, assets.kpmg/content/dam/kpmg/in/pdf/ http://www.cbhidghs.nic.in/showfile.php?lid=1147 2016/09/AHPI-Healthcare-India.pdf. 83. Data.worldbank.org. 2020. Domestic General Government 97. Central Drugs Standard Control Organization. Drug Alert List for Investors can support business models that are working to create low cost primary healthcare Health Expenditure (% Of General Government Expenditure) | September 2020. Ministry of Health and Family Welfare, 2020, Overview: infrastructure to improve access to basic services across the health continuum with potential to reduce Data. Available at: https://data.worldbank.org/indicator/ Available at: cdsco.gov.in/opencms/opencms/en/ SH.XPD.GHED.GE.ZS?view=chart OOP healthcare expenses, especially for low income segments in underserved regions of India Notifications/Alerts/. 84. Rchiips.org. 2020. National Family Health Survey (2015-16). 98. UNDP- Invest India stakeholder consultations Available at:

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100. Watts, Kerean (2019). The Medical Devices Bill, Explained. Health 122. India Brand Equity Foundation. “Healthcare Industry in India, Issues India, 20 Dec. 2019, Available at: Indian Healthcare Sector, Services.” Ibef.Org, Ministry of www.healthissuesindia.com/2019/12/20/the-medical-devices-bill- Commerce and Industry, 2019, Available at: explained/#:~:text=One%20of%20the%20provisions%20of. www.ibef.org/industry/healthcare-india.aspx. 101. Das, Sohini (2020). Govt Notifies Incentive Scheme for Local API 123. EY, and Indian Pharmaceutical Alliance. “Healthcare Goes Mobile: Manufacturing to Cut Imports. Business Standard India, 22 July Evolution of Teleconsultation and e-Pharmacy in New Normal.” 2020, Available at: www.business-standard.com/article/ 2020.Available at: https://assets.ey.com/content/dam/ey- companies/govt-notifies-incentive-scheme-for-local-api- sites/ey-com/en_in/topics/health/2020/09/healthcare-goes- manufacturing-to-cut-imports-120072201580_1.html. mobile-evolution-of-teleconsultation-and-e-pharmacy-in-new- 102. Invest India analysis for the Healthcare sector- 2020 normal.pdf 103. Ayushman Bharat - National Health Protection Mission | 124. www.makeinindia.com. (2017). Sector Survey: Medical Devices - National Portal of India. Www.India.Gov.In, Available Make In India. Available at: https://www.makeinindia.com/article/ at:www.india.gov.in/ spotlight/ayushman-bharat-national-health- -/v/sector-survey-medical-devices protection-mission. 125. Praxis Global Alliance. 2019. Healthcare Investor Sentiment 104. Bain and Company, and IVC Association. India Private Equity Spotlight. Available at: https://www.dropbox.com/s/ Report 2020.Available at: www.bain.com/globalassets/ o6vaek2i0o3o29l/Healthcare%20Investor%20Sentiment%20Spotl noindex/2020/bain_report_india_private_equity_report_2020.pdf. ight%202019%20-%20Praxis%20Global%20Alliance.pdf?dl=0. 105. Bain and Company, and IVC Association. India Private Equity 126. Niti Aayog (2018). Strategy for New India @ 75. Niti Aayog. Report 2020.Available at: www.bain.com/globalassets/ Available at: https://niti.gov.in/writereaddata/ noindex/2020/bain_report_india_private_equity_report_2020.pdf. files/Strategy_for_New_India.pdf. 106. Investindia.Gov.In (2018). Medical Devices. Available at: 127. Velayanikal, Malavika. “Startups Seek a Cure for Costly Medical www.investindia.gov.in/sector/medical-devices. Devices.” Livemint.Com, 2 Sept. 2019, Available at: 107. Ravi, Shamika, et al (March 2020). COVID-19 | Is India's Health www.livemint.com/companies/start-ups/startups-seek-a-cure- Infrastructure Equipped to Handle an Epidemic?. Brookings, for-costly-medical-devices-1567363624718.html. Available at: www.brookings.edu/blog/up-front/2020/03/24/is- 128. Deloitte, and NATHEALTH. “Medical Devices Making in India -A indias-health-infrastructure-equipped-to-handle-an-epidemic/. Leap for Indian Healthcare.” Deloitte, 2016. Available at: 108. List of States in the Aspirant and Performer categories for SDG 3 https://www2.deloitte.com/content/dam/Deloitte/in/Documents/ is provided under Annexure IV life-sciences-health-care/in-lshc-medical-devices-making-in-india- noexp.pdf 109. Das, Sohini (2020). Govt Notifies Incentive Scheme for Local API Manufacturing to Cut Imports. Business Standard India, 22 July 129. Business Standard (2020a). Govt approves scheme to boost 2020, Available at: www.business-standard.com/article/ domestic manufacturing of medical devices. Press Trust of India. companies/govt-notifies-incentive-scheme-for-local-api- 21 March 2020. Available at: https://www.business- manufacturing-to-cut-imports-120072201580_1.html. standard.com/article/companies/govt-approves-scheme-to- boost-domestic-manufacturing-of-medical-devices- 110. UNDP research for SDG Investor Map for India 120032100989_1.html. 111. Niti Aayog (2018). Strategy for New India @ 75. Niti Aayog. 130. www.makeinindia.com. (2017). Sector Survey: Medical Devices - FOOD AND BEVERAGES Available at: https://niti.gov.in/writereaddata/ Make In India. Available at: https://www.makeinindia.com/ FOOD AND FOOD AND files/Strategy_for_New_India.pdf. article/-/v/sector-survey-medical-devices FOOD AND 112. Bain and Company, and IVC Association. India Private Equity 131. India Brand Equity Foundation. “Healthcare Industry in India, Report 2020.Available at: www.bain.com/globalassets/ BEVERAGES FOOD BEVERAGES Indian Healthcare Sector, Services.” Ibef.Org, Ministry of BEVERAGES noindex/2020/bain_report_india_private_equity_report_2020.pdf. Commerce and Industry, 2019, Available at: 113. Singh, S. and Badaya, S. (2014). Health care in rural India: A lack www.ibef.org/industry/healthcare-india.aspx. FOOD AND BEVERAGES between need and feed. South Asian Journal of Cancer, [online] AND FOOD AND BEVERAGES 132. www.makeinindia.com. (2017). Sector Survey: Medical Devices - 3(2), pp.143–144. Available at: https://www.ncbi.nlm.nih.gov/ Make In India. Available at: https://www.makeinindia.com/article/ FOOD AND pmc/articles/PMC4014652/. FOOD FOOD AND -/v/sector-survey-medical-devices 114. India Brand Equity Foundation. “Healthcare Industry in India, BEVERAGES 133. S&P Capital IQ data AND BEVERAGES Indian Healthcare Sector, Services.” Ibef.Org, Ministry of BEVERAGES Commerce and Industry, 2019, Available at: 134. KPMG (2020d). INDIAN API INDUSTRY - REACHING THE FULL POTENTIAL. Confederation of Indian Industry. Available at: BEVERAGES FOOD AND www.ibef.org/industry/healthcare-india.aspx. FOOD AND BEVERAGES https://www.mycii.in/KmResourceApplication/65765.IndianAPIIn 115. India Brand Equity Foundation. HEALTHCARE Industry. Ministry BEVERAGES dustryReachingthefullporentialCIIKPMGreport2020.pdf of Commerce and Industry, 2019. Available at: https://www.ibef.org/download/Healthcare-September-2019.pdf 135. Bohra, S. (2020). India's Incentives forFOOD Domestic API Production AND FOOD AND Could Cut Supply Risk. Fitchratings.com. Available at: 116. Porecha, Maitri. “Hospitals See Healthy Prospects in Tier-II Cities.” https://www.fitchratings.com/research/corporate-finance/india- FOODFOOD AND AND @businessline, The Hindu, June 2019, Available at: BEVERAGES incentives-for-domestic-api-production-could-cut-supply-risk-10- www.thehindubusinessline.com/news/hospitals-see-healthy- BEVERAGES 08-2020#:~:text=Fitch%20Ratings%2DMumbai% prospects-in-tier-ii-cities/article28067158.ece. FOOD 2FSingapore%2D. 117. EY. “Re-Engineering Indian Healthcare 2.0 Tailoring for Inclusion, AND 136. S&P Capital IQ data BEVERAGES FOOD AND BEVERAGES True Care and Trust.” FICCI, 2019. Available at: BEVERAGES 137. Praxis Global Alliance. 2019. Healthcare Investor Sentiment BEVERAGES FOOD FOOD AND BEVERAGES http://ficci.in/spdocument/23111/Re-engineering-Indian- FOOD AND healthcare-2.0_FICCI.pdf Spotlight. Available at: https://www.dropbox.com/s/ o6vaek2i0o3o29l/Healthcare%20Investor%20Sentiment%20Spotl FOOD AND BEVERAGES BEVERAGES 118. UNDP- Invest India stakeholder consultations AND ight%202019%20-%20Praxis%20Global%20Alliance.pdf?dl=0. 119. Data.worldbank.org. 2020. Physicians (Per 1,000 People) | Data.

138. Rughani, K. (2020). Thematic Report -Pharmaceutical. FOOD AND BEVERAGES BEVERAGES Available at: FOOD AND BEVERAGES hdfcsec.com. HDFC Securities. Available at: https://data.worldbank.org/indicator/SH.MED.PHYS.ZS https://www.hdfcsec.com/hsl.docs/ /HSL-Thematic-Pharma- 120. KPMG (2016). Report on Healthcare Access Initiatives. [online] Stock-Picks-280520-202005281521532768561.pdf. FOOD indiaoppi.com. Available at: https://www.indiaoppi.com/wp-

139. Craft Driven Market Research (2018a). Karma Clinic: Bridging Gap FOOD AND BEVERAGES FOOD content/uploads/2019/12/Report-on-healthcare-access- AND between Rural & Aﬀordable Healthcare Service. initiatives-For-web.pdf. www.craftdrivenresearch.com. Available at: BEVERAGES

FOOD AND FOOD AND BEVERAGES 121. Jalan, Trisha. Summary: India's Telemedicine Guidelines 2020. 31 https://www.craftdrivenresearch.com/karma-clinic-healthcare- AND Mar. 2020, Available at: www.medianama.com/2020/03/223- startup/. FOOD AND summary-india-telemedicine-guidelines/ BEVERAGES 67 BEVERAGESBEVERAGES FOOD AND FOOD AND BEVERAGES BEVERAGES SDG Investor Map Report for India-2020

Food and Beverages 1.1. Sectoral development needs 1.1.2. Productivity (SDG 12) A review of key policy documents, human • Currently, India's annual production of development reports and stakeholder agricultural produce (rice, wheat and consultations highlighted the following sectoral coarse cereals) from one Ha of land is development needs for F&B in India: 2,516.67 kg. GoI targets to double this by 2030 to 5,033.34 kg/Ha 1.1.1. Food security (SDG 2) • As per 2016 data, the average size of 148 As per SDG India Index report by NITI Aayog , operational landholding in India was less than India's progress on SDG 2 (Zero Hunger) is two hectares (1.080 ha in 2016 and 1.150 ha in currently low with a cumulative score of 35 out of 2011)150 . Such fragmented landholding is the 100 (score of 20 states and 3 UTs is under 50 principal cause for a lower scale of production points). However, experts believe that food in India when compared to other countries as production will continue to keep pace with it inhibits the application of modern inputs projected grain requirements. and improved agricultural practices. As a In 2019, India ranked 72 among 113 countries result, India's existing yield levels for a assessed by the Global Food Security Index majority of crops remain much lower than the (GFSI), based on four parameters – aﬀordability, world average availability, quality and safety149 .

Chart 8: Agriculture, Forestry and Fishing, value-added as a percentage of GDP compared for peer economies151 1. Sector overview Agriculture, Forestry and Fishing, value added (% of GDP) ndia is essentially an agrarian economy. The market size of agriculture and allied services 18.0% 140 16.4% stood at ~USD 283.68 billion in 2018 . Pre-pandemic estimates expected the sector to grow at 16.0% 15.3% 16.0% 15.4% a CAGR of 12.2 percent between 2018 and 2023, reaching USD 1,183 billion by 2023141 . 14.7% 14.0% I 142 14.0% Moreover, agriculture employs about half of India's workforce (~58 percent of rural households depend on agriculture for their livelihood) and is, therefore, a primary source of income for a 12.0% signiﬁcant number of Indian households. 10.0% 8.6% 7.5% 7.5% 8.0% 7.3% 7.0% India's soil varieties support a high yield for a wide range of crops. With an annual output of 7.1% 6.0% 4.6% 143 4.4% average 260 million tonnes , India is among the largest producers of fruits and vegetables in the 4.4% 4.0% world. Despite such high yield, India ranked 103 out 2018's Global Hunger Index144 , largely a result 1.9% 1.8% of high levels of wastage which have arisen due to issues with the agricultural supply chain. 2.0% 1.7% 0.0% Despite the agricultural sector's prominence, it contributes less than 20 percent to GDP.145 GoI India Vietnam Malaysia China Brazil Korea

recognizes the productivity related challenges in agriculture and aims to double farmers' incomes 2017 2018 2019 146 by 2022. This target requires farmers' income to grow at 10.4 percent annually from the Source: World Bank national accounts data (n.d.). Agriculture, forestry, and fishing, value added (% of GDP) - previous CAGR of 3.31 percent from 1994-2016. GoI data suggests that expansion of area under India, Brazil, China, Korea, Rep., World, Malaysia | Data. data.worldbank.org. Available at: https://data.worldbank.org/indicator/NV.AGR.TOTL.ZS?locations=IN-BR-CN-KR-1W-MY-V [Accessed 27 Oct. 2020]. horticulture crops by 4 million hectares can help in generating 8 million new employment opportunities, creating opportunities for the growth of the sector.147 There is also a need to create • Furthermore, demand side factors favour the estimates may get impacted in the short term alternative channels of employment for rural populations (including rural women) currently expansion of area under fruits and vegetables, (due to sudden spike/decline in demand for employed in agriculture, enabling them to transition into sectors with greater financial resilience. and livestock products for better income yield. some categories of food), however, this From the private sector investment point of view, most of the investments in the agriculture Though research has also shown that should normalise in the long term with an sector are drawn largely from public sources, with private investment accounting for only a diversification to fruits and vegetable segment adequate push for improving India's minimal proportion. is likely to benefit small and medium farmers productivity in the F&B sector more than large ones GoI has introduced the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 1.1.3. Agricultural supply chain (SDG 2) 2020 and the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm • Before the pandemic, India was expected to • India's agriculture industry saw annual post- Services Act, 2020 to transform Indian agriculture by offering farmers the freedom to sell become the fifth largest consumer by 2030, harvest losses amounting to USD 7 billion153 anywhere and to attract private investment in Indian agriculture. with Indian annual household consumption due to supply chain inefficiencies such as growing threefold152 . Post COVID-19, such

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limited connectivity, billion has been allocated to the segment 1.3. Private sector participation lack of transparency, comprising of Agriculture and allied activities, spurious products, and Irrigation and Rural Development for holistic The private corporate sector accounts for less inadequate advancement of India's Agriculture. Further, to than 2.5 percent of investments in agriculture 159 infrastructure support business enterprises in this segment, sector , which is essentially a result of (including storage Reserve Bank of India (RBI) circular158 on Priority challenges faced by investors due to the facilities) and demand- Sector Lending (PSL) includes activities covered Government's strict control over the sector. supply mismatch. To under Agriculture under three sub-categories viz. Moreover, India's Agriculture Orientation Index strengthen the Farm credit, Agriculture infrastructure and (i.e., agriculture share of government agriculture supply Ancillary activities. To further strengthen the expenditures, divided by the agriculture share of chain, private agriculture sector and enable farmers to reap GDP), has been lower than 1 (stood at 0.45 in 160 investment in this benefits of their produce by selling it at the right 2018 ). Thus, there is a high burden of space must increase. price, GoI announced its plans to strengthen investment in agriculture on farmers who are Electronic National Agriculture Market (eNAM) already in financial distress. To achieve the target 1.1.4. Price security for (which aims to create a unified national market of doubling farmers' income by 2022, farmers farmers (SDG 12) for agricultural commodities) and dismantle need to fund an investment gap of USD 6 billion 161 • There exists a large gap Agricultural Produce Market Committees while GoI would have to invest USD 14 billion . • Complex supply chains, involving multiple between farm harvest prices (FHP) and retail (APMCs), which required farmers to sell through The burden of investment solely by farmers in actors between farm gate to the consumer, prices. In a good production year, prices tend mandis, instead of selling to end-consumers the agriculture sector can be reduced by offering were severely affected due to restricted to fall below the minimum support prices, directly. GoI also amended the Essential a more conducive policy environment to transport facilities resulting in trucks full of thereby leading to low income for farmers and Commodities Act (2020) to deregulate food items encourage private participation. Under its produce being stranded in the middle of agrarian distress. Mechanisms need to be like cereals, pulses and onion and ease the current policy initiatives, GoI has allowed 100 interstate highways. MSMEs working in food developed to ensure remunerative prices imposition of stock limit on agricultural produce. percent FDI in the marketing of food products processing struggled to procure raw materials for farmers, in both 'good' and 'bad' This will help in making the agriculture sector and food product e-commerce under the during this period due to both restricted monsoon years more competitive, ensuring better price automatic route. There is an increasing interest access to markets as well as a severe realisation and removal of stock limits on all agri- • According to the Committee on Doubling of in the F&B sector that ranked fourth out of the liquidity crunch commodities to offer farmers the freedom to Farmers' Income (formed to coordinate with top 10 sectors with PE and VC deal values of USD produce, distribute and supply, resulting in 162 different ministries as well as among various • Furthermore, businesses such as sweet shops, 881 million recorded through 83 deals in 2019 . economies of scale. departments within the agriculture ministry), tea-shops and restaurants had to close down To further private sector participation, National farmers' share in consumer's price varies operations, which lead to a sudden and steep To transform Indian agriculture and promote Bank for Agriculture and Rural Development between 15 to 40 percent154 . Various fall in demand for farm produce, including private investment, GoI has proposed four farm (NABARD), in 2019, announced an investment of participants in the agriculture value chain dairy products. As per market estimates, this bills to boost the agriculture sector, make it more USD 100 million venture capital fund for equity capture farmers' margins, without offering led to a 30 percent decline in milk sales, competitive, and to create a better value investment in agriculture and to encourage rural- 163 any value addition. Re-examining the role of which impacted farm incomes of ~75 million proposition for the farming community. At the focused start-ups . Amendment of the Essential 156 such participants is imperative for ensuring dairy farmers time of writing this report, Farmers Commodities Act in 2020 is also slated to improve private sector/FDI in the sector, that farmers earn the right price for their • Although COVID-19 crisis is not permanent, it (Empowerment and Protection) Agreement on especially in cold storage, as well as produce, even during a bumper crop has magnified the existing challenges facing Price Assurance and Farm Services Act, 2020 modernisation of the food supply chain. Through India's food ecosystem. Taking stock of (which promotes contract farming, under which 1.1.5. Impact of COVID-19 its National Logistics Policy, GoI announced the challenges in the sector, some of which have farmers will produce crops as per contracts with establishment of warehouses under PPP model Compared to the dip in the growth of other been highlighted in this report, can help both corporate investors for a mutually agreed leading to a significant increase in warehouse sectors in the first quarter of FY 2020-21, the government and businesses to create remuneration) and the Farmers' Produce Trade capacity by 2023. To facilitate private investment Agriculture and allied sectors clocked a growth of stronger and resilient supply chains, thereby and Commerce (Promotion and Facilitation) Act, 3.4 percent primarily due to bumper rabi 2020 (which aims to liberate farmers allowing in dairy processing and cattle feed infrastructure, supporting smallholder farmers who are 164 155 an outlay USD 2 billion was announced for harvest. However: critical to the food supply chain them to sell anywhere) were passed by the parliament. Animal Husbandry Infrastructure Development • The pandemic and nationwide lockdown, have 1.2. Policy priorities Fund. The Model Agriculture Produce and resulted in farmers experiencing a shortage of A list of key policy initiatives driving the growth of Livestock Marketing (Promotion and Facilitation) labour and equipment, causing many to To achieve its priority goal of 'Doubling of the F&B sector in India is available in Annexure II. Act, 2017 provides an opportunity for the private abandon their crops or resort to delayed farmers' income' by 2022, GoI has undertaken sector to set up private markets, alternate harvesting by more than a month several initiatives to uplift the agriculture sector. marketing channels, online market platforms, 157 Under Union Budget 2020-2021 , USD 40.06 etc., in both agriculture and livestock marketing.

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Bottlenecks for private sector investments 1.4. Priority subsectors from secondary sources show that R&D in agriculture and agri-biotechnology do not in the Food & Beverages sector Through a review of subsectoral development currently offer attractive commercials and needs and policy priorities, and by deep-dive operating environment for private sector The following bottlenecks that result in low productivity and value losses for private commercial consultations with sector experts and investors, participation. Besides, while some business investment in the F&B sector were highlighted in consultations with investors and industry experts the following themes emerged as areas which models offer financing support to farmers, agri- address key development needs through financing space is not commercially viable to Fragmented landholding business models: operate as an independent business model, offering scalable and marketable business As per 2016 data, the average size of operational landholding in India was less 1. Agriculture technology (including E-markets opportunities. than two hectares (1.080 ha in 2016 and 1.150 ha in 2011).165 However, the majority and technological interventions in the 01 of these landholdings are fragmented to an extent of being rendered economically agriculture space) Food Retailers and Distributors, Processed unviable. As a result, usage of agriculture instruments, irrigation and other 2. Research and Development (R&D) in Foods and Meat, Poultry and Dairy are mechanized farming cannot be implemented economically and effectively. agriculture and agri-biotechnology subsectors that lie at the intersection of development and policy priorities, as well as 3. Rural markets, logistics and supply chain to be commercial private interest, and have therefore Supply channel bottlenecks strengthened been shortlisted for the Investor Map. Investing Challenges in supply chain inefficiencies which lead to excessive wastage of 4. Food processing in agriculture technology models can help in farm produce and farmers resorting to making distress sales, leads to heavy servicing input and output needs of farmers, 02 166 losses. According to market estimates, ~9.3 percent of farm produce is 5. Poultry, Fish and Dairy farming while also offering advisory services to guide wasted due to inadequate storage and maintenance facilities. 6. Agri-financing them on the usage of modern techniques of agriculture. Though food processing and the Consultations with sector experts, investors and dairy market already have significant private Reliance on monsoons industry bodies helped test the abovementioned investment, the growth of these sectors can help themes for alignment with development needs, Only one-third of the total cultivated area in the country is under irrigation167 . in reducing wastage of produce and diversify policy priorities and viability for commercial Majority of farmers still depend on monsoons for farming activities, making product offerings. investments. Experts' suggestions and evidence 03 them vulnerable to the effects of irregular monsoons.

Dependence on traditional methods of agriculture Majority of farmers are financially unequipped to afford mechanisation of farming practices, and have significant knowledge gaps to understand the 04 benefits of using improved seeds, fertilizers and other methods, which can improve their productivity, while also being environmentally friendly168 .

Access to finance Farmers need financing facilities at the post-harvest stage when they are under pressure to sell their produce to gain liquidity, pay off their debt and realise better 05 returns. In the absence of such facilities, they are unable to reap the benefits of storage facilities and instead make distress sales. Many warehousing companies have started lending to farmers, using their produce as collateral. Such initiatives are still at a nascent stage but have the potential to assist farmers in reducing their financial instability.

Agriculture exports 06 Majority of Indian agricultural value chain focuses on local markets, and market players lack the resources and capacity to compete in external markets. For India to improve its agricultural exports, standardisation and upgradation in quality of produce is required. 74 SDG Investor Map Report for India-2020

Figure 15: Subsector Shortlist for the Food & Beverages Sector farmers, more prosperous regions, such as Market data shows that 10 States in India Madhya Pradesh, Gujarat, Punjab, Haryana and produce 81 percent of the milk, and the rest of Alignment to development needs and policy priorities Karnataka are likely to see more traction. the States and UTs produce the balance 19 percent. Only nine States have achieved per The tech-enabled supply chain for fresh farm High Medium Low capita availability of milk at par with the Shortlisted (subsectors mentioned (subsectors not mentioned produce to create a link between farmers' 170 (subsectors highlighted national level . subsectors as ‘top’ priorities by as ‘priority’ by by development sector produce and retail stores/end consumer and development experts) development experts) experts) ensuring a fair price for all As per publicly available information, Uttar Pradesh is the largest dairy and milk-producing According to expert consultations, such models Subsector: FOOD state as it is home to the highest buffalo RETAILERS & depend on their ability to scale, with an DISTRIBUTORS population and the second-highest cattle emphasis on catering the underserved markets. Conducive for Input side digital Subsector: population in the country. Gujarat has numerous platforms AGRICULTURE Apart from collection centres concentrated near private sector Output side digital cooperative dairy milk unions, private dairy FINANCING* farmlands, a regional focus may not be relevant participation platforms Risk-mitigation plants and primary milk cooperative societies, Subsector: PROCESSED products to safeguard in this space. Moreover, investors would be (subsectors FOODS farmers from future which play a crucial role in the production of milk Food processing interested in models which are scalable and can with PE price falls in case of in the state. Subsector: MEAT, excess produce operate at a pan-India level. investments) POULTRY & DAIRY According to expert consultations, States like Dairy and related Food processing of farm produce to reduce products Madhya Pradesh, Chhattisgarh and Odisha have wastage and diversify offerings scope for dairy farming as milk is consumed in Subsector: FOOD Subsector: Various state policy documents focus on its raw state in these regions. Many large Significant RETAILERS & PROCESSED FOODS establishing food processing units, thereby meat/dairy farms operate out of Andhra Pradesh barriers to DISTRIBUTORS Export of processed foods Efficient storage offering a conducive policy environment for and Punjab. Investors suggest that for a business scale (subsector Subsector: infrastructure for with commercial AGRICULTURE investors (fiscal interventions for agro and food to be scalable for investments to flow in, the agri-produce to ensure FINANCING* bottlenecks to minimum wastage of processing enterprises, including capital front-end operations of the business models

Private investor interest Agri-insurance investment) farm produce investment subsidy for agro and food processing must be at a pan-India level even if back-end units, as well as for farmer producer). These operations may be region focused. (State-wise Subsector: MEAT, Low scope for states include Bihar, Meghalaya, Jharkhand, Uttar SDG Maps and Indicators are documented in commercial POULTRY & DAIRY Post-harvest infra for Pradesh, Madhya Pradesh, Andhra Pradesh, Annexure IV) investor servicing value chains for Tripura, Andaman and Nicobar Islands, Punjab, participation meat/dairy/fish market 1.6. Investment Opportunity Areas - (subsectors with Biotech inputs that can help Odisha, Lakshadweep, Nagaland, Gujarat, Goa regulatory barriers) in servicing value chains for and Manipur. Overview meat/dairy/fish market Food processing centres are generally While IOAs such as 'efficient storage Note: *Subsector not included in SASB Source: UNDP Investor Map research concentrated close to the source of raw material. infrastructure for agri-produce to ensure For instance, manufacturers of tomato puree or minimum wastage of farm produce' and 'risk- other related products shall be set up near mitigation products to safeguard farmers from 1.5. Region ecosystem for the Food Experts believe that agri-tech ventures are likely tomato farms in regions such as Andhra future price falls in case of excess produce' came and Beverages sector to be concentrated in regions which possess the Pradesh, Madhya Pradesh, Karnataka, Gujarat, up as IOAs with a potential for strong largest start-up talent pool, including Delhi NCR, Odisha or West Bengal169 . For marketing of such development impact, the commercial viability of Developers of digital platforms to service input Bombay-Pune and Hyderabad-Chennai- products, region prioritisation for such such models remains unproven. Business (seeds, nutrition and pest control) needs of Bangalore. Headquarters of most companies, businesses shall be influenced by their demand, models in these 'white spaces' currently face farmers and increase their market reach: States along with their core team, are likely to be which is primarily higher in urban areas. significant commercial hurdles and need to such as Meghalaya, Rajasthan, Jharkhand, located in one of these regions. However, given develop further from a policy and business Production and delivery of dairy products Haryana, Chhattisgarh, Uttar Pradesh, Madhya the nature of such businesses, the sourcing may innovation standpoint, before they attract large- Pradesh, Assam, West Bengal, Andaman and be carried out from primarily rural areas, while States including Bihar, Rajasthan, Haryana, Uttar scale commercial private investments. Nicobar Islands, Punjab, Odisha, Jammu and logistics would be carried out at a pan-India level. Pradesh, West Bengal, Daman & Diu, Puducherry, Food processing, Dairy and related products on Kashmir, Gujarat and Manipur have dedicated Experts expect such regional focus to change Gujarat, Goa, Manipur and Dadra and Nagar the other hand, not only have the potential to policies focused on improving agriculture post COVID-19, with North, West and Central Haveli, have the potential for development of address key development needs but have also subsectors such as Food Retailers and regions of India to see more traction, due to the dairy sector with the support of dedicated demonstrated interest from a range of private Distributors. better connectivity and proximity to the source state policies. of produce. Moreover, since such business sector investors. Companies in this IOA have models are likely to benefit medium-scale been able to demonstrate profitability and offer

75 76 SDG Investor Map Report for India-2020

Figure 16: Investment Opportunity Areas Shortlist for the Food & Beverages Sector 2. www.businesstoday.in. (n.d.). Budget 2020: FM Sitharaman pushes for building warehousing on PPP model. Available at: https://www.businesstoday.in/union-budget-2020/decoding-the-budget/budget-2020-fm-pushes-for-building-warehousing-on-ppp- model/story/395231.html. Subsector Food Retailers & Distributors Processed Foods Meat, Poultry & Dairy Agriculture Financing 3. Aayushi Bhatia, Aayushi Bhatia, Radhika Mehta & Kanika Verma (2020a). Indian Food Processing Sector: The untapped growth opportunity. www.investindia.gov.in. Available at: https://www.investindia.gov.in/siru/indian-food-processing-sector-untapped-growth- Digital platforms Digital platforms Efficient Food processing Production and Risk-mitigation opportunity#:~:text=A%20strong%20and%20dynamic%20food. Opportunity offering tech-enabled to service input storage to reduce wastage delivery of dairy products to 4. Agritech startup Bijak raises $2.5 million from investors. (n.d.). The Economic Times. Available at: https://economictimes.indiatimes.com/small- Areas solutions for agriculture (seeds, nutrition infrastructure and diversify food products safeguard farmers biz/startups/newsbuzz/agritech-startup-bijak-raises-2-5-million-from-investors/articleshow/72838211.cms?from=mdr. and pest control) supply chain and for agri- product offerings from future price 5. Anon, (n.d.). A Startup for 58% of India | Ideascape Communications. Available at: https://ideascape.in/blog/a-startup-for-58-of-india/ [Accessed 27 needs of farmers forming a link between produce to for end- falls in case of Oct. 2020]. and provide them farmers’ and retail ensure consumers excess produce 6. Niti Aayog (2019). SDG India Index 2019-20. Niti Aayog. Available at: https://niti.gov.in/sites/default/files/2019-12/SDG-India-Index-2.0_27-Dec.pdf. with easy access stores/end consumers, minimum to markets for selling fresh farm wastage of produce and ensuring farm produce fair price for all successful exits to early investors. Continued In addition to the shortlisted IOAs and identified Investors identified commercial private sector interest is expected in white spaces, themes including 'Export of area as fundamentally ? ? marketable? this mature IOA. processed foods', 'Biotech inputs that can help in USD 1.7 bn servicing value chains for meat/dairy/fish USD 12 bn 379 mn sq. ft USD 535 bn USD 32.57 bn USD 200 bn Models under both input side digital platforms Scale Potential in 20251; comprising By 20251 by 20232 by 20263 In 2023, at CAGR of market, consisting of market', 'Post-harvest infra for servicing value 200 million potential 3 4 5 14.8 percent 5 mn middlemen and output side digital platforms, are still customers chains for meat/dairy/fish market' and 'Agri- relatively nascent but have gained significant Proven Models have Models have Models in Models have Models have Models in insurance' were also highlighted in the course of in-market as attracted private demonstrated demonstrated traction from investors/large corporations over attracted private experiment stage experiment stage our discussions with expert consultants. evidenced by sector capital, sector capital, but with few emerging profitability and profitability and with few emerging the past few years because of their potential to investors but have not yet have not yet been ideas which have attracted private attracted private sector ideas which have However, there is still uncertainty over the interest? been proven as proven as attracted investor sector investments, investments, albeit attracted investor scale cost-effectively by leveraging technology. profitable profitable interest albeit only recently only recently interest marketability and scalability of existing business Investment activity in this 'emerging opportunity models nor have any proven business models Emerging Emerging White space: strong Mature IOA Mature IOA White space: strong area' is expected to continue growing in medium Opportunity type IOA IOA scale potential but scale potential but that have displayed any investment momentum not successful not successful to long-term horizon. These areas have also business models business models in the past. (Please refer to Annexure III for detailed been included as part of the Investor Map. analysis of the shortlisting process followed to Emerging Input-side digital B2B or B2C Micro- Food processing Business models Auction facilities units under large business model(s) platforms serving platforms for buying warehousing at servicing value chains and commodity arrive at the final IOAs) farmers (including fresh produce from the village level brands or newer for dairy products spot markets for those engaged in farmers (including Large processing units (including cold-storage agri produce specialized value meat products) and warehouses focused on crops based delivery services) chains, like aquaculture offering efficient catering to large which are easily and value-added dairy or high value produce delivery from traders and large grown in India, like products (such as like exotic fruits and farmgate to corporations pulses, millets, etc. cheese – European style 1.7. Food and Beverages Investment product range and last-mile delivery. Such vegetables) by offering retailers/end Storage facilities Such units can help cheeses, soft cheese, platforms may not have reported a profit, but agriculture inputs consumers, with the near offer a variety of hard cheese, different Opportunity Areas Deep Dive (seeds, nutrition and objective to resolve consumption food products for types of yoghurts, etc.) have been successful in attracting investor pest control), the supply chain end-consumers, and units help in addressing 1.7.1. Digital platforms to service input 172 mechanization or issues which affect Cold-storage also ensure better nutritional needs and interest, while growing ~2-2.5 times during productivity increasing Indian agriculture. facilities utilisation of farm offer an alternative (seeds, nutrition and pest control) needs of tools (both, on sale or Such models will produce, while source for doubling 2016-2019. According to expert consultations, Warehousing on lease) and enable also help in reducing food farmers’ income companies farmers and provide them with easy access to extensive utilization of data analytics in this them to eliminate any eliminating middle- wastage focused on agri- delays in production men who seize markets marketing, in space for predicting demand as well as for agri- caused by travelling to farmers’ margins addition to nearby markets or due (without offering any input stock aggregation will help lower the offering storage India's agri-inputs industry comprises three key to inadequate access to value addition), facilities procurement cost and increasing margins essential inputs (inputs thereby increasing subsectors – crop protection (pesticides), crop are either not available farmers’ income. through economies of scale. Furthermore, nutrition (fertilizers) and seeds. Agritech start- easily or time involved Farmers are also platforms that service specialized value chains in procuring them leads offered guidance ups are operating in an attractive market with an to delay in production). and support on (end to end), such as aquaculture or high value Such platform providers usage of digital tools estimated potential of USD 24 billion by 2025, also offer advisory produce like exotic fruits and vegetables, focus services to farmers to wherein the segment supporting market linkages resolve the problem of on the quality of products and are thus able to information asymmetry, (farm inputs) is estimated to reach a market 171 attract a higher price realization. Typically, pure thereby improving potential of USD 1.7 billion by 2025 . production yield and electronic platforms charge ~1-2 percent of trade increasing their income Digital platforms help in addressing information as their commission. Since business models in

SDGs impacted asymmetries in the agriculture sector by oﬀering this area are still at a nascent stage, experts value-based advisory and exposure to new believe that such businesses are likely to techniques of agriculture, as well as information generate returns in ~7-10 years. about government schemes/policies. Under Budget 2021, GoI announced the Market players oﬀering app-based agricultural provision of USD 306.29 million173 for Sources: 1. www.ey.com. (n.d.). How agritech start-ups are changing the face of Indian agriculture. inputs and advisory to farmers have engaged in computerization of Primary Agricultural Credit Available at: https://www.ey.com/en_in/start-ups/how-agritech-start-ups-are-changing-the-face-of-indian-agriculture continuous innovations in farmer engagement, Society (PACS) to ensure cooperatives are

77 78 SDG Investor Map Report for India-2020

benefited through digital technology. With the such government initiatives, thereby expanding 1.7.2. Digital platforms offering tech-enabled on all agri-commodities will offer farmers the dismantling of APMCs and strengthening of to newer regions and offering easy market solutions for agriculture supply chain and freedom to produce, hold, move, distribute and eNAM, electronic trading in the agriculture sector access to farmers. forming a link between farmers' and retail supply, resulting in economies of scale. This will has become easier, thereby facilitating private stores/end consumers, for selling fresh farm also help in attracting private sector/FDI into the This area has seen growing private sector participation. GoI's Digital India initiative has also produce and ensuring a fair price for all agriculture sector, thereby driving up investment interest, with some companies having raised enabled the availability of smartphones and in cold storage, as well as modernisation of food capital and demonstrated scalability. Therefore, According to a recent National Association of internet in remote rural areas of India. Digital supply chain. Central Government has also Input side digital platforms have been identified Software and Service Companies (NASSCOM) platforms servicing farmers have benefited from proposed a new law to be framed, which shall be as a key IOA. report titled 'Agri-tech in India – Emerging Trends focused on providing adequate choices to in 2019', the Indian agri-tech sector is growing at farmers to sell their produce at attractive prices, 1.7.1. Digital platforms to service input (seeds, nutrition and pest control) needs of farmers and a rate of 25 percent year-on-year (YoY) and provide them with easy access to markets - Market Insights enabling interstate trade without restrictions and comprises more than 450 startups174 which are creating a framework for electronic trading of Investors can focus on companies providing farmers with timely and easy access to input markets, receiving considerable investment interest. 179 Overview: farm products. thereby facilitating improved yield. This will subsequently help in raising India's agriculture productivity AgriTech segment supporting supply chain tech and output market linkages is estimated to reach According to experts, such models are essentially a market potential of USD 12 billion by 2025175 . demand-supply matching agents, and for a According to market data, existing yield levels for a majority of crops remain much lower than the world Need case: platform to unlock its value, achieving network average. Predominant causes of such low yield include low irrigation, use of low-quality seeds, low Digital platforms based on emerging adoption of improved technology and a knowledge deficit in respect to improved agricultural practices effects is imperative. Such business models focus technologies in satellite imagery can differentiate This IOA could contribute directly to SDG2 (Zero Hunger), particularly 2.3.2. (Gross Value Added (GVA) in on eliminating the intermediary and streamlining between different crops and help in foreseeing Agriculture per worker) and SDG12 (Sustainable Consumption and Production), particularly 12.3.1. the supply chain while generating revenue from (Per capita food availability), while it contributes indirectly to SDG1 (No Poverty), SDG5 (Gender the kind of yield one can expect, thereby the margin at which fresh produce is sold to Equality), SDG8 (Decent Work and Economic Growth), SDG13 (Climate Action), SDG14 (Life Below reducing food wastage. Water) and SDG15 (Life on Land) retailers. Moreover, digitization of value chain To develop affordable and financially viable post- can help resolve potential disruptions that User or This IOA can benefit farmers by offering easy market access for their input needs, as well as real-time harvest management infrastructure, GoI has hinder food-chain, including minimizing the time beneficiary: solutions to reduce their cost of production and improved yields. Marketeers would also benefit from provided a financing facility of USD 13.24 spent in travelling to mandis, use of precision obtaining accurate information about the yield, thereby assisting them in making timely decisions billion176 for funding agriculture infrastructure farming for integrating field data and weather regarding their sale projects at farm gate and aggregation points. patterns to drive agronomic advice to farmers, About 14.8% of the population is undernourished in India. End consumers are likely to benefit from improvement in quality of produce (achieved through better productivity), resulting in more nutritional This has the potential to plug post-harvest yield forecasting and efficient financial system at food products. This would, in turn, help in achieving India's SDG 2 - 'end hunger, achieve food security storage related challenges with perishable crops the farm gate level to reduce delay in payments and improved nutrition and promote sustainable agriculture' and meet the requirement of 70,000 pack- and provide easy lending facilities. houses (near-farm aggregation points where Even though players in this space are yet to Economic Market players offering app-based agricultural inputs and advisory to farmers may not have reported a fresh harvest is brought for processing), in profit, but have been successful in attracting investor interest, while growing ~2-2.5 times in the last three demonstrate profitability, they have shown factors: comparison to the current level of 249 pack- years. As per investors, extensive utilization of data analytics in this space for predicting demand, as well promising results in terms of growth in volume houses only177 . Additionally, such infrastructure as for agri-input stock aggregation, will help lower the procurement cost and increasing margins through and revenue. Since these models are at a economies of scale development will also contribute towards nascent stage, market players are investing in Since business models in this area are still in a nascent stage, experts believe that such businesses are employment generation at the village level (for growth. Expansion for growth occurs at above likely to generate returns in ~7-10 years example, creation of 70,000 pack-houses would Earnings Before Interest, Taxes, Depreciation and potentially create 2.8 million jobs at the village Enabling The vertical has a strong partner environment with significant interest from commercial investors and Amortization (EBITDA) level for such service- level). With an allocation of USD 66 million, GoI factors: private corporations oriented and asset-light business models. As a expanded the purview of 'Operation Green' (a With dismantling of APMCs and strengthening of eNAM, electronic trading in agriculture sector has result, it is difficult for most companies to become easier. GoI’s ‘Digital India’ initiative has also enabled the availability of smartphones and internet scheme for integrated development of tomato, achieve a positive EBITDA at a time when they in remote rural areas of India. Digital platforms servicing farmers have benefited from such government onion and potato (TOP) value chain) to include all initiatives, thereby expanding to newer regions and offering each market access to farmers. are still focused on growth. fruits and vegetables, and offering 50 percent subsidy on transportation from surplus to Output side digital platforms have been Risk Majority of farmers in India come from low resource settings. Due to information asymmetries, they are deficient markets and 50 percent subsidy on identified as a key IOA, due to growing private factors: neither fully aware of the benefits nor trust alternate channels of commerce. Convincing farmers to use 178 the platform is the primary challenge for such businesses storage, including cold storage. In 2020, GoI sector interest, with some companies having Ensuring timely last-mile delivery; logistics challenges still stand in the way of speedy deliveries of bulk announced its plans to dismantle the APMCs and raised capital and demonstrated scalability. products amend the Essential Commodities Act to Investors also believe that newer players deregulate food items like cereals, pulses and entering the market can build upon the Impact Investments falling under this IOA are likely to benefit stakeholders (IMP classification B), given that this management: business model yields an important and intended outcome that can improve access to healthcare in onion, thereby making agriculture sector more experience of existing players, and can non-metros competitive, while ensuring better price potentially achieve scale at a faster rate than

Source: UNDP research for India Investor Map realisation for farmers. Removal of stock limits their predecessors. 79 80 SDG Investor Map Report for India-2020

1.7.2. Digital platforms offering tech-enabled solutions for agriculture supply chain and forming a link between India's food processing sector's output is According to market data, food processing farmers’ and retail stores/end consumers, for selling fresh farm produce and ensuring a fair price for all - Market Insights expected to reach USD 535 billion by 2026181 . companies which raised funding in the last 5 Investors can focus on companies offering technology solutions to resolve demand and supply years reported average EBITDA margins of ~8.3 Overview: Despite a large production base, the level of mismatch, especially in case of fresh produce, by obtaining essential information regarding what is percent. Business models engaged in niche processing (essentially primary processing) in grown and when would it be available for sale market foods, snack foods, ready-to-make foods India is less than 10 percent, with only ~2 percent and packaged foods, entail high volumes and low of fruits and vegetables, 6 percent poultry, 21 According to UNFAO estimates, more than 40% of food produced in India (i.e., ~USD 14 billion worth of margins. Penetration levels in the segment are as Need case: percent meat, 23 percent marine, and 35 percent food per year) is wasted before it reaches the end consumers. As a result of such massive food wastage, yet quite low, with product acceptance largely milk produce being processed.182 GoI plans to ~194 million Indians go hungry every day restricted to the urban population. As per This IOA could contribute directly to SDG2 (Zero Hunger), particularly 2.3.2. (GVA in Agriculture per triple the capacity of food processing sector and investors, business houses operating food worker) and SDG12 (Sustainable Consumption and Production), particularly 12.3.1. (Per capita food has committed USD 936.38 million183 as processing units can benefit if they start building availability), while it contributes indirectly to SDG1 (No Poverty), SDG5 (Gender Equality), SDG8 (Decent investments for mega food parks in the country, Work and Economic Growth), SDG13 (Climate Action) and SDG15 (Life on Land) value chains linked to farmers, which would help as part of the Scheme for Agro-Marine them in getting adequate and assured supply Processing and Development of Agro-Processing that meet quality standards while also User or This IOA can benefit farmers (suppliers) by allowing them to sell their produce at a better price than the Clusters under Scheme for Agro-Marine beneficiary: market without being exploited by the middleman through a one point sale. Assured and timely receipt eliminating middlemen. According to experts, Processing and Development of Agro-Processing of payment can help in strengthening their financial resilience product development, market testing and Clusters Shopkeepers and restaurants (customers) get fresh and good quality vegetables and fruits at their subsequent market capture require a long doorstep at competitive prices without having to visit the market (SAMPADA). GoI has rolled out the scheme of gestation period. Formalization of Micro Food Processing Economic Models in this segment are in a nascent stage, expansion for growth happens above EBITDA level for such Enterprises (FME) with an outlay of USD 1 Given its strong potential to meet India's factors: service-oriented and asset-light business models. As a result, it is difficult for most companies to achieve a billion184 in line with the objectives of development need, favourable policy positive EBITDA at a time when they are still focused on growth. Thus, in order for these companies to hit a Atmanirbhar Bharat. momentum and significant private sector profit, they need to stabilize and stop investing in expansion of business Many players in this segment are likely to take minimum ~10 years to achieve full scale and report a profit. interest, Food processing is a IOA. Investors also believe that newer players entering the market can re-use the learnings of existing players, and can potentially achieve scale at a faster rate than their predecessors 1.7.3. Food processing to reduce wastage and diversify food product offerings for end consumers - Market Insights The vertical has a strong partner environment with significant interest from commercial investors and Enabling Investors can focus on companies engaged in food processing with the objective to reduce wastage, private corporations Overview: factors: increase value addition, ensure better prices for farmers while ensuring availability of affordable and In 2020, GoI announced its plans to amend the Essential Commodities Act to deregulate food items like quality produce to consumers cereals, pulses and onion, thereby making agriculture sector more competitive, while ensuring better price realization for farmers Majority of processing in India can be classified as primary processing, which offers lower value addition Need case: compared to secondary processing. There is a need to move up the value chain in processed food Risk Such business models require time and effort to build. Also, high capital is required since a significant products to boost farmers’ income factors: amount of money is needed to accommodate machines, computers and educating the farmers to use This IOA could contribute directly to SDG2 (Zero Hunger), particularly 2.3.2. (GVA in Agriculture per the same worker) and SDG12 (Sustainable Consumption and Production), particularly 12.3.1. (Per capita food Fresh produce or food supply chain has become a crowded market, simply because of the sheer size of availability), while it contributes indirectly to SDG1 (No Poverty), SDG5 (Gender Equality), SDG8 (Decent the Indian territory, which makes scaling up a huge challenge Work and Economic Growth), SDG13 (Climate Action) and SDG15 (Life on Land)

Impact Investments falling under this IOA are likely to contribute to solutions (IMP classification C), given User or This IOA can benefit end consumers by offering a greater variety of food products management: that these business models yield an important and intended outcome that can allow farmers to sell beneficiary: Food processing acts as a bridge between Agriculture and Manufacturing sectors, thereby creating direct their produce at a better price than the market without being exploited by the middleman through a and indirect employment opportunities one point sale

Source: UNDP research for India Investor Map Economic Food processing companies which raised funding in the last 5 years reported average EBITDA margins of factors: ~8.3%. Business models which cater to niche market foods, snack foods, ready-to-make foods and packaged foods, essentially cater to urban population and entail high volumes, low margins and low penetration levels 1.7.3. Food processing to reduce wastage the life of food products. Indian food processing 180 According to experts, product development, market testing and subsequent capture, require a long and diversify food product offerings for sector accounts for 32 percent of the country's gestation period end-consumers total food market, which is one of the largest industries in India and ranked fifth in terms of Enabling The vertical has a strong partner environment with significant interest from commercial investors and Food processing has an important role to play in production, consumption, export and expected factors: private corporations linking farmers to consumers in both domestic GoI plans to triple the capacity of food processing sector and has committed USD 936.3818 billion as growth. As a result of rising household incomes, and international markets, while also reducing investments for mega food parks in the country, as a part of the Scheme for Agro-Marine Processing and urbanization and growth of organized retail, food wastage as processing helps in prolonging Development of Agro-Processing Clusters under SAMPADA

81 82 SDG Investor Map Report for India-2020

1.7.4. Production and delivery of dairy products - Market Insights Risk Seasonal deficiency and high cost of raw materials constitute one of the most important constraints factors: affecting the growth of small-scale food processing businesses, which subsequently results in shortage Investors can focus on companies engaged in dairy business and contribute to the development of and higher pricing of raw materials Overview: agribusiness and food processing industry, while allowing farmers to earn higher income and creating This sector essentially caters to urban areas, as majority of processed foods are expensive and out of employment opportunities reach for the common man Modernisation is not affordable for small-scale manufacturer, while large companies do not find investment justifiable due to small size of the market As per Agriculture Skill Council of India, ~8.4 million farmers depend on dairy sector for their livelihoods, Need case: out of which 71% are women. While crop production employs rural workforce for 90-120 days per year, Impact Investments falling under this IOA are likely to benefit stakeholders (IMP classification B), given that dairy provides alternative employment opportunities throughout the year management: such business models yield an important and intended outcome as creation of large scale processed This IOA could contribute directly to SDG2 (Zero Hunger), particularly 2.3.2. (GVA in Agriculture per food manufacturing and food chain facilities would uplift the agricultural economy by creating worker), SDG3 (Good Health and Well-Being), SDG8 (Decent Work and Economic Growth), particularly employment and potential export earnings 8.2.4. (Annual growth in agriculture sector) and SDG12 (Sustainable Consumption and Production), particularly 12.3.1. (Per capita food availability), while it contributes indirectly to SDG1 (No Poverty), SDG5 Source: UNDP research for India Investor Map (Gender Equality), SDG10 (Reduced Inequalities), SDG13 (Climate Action) and SDG15 (Life on Land)

User or This IOA can support in development of rural economy by reducing poverty and providing a regular beneficiary: source of income for rural households As per International Farm Comparison Network, Dairy Report, 2018, ~60% of consumer price from milk 1.7.4. Production and delivery of GoI announced an outlay of USD 2 billion191 for goes to the farmer, which is the highest among major milk-producing countries dairy products Animal Husbandry Infrastructure Development Fund. The Model Agriculture Produce and As per Invest India 2018 data, India is a leading Economic As per experts, dairy business is only investable if it is able to capture a large share of the market in order Livestock Marketing (Promotion and Facilitation) milk producer, holding 19 percent185 of the global factors: to substantiate the project cost Act, 2017 allows the private sector to set up market share. Indian milk processing sector is As per experts, success of dairy-based business models depends on large volumes and capturing of a large private markets, alternate marketing channels, market share. Since this would require a substantial amount of time and effort to build, investments in this expected to expand at a CAGR of 14.8 percent online market platforms, etc., in both agriculture space will have a long gestation period between 2018 and 2023 and is projected to 186 and livestock marketing. reach USD 32.57 billion in 2023 . As of 2018, Enabling The vertical has a strong partner environment with significant interest from commercial investors and 81.1 percent187 of the dairy and milk processing As per expert consultations, since dairy business factors: private corporations market was part of the unorganised sector and is capital intensive (cost of cattle, quality feed, Various initiatives have been undertaken by the government to strengthen the dairy sector, including 71 percent of total participants in the sector are machinery for processing, cold-storage facilities National Programme for Dairy Development (NPDD), Dairy Entrepreneurship Development Scheme (DEDS) and Dairy Processing and Infrastructure Development Fund (DIDF) women. Experts expect the dairy industry to gain and transport), it is only investable if it can more importance with people moving back to capture a large share of the market to justify the villages during the pandemic. While crop project cost involved. Value-added dairy product Risk Dairy sector needs organization, significant infrastructure and capital infusion to boost hygiene and factors: nutrition levels. Investment in infrastructure to transform this ecosystem, would require tapping into production employs rural workforce for 90-120 segment (for example, cheese, including unrealized potential for supply and distribution logistics, as well as into the huge customer base under days per year, dairy provides alternative and European style cheese, soft cheese, hard cheese, this segment sustainable employment opportunities different types of yoghurts, etc.) has showcased There are no reliable cold chains or proper transport facilities, which are necessary for temperature- throughout the year188 and has significant high potential to scale and attract private sensitive foods like fruits and vegetables, ice creams, etc. potential to grow, with the added potential for investment. As per Invest India, flavored milk diversification. drinks segment reported annual growth in value Impact Investments falling under this IOA are likely to benefit stakeholders (IMP classification B), given that management: such business models yield an important and intended outcome as development of dairy sector would of 25 percent in 2019 and is expected to register Under Budget 2021, GoI allocated USD 447 help in boosting rural economic growth and empowering rural women a CAGR of 23.6 percent between 2019 and million189 for Animal Husbandry and Dairying and 2024192 . The main driver of growth for this various initiatives have been undertaken by the Source: UNDP research for India Investor Map segment is rising health consciousness among government to strengthen the dairy sector. As consumers. Yoghurt and sour milk products per the National Action Plan on Dairy segment grew at the rate of 26 percent YoY, to Development Vision 2022 report190 , GoI aims to reach USD 3.29 billion in 2019193 . Due to the farm products. To meet India's policy priority to increase milk procurement and processing 1.8. Food and Beverages White Spaces substantial amount of time and effort required double farmer's income by 2022, it is imperative through setting up village-level dairy Deep Dive to achieve scale and marketability, investments to capture a greater value of agri-produce infrastructure, increase organized milk handling in this space will have a gestation period of more 1.8.1. Efficient storage infrastructure for agri- through storage and processing, among other to 50 percent by 2024, increase milk than 15 years. produce to ensure minimum wastage of farm key factors. This segment is expected to grow as procurement by cooperatives 20 percent, and by produce ('Warehousing') a result of rising food demand, supply deficits the private sector 30 percent by 2023. Given its strong potential to meet India's and improved market economics. Cold chain Furthermore, to facilitate private investment in development need, favourable policy Currently, inadequate storage (warehousing and storage facilities could be set-up using alternate dairy processing and cattle feed infrastructure, momentum and significant private sector cold-storage) facilities lead to heavy losses for energy technologies like solar-powered systems, interest, Dairy and related products is a key IOA. Indian farmers due to wastage of perishable

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and players could explore chemical treatments demand-supply mismatch is addressed. Many 1.8.2. Risk-mitigation products to safeguard and food processors to keep a ledger of their to extend the shelf-life of produce and set up emerging players also bundle post-harvest farmers from future price falls in case of transactions, access transparent pricing, and pack houses and reefer transport systems194 . finance at the farm gate level, thereby facilitating excess produce ('E-auction and commodity improve their working capital cycles. There is a need to not only optimize the usage of the farmers to utilize warehouse services trading') Various existing agri-tech players plan to launch existing cold-storage facilities by allowing storage economically. Although investment burden and risks their e-market platforms. Investors expect more of multiple crops but also deploy cold storage at GoI has undertaken several measures to uplift associated with production are borne entirely by traction in this segment in the next 12-15 the farm gate level, which can work in off-grid this area by way of setting up a fund of USD 13.3 farmers who produce nearly all the agricultural months, especially with the strengthening of conditions, to support farmers in growing fruits billion195 for establishing farm gate infrastructure produce, first-mile intermediaries (namely, the eNAM. GoI, through eNAM, aims to create a and vegetables. to strengthen agriculture, fisheries, and food local aggregators who gather produce from unified national market for agricultural Since farmers prefer to immediately sell off their processing sectors. RBI's circular196 on PSL also multiple smallholder farmers and sell it to commodities by networking existing APMCs. It produce to gain liquidity, instead of storing the includes agriculture infrastructure as a priority commission agents) seize ~75 percent197 of the aims to connect all regulated wholesale produce same, demand for storage infrastructure in India area that commercial and public-sector produce value. markets through a pan-India trading portal. is low and businesses in this space struggle with undertaking (PSU) banks are mandated to fund India's agri-commodity trading sector addresses Although some players have invested in this achieving scale. Moreover, cold-storage is a under the PSL norms. a market size of USD 200 billion, comprising ~5 space, models are still in an experimental stage. capital-intensive segment which requires funds Although some players have invested in this million middlemen198 . Business models under Given its strong potential to meet development for implementing innovative hardware. As a space, business models are still in an this area offer agricultural commodity buyers needs and growing policy momentum, we expect result, the majority of warehousing players experimental stage. However, given its strong and sellers better prices, increased working private investment in this space to pick up. Thus, focused on large markets and only expanded potential to meet India's development need and capital and optimized logistics. They help in E-auction and commodity trading is recognized into rural markets after achieving financial growing policy momentum, we expect private bringing accountability and transparency into the as a white space. stability. However, as per experts, rental cold investment in this space to pick up. Thus, agricultural value chain through a buyer/seller storage models can be marketable, if the warehousing is recognized as a white space. rating system, and enable traders, wholesalers,

1.8.2. Risk-mitigation products to safeguard farmers from future price falls in case of excess produce 1.8.1. Efficient storage infrastructure for agri-produce to ensure minimum wastage of farm (E-auction and commodity trading) - Market Insights produce (Warehousing) - Market Insights Investors can focus on companies engaged in offering e-auction of agri-commodity trading with the Overview: Investors can focus on companies engaged in storage (warehousing and cold storage) business with the objective to allow buyers and sellers trade at better prices, while providing them increased working Overview: objective to reduce wastage of farm produce and enable farmers to realize sufficient returns for their capital and optimized logistics produce Helps in creating a transparent agricultural value chain through a buyer/seller rating system, and Need case: Inadequate storage (warehousing and cold storage) facilities lead to heavy losses for Indian farmers ensuring price security for farmers Need case: due to wastage of perishable farm products Such models could contribute directly to SDG1 (No Poverty), particularly 1.1.1. (Proportion of Such models could contribute directly to SDG2 (Zero Hunger), particularly 2.3.2. (GVA in Agriculture population below the international poverty line, by sex, age, employment status and geographical per worker) SDG12 (Sustainable Consumption and Production), particularly 12.3.1. (Per capita food location (urban/rural)), SDG10 (Reduced Inequalities), while it contributes indirectly to SDG2 (Zero availability), while it contributes indirectly to SDG1 (No Poverty), SDG5 (Gender Equality), SDG8 Hunger), SDG5 (Gender Equality), SDG8 (Decent Work and Economic Growth) and SDG12 (Decent Work and Economic Growth) and SDG13 (Climate Action) (Sustainable Consumption and Production)

User or Support farmers in avoiding wastage of their produce and thereby reducing post-harvest losses. Farmers User or Market participants benefit from creation of a better link between the future market and the spot market beneficiary: are able to sell their produce at the right price, instead of dumping it in the market at throw-away prices beneficiary: Ensuring price stability so that seasonal variations can be minimized. Agricultural commodity trading Cold storage facilities can help in increasing the life of perishable products such as milk, fruits and market is helpful to discover future prices depending upon the current trends vegetables

Risk Garnering farmers’ trust to trade on such platforms is the biggest challenge for players in this segment. Risk Although there are players working in this area, models in this space struggle with achieving scale since factors: Since the network is not formalized, it is plagued by issues such as information asymmetry, trust deficit, factors: demand for storage infra in India is low, in comparison to the need for storage facilities at both business doubts of transparency and accountability and end-consumer level. Farmers prefer immediately selling off their produce to gain liquidity, instead of Although GoI has undertaken some policy initiatives, market players are still unclear about the policy storing the same implications, and thus such models are still in an experimental stage Cold storage is a capital-intensive segment which requires funds for implementing innovative hardware Impact Investments falling under this IOA are likely to contribute to solutions (IMP classification C), given that Impact Investments falling under this IOA are likely to benefit stakeholders (IMP classification B), given that management: these business models yield an important and intended outcome, allowing development of a transparent management: such business models yield an important and intended outcome by reducing wastage of farm produce, trading ecosystem for agriculture produce and offering price security to farmers for selling their produce while increasing the level of food security in India Source: UNDP research for India Investor Map Source: UNDP research for India Investor Map

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87 88 RENEWABLE RESOURCES RENEWABLE RESOURCES RENEWABLE & ALTERNATIVE ENERGY RENEWABLE & ALTERNATIVE ENERGY RENEWABLE RESOURCES RENEWABLE RESOURCES RENEWABLE RESOURCES RENEWABLE RESOURCES RESOURCES & & ALTERNATIVE ENERGY RESOURCES & & ALTERNATIVE ENERGY ALTERNATIVE ENERGY ALTERNATIVE ENERGY & ALTERNATIVE ENERGY RENEWABLE RESOURCES& ALTERNATIVE & ENERGY RENEWABLE RESOURCES & RENEWABLE RESOURCES RENEWABLE RESOURCES RENEWABLE & ALTERNATIVE ENERGY ALTERNATIVE ENERGYRENEWABLE & ALTERNATIVE ENERGY ALTERNATIVE ENERGY RESOURCES & RENEWABLE RENEWABLERESOURCES RESOURCES && RENEWABLE RENEWABLE RESOURCES & RESOURCES & ALTERNATIVE ENERGY RESOURCES & ALTERNATIVE ENERGY RENEWABLE RENEWABLE RENEWABLE RESOURCES & RESOURCES & ALTERNATIVE ALTERNATIVE ALTERNATIVE ALTERNATIVE ALTERNATIVE ENERGY ENERGY ALTERNATIVE ENERGY ENERGY RENEWABLE RESOURCES & ALTERNATIVE ENERGY RENEWABLE RESOURCES & ALTERNATIVE ENERGY ENERGYRESOURCES & RENEWABLE ENERGY RENEWABLE RENEWABLE RESOURCES RENEWABLE RESOURCES & RENEWABLE RESOURCES RENEWABLE RESOURCES & RESOURCES & ALTERNATIVE ENERGY RESOURCES & ALTERNATIVE ENERGY & ALTERNATIVEALTERNATIVE ENERGY ALTERNATIVE ENERGY & ALTERNATIVE ENERGY ALTERNATIVE ENERGY RENEWABLEENERGY RENEWABLE RENEWABLE RENEWABLE RESOURCES & RESOURCES & RESOURCES & ALTERNATIVERESOURCES & ALTERNATIVE ALTERNATIVE ENERGY ALTERNATIVE ENERGY RENEWABLE RESOURCES RENEWABLE RESOURCES RENEWABLE RESOURCES & RENEWABLE RESOURCES & RENEWABLE ALTERNATIVE ENERGY ALTERNATIVE ENERGY & ALTERNATIVE ENERGY ENERGY ALTERNATIVE ENERGY & ALTERNATIVE ENERGY SDG Investor Map Report for India-2020

1.1.2. Reducing India's dependence on from urban to rural areas, which underscored Renewable Resources imports (SDG 7) the need for entrepreneurial ventures to uplift the rural sector and create employment • As per NITI Aayog's report 'Zero-Emission opportunities. An insufficient power supply is & Alternative Energy Vehicles (ZEVs): Towards a Policy Framework', a major hindrance for productive investments import oil is needed to cover over 80 in rural and semi-urban areas. Renewable percent207 of India's transport fuel. The import Resources & Alternative Energy and cleantech bill for crude oil is currently standing at nearly solutions can help bridge such energy gaps in USD 85 billion208 in 2020. This oil demand is an environment-friendly way by serving the likely to grow with an increasing rate of needs of underserved regions, as well as urbanisation, leading to a higher need for SMEs, thereby strengthening local value transport facilities chains by creating demand for skilled and • A shift from imported oil to other efficient semi-skilled manpower methods can help in generating additional employment. European Climate Foundation 1.2. Policy momentum states that through reducing oil demand by Renewable Resources & Alternative Energy has more efficient electric cars, employment will been highlighted as a priority sector by the 209 increase from-500,000 to 850,000 jobs by 2030 country's apex policy think tank, NITI Aayog and • Although GoI's tax revenue from the oil sector GoI have undertaken several initiatives to boost is likely to reduce with increased usage of EVs the Indian Renewable Resources & Alternative 1. Sector overview in India's transportation system, such revenue Energy sector. GoI has set a target to achieve loss is expected to be offset with potential Renewable Resources & Alternative Energy y virtue of its geographic location, India is the fourth most attractive market for Renewable higher tax revenues, generated as a result of capacity of 175 GW by 2022 (and 450 GW by Resources & Alternative Energy. GoI is making steady efforts to move towards cleaner improved operational productivity in other 2030), including 60 GW of utility-scale solar sources of energy not only to deal with the problems of growing air pollution and global B economically viable sectors photovoltaic (PV), 40 GW of rooftop solar PV, 60 climate change but also to ensure its energy security. As of 2020, India's installed RE capacity GW of wind power, 5 GW of small hydro and 10 stands at 87.26 GW, which includes 34.81 GW of solar, 37.74 GW of wind, 9.86 GW of biomass and 1.1.3. Impact on health/mortality rate (SDG 3) GW of bioenergy211 . Budget 2020-21 proposed 199 4.68 GW of small hydro . To achieve its target of 175 GW by 2022, GoI has estimated an 212 • Pollution is a global issue and adversely allocation of USD 3.11 billion for power and investment of USD 100 billion200 over the next 3 years, requiring increased capital inflow from both impacts health and premature mortality rate. Renewable Resources & Alternative Energy domestic and international investors. Based on publicly available information, key investment 213 In addition to implementing various sector. Up to 100 percent FDI is allowed under deals in Indian RE sector amounted to USD 8.4 billion, 41 percent was in solar, 10 percent was in progressive initiatives to curb pollution, GoI the automatic route for renewable energy wind, while 1 percent was for storage of solar pumps201 . With growing investor interest in this has also undertaken specific policy measures generation and distribution projects subject to space, along with a positive policy momentum, RE sources can not only enable India to become to promote clean energy solutions provisions under the Electricity Act, 2003. During self-sufficient for its energy needs but can also have the potential to address the power deficit 2020, the finance ministry announced changes in faced by the underserved regions and Small-Medium Enterprises (SMEs). 1.1.4. Impact of COVID-19 FDI rules which made prior approval of the • Due to disruptions in the global supply chains, government mandatory for foreign investments 1.1. Sectoral development needs on renewables has brought down share of COVID-19 has intensified the urgency for India from countries that share a border with India coal in energy generation to 57 percent. Now to become self-sufficient to meet its energy (including China, Bangladesh, Pakistan, Bhutan, Our review of key policy documents, human 203 that 99.99 percent of households have needs and reduce its dependency on import Nepal, Myanmar and Afghanistan) to prevent the development reports and stakeholder access to electricity, there is a need to of crude oil for the generation of electricity, as opportunistic takeover of domestic firms amid consultations highlighted the following sectoral 214 increase the share of RE in electricity well as transport facilities. Due to the COVID-19 pandemic under the FEMA law . To development needs in India: generation and meet India's targets for SDG nationwide lockdown in India, electricity further boost the Renewable Resources & 1.1.1. Climate change (SDG 7 and SDG 13) 13 (Climate Action) demand reduced by 25-30 percent. Market Alternative Energy sector, India plans to add 30 experts estimate that such decline in demand, GW of Renewable Resources & Alternative • The Intergovernmental Panel on Climate • The power sector contributes to half of India's 204 coupled with a reduced collection of Energy capacity along the desert region on its Change (IPCC) finds that India is one of the CO2 emissions . Total Primary Energy payments and slow economic recovery, will western border, covering the states of Gujarat most vulnerable countries in the world to Demand (TPED) of India is expected to grow 205 aggravate financial pressure on Distribution and Rajasthan. Indian Railways also plans to global warming. There is, thus, a pressing by 63 percent by 2030. Concomitantly, Companies (DISCOMs), resulting in a shortfall adopt sustained energy efficient measures and India's contribution to world's energy-related need for a reduction in the use of fossil fuels 210 of approximately USD 5 billion maximum use of clean fuel to cut down emission and the associated emissions. As per SDG total CO2 emission is expected to rise from 6.7 215 206 level by 33 percent by 2030. India Index report by NITI Aayog202 , GoI's thrust percent to 10.6 percent • Lockdown resulted in increased migration

91 92 A list of key policy initiatives driving the growth of national competitive auctions for wind and solar The high cost of raw materials the Renewable Resources & Alternative Energy PV sector, intending to increase investment in sector in India is available in Annexure II. Renewable Resources & Alternative Energy in a Currently, components used in the manufacturing of RE-based products are cost-effective manner. imported. For instance, there is a significant import dependence on countries 1.3. Private sector participation like Chile, Argentina, Bolivia, China, the Democratic Republic of the Congo, and 1.3.3. GoI has set up a dispute resolution 04 To achieve GoI's target of 175 GW of Renewable the United States (Nevada) for core components of lithium-ion batteries such as mechanism. Besides, GoI has also approved for Resources & Alternative Energy by 2022, the import of cobalt, and experts expect India to take a few years before it can reach setting up of an 'Empowered Group of government must encourage private sector the economies of scale to manufacture such products domestically, especially Secretaries (EGoS) and Project Development participation by creating a conducive policy due to limited demand, high cost of capital, lack of technology and access to Cells (PDCs) in Ministries/Departments of GoI for environment and by offering incentives. affordable raw materials attracting investments in India'. This new 1.3.1. Investment deals in Indian Renewable mechanism will reinforce India's vision of Resources & Alternative Energy sector during becoming a USD 5 trillion economy by 2025217 . 2020 amounted to USD 8.4 billion216 , of which Mounting dues from distributors 1.3.4. Customs duty on import of cobalt, nickel 05 majority were in solar, followed by EVs, providing As per the Central Electricity Authority (CEA) of India data dated 2019, distribution and other elements which are used for battery 218 evidence that investors are bullish in these companies across India owe USD 1.29 billion to renewable power producers. manufacturing has been removed. sectors near to medium term. To ensure continuous progress in the growth of 1.3.2. By 2019, India accounted for around renewables, auction design, grid connections and 1.6 percent of the close to USD 40 billion that Grid bottlenecks the financial health of DISCOMs are critical had been invested in companies the electric elements for reform. There is a difficulty in integrating Renewable Resources & Alternative Energy into vehicles sector across the globe. GoI introduced 06 the Indian grid system, as there is no system in place to facilitate efficient electricity trading between states with surplus renewable generation and others. Bottlenecks for private sector investments in the Renewable Resources & Alternative Energy sector Retiring existing coal plants

Developers in the Renewable Resources & Alternative Energy sector have been facing some issues which Retiring of the capital-intensive brownﬁeld coal plants while also paying for the have resulted in a dip in the rate of private investments in this segment. The following bottlenecks to private already committed capital (or sunk) costs of these plants is a tedious process. commercial investment in the Renewable Resources & Alternative Energy sector were highlighted in 07 The decommissioning cost, net of scrap value, ranges between USD 10-14 million 219 consultations with investors and industry experts: per 500 Mega Watt (MW) .

Reduction in bids and cost overruns Lack of smart grids Cancelled auctions and renegotiated power contracts, resulted in a dip in new Smart grid can help in resolving the problem of intermittency issues of high 01 investments. Moreover, auctions have resulted in project delays, potential variability and unpredictability which arise due to power generation from cancellations, as well as difficulties in sourcing technology and financing for the Renewable Resources & Alternative Energy. Application of a large amount of projects. Challenges around the procurement of necessary land and permits 08 electric power storage is challenging and can cause system losses. Given the have also been areas of concern for private sector players in this sector. growing participation of Renewable Resources & Alternative Energy in the electricity supply chain, the requirement for energy storage is likely to increase. Auction process Lack of storage 02 It has been highlighted in our conversations with stakeholders that there is a need for revision in qualification requirements under the auction process to There is a need to develop a robust regulatory framework for energy storage systems ensure successful completion of projects. The government should set a cap on to bolster the development of the Renewable Resources & Alternative Energy the lowest price and emphasis should be toward the use of newer and more storage sector. Issues faced by owners (generating companies, distribution licensees, efficient technologies. 09 transmission utilities, merchant power plants, bulk power consumers) include the dependence of regulatory treatment on the ownership of energy storage assets which include market entry fee, cost recovery structures/mechanisms (pricing), grid Low tariff rates integration, use of licensees' assets and revenue sharing. Energy storage has the 03 Tariff rates have fallen to unfeasibly low levels, such that developers find it potential to reduce bulk/industrial consumers' reliance on DISCOMs as a back-up. difficult to operate and recover their costs or make a viable return. However, such reduced dependence on DISCOMs would increase the tariff for retail and domestic consumers, which will significantly impact the operations of DISCOMs.

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1.4. Priority subsectors from secondary sources show that there are Figure 17: Subsector shortlist for Renewable Resources & Alternative Energy sector significant commercial hurdles in hydropower Through review of subsectoral development and biomass segments, and these areas require Alignment to development needs and policy priorities needs and policy priorities and by deep-dive more development and policy momentum to consultations with sector experts and investors, attract private capital and offer power viable High Medium Low Shortlisted (subsectors mentioned (subsectors not the following themes emerged as areas which solutions. Also, while some business models and (subsectors highlighted address key development needs through subsectors as ‘top’ priorities by as ‘priority’ by mentioned by development initiatives have been undertaken to reduce the development experts) development experts) sector experts) business models: level of emissions in India and develop forestry 1. Scalable solar energy projects management segments, these areas are not Subsector: SOLAR commercially viable from the point of offering TECHNOLOGY & 2. EV manufacturing and infrastructure PROJECT DEVELOPERS scalable and marketable business opportunities. Conducive for Rooftop solar Subsector: ELECTRIC Subsector: WIND 3. Harnessing wind resources to meet energy Solar Technology and Project Developers, EV and private sector VEHICLE* Subsector: SOLAR TECHNOLOGY & needs participation Manufacturing of EVs TECHNOLOGY & PROJECT Wind Technology and Project Developers are PROJECT EVs for service industry DEVELOPERS (subsectors DEVELOPERS subsectors that lie at the intersection of Subsector: WIND On-grid and off-grid 4. Harnessing hydropower to meet energy needs Floating solar plants with PE TECHNOLOGY & wind energy development and policy priorities, as well as projects 5. Converting waste to energy (such as biofuels) investments) PROJECT DEVELOPERS commercial private interest, and have therefore Wind-Solar Hybrid Projects 6. Upgrading industrial and agricultural been shortlisted for the Investor Map. Investing technology to reduce emissions in solar and wind energy, as well as the development of the EV sector, can help in 7. Forestry Management and processing of meeting government's Renewable Resources Significant Subsector: SOLAR Subsector: TECHNOLOGY & PROJECT forest produce & Alternative Energy target and in moving barriers to ELECTRIC DEVELOPERS VEHICLE* towards cleantech solutions of energy. Though scale (subsector Manufacture of solar Consultations with sector experts, investors and with commercial Charging utility products industry bodies helped test the abovementioned EV sector already has significant private infrastructure Trading/supply of solar bottlenecks to for EVs energy-based products to

investment, the growth of this sector is highly Private investor interest themes for alignment with development needs, investment) last-mile consumers policy priorities and viability for commercial dependent on the development of charging infrastructure which is an ancillary segment. Low scope for investments. Experts' suggestions and evidence Subsector: SOLAR commercial TECHNOLOGY & PROJECT investor DEVELOPERS Solar component participation manufacturing (subsectors with Manufacturing of batteries regulatory barriers) used in solar panels

Note: *Subsector not included in SASB Source: UNDP Investor Map research

1.5. Region ecosystem Jharkhand, Tamil Nadu, Maharashtra and Gujarat. NITI Aayog's SDG India Index report 1.5.1. Solar technology and project developers identiﬁed Haryana, Delhi, Tamil Nadu, Investment in solar projects is likely to be Maharashtra and Gujarat as states which are concentrated in regions which experience a performing well in achieving SDG 7, while higher intensity of sun rays. As per Ministry of Jharkhand still needs to make considerable New and Renewable Energy (MNRE) data220 , progress in achieving targets concerning SDG 7. sunny states in India, with more than 20 GWp of Currently, Maharashtra has the highest installed solar potential include Rajasthan, Maharashtra, capacity of rooftop solar (473 MW), followed by Madhya Pradesh, Andhra Pradesh, Gujarat, Tamil Nadu (312 MW), Karnataka (273 MW), Odisha, Karnataka, Himachal Pradesh, Uttar Rajasthan (270 MW) and Uttar Pradesh (223 Pradesh and Telangana. Furthermore, investors MW). As per a report by the Institute for Energy believe that the scope for solar-based projects Economics and Financial Analysis (IEEFA), these will be high in regions with an advanced top ﬁve states account for 54 percent of total industrial sector, including Haryana, Delhi, rooftop solar capacity in India221 .

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Additionally, various states offer a conducive generation. As per NITI Aayog's SDG India Index Figure 18: Investment Opportunity Areas Shortlist for the Renewable Resources & Alternative Energy sector policy environment for players in this sector to report, Gujarat, Karnataka, Maharashtra, Andhra Wind Technology & Subsector Solar Technology & Project Developers function. For instance, Gujarat government, in its Pradesh and Telangana qualify as states which Electric Vehicle Project Developers 222 Budget 2020-21, announced USD 121 million have made significant progress in achieving SDG Innovative Rooftop solar to serve Manufacturing Electric Vehicle- Charging Innovative solutions Opportunity solutions for subsidy for rooftop solar under Surya Gujarat 7, while Rajasthan and Madhya Pradesh qualify residential, commercial of Electric based services for infrastructure for resolving issues Areas resolving limited and industrial Vehicles logistics, hyperlocal for EVs affecting the Yojana, wherein residential consumers shall be as states which still need to make considerable land-bank issues energy needs delivery and Renewable Resources which plague the micro-mobility & Alternative Energy provided 40 percent subsidy on the stipulated progress in achieving targets concerning SDG 7. solar industry cost of the solar system up to 3 Kilo Watt (KW), Additionally, Gujarat has dedicated policies to Investors identified and 20 percent subsidy for more than 3 KW and promote both solar and wind energy projects, area as fundamentally marketable? ? ? up to 10 KW capacity. while Rajasthan and Andhra Pradesh state governments have issued policies to promote 1700 MW USD 1 bn 10 GW 40 GW USD 7.09 bn Shared mobility market in c.40% CAGR Scale Potential 1 projects under various 1.5.2. Electric Vehicle 3 5 Under construction GoI’s target 2022 2 by 2025 2019; expected to grow at Between 2019-2025 Wind-Solar-Hybrid projects. (State-wise SDG Maps stages of development or being tendered6 25-30% over the next 5 years4 As per expert consultations, the following and Indicators are documented in Annexure IV) Proven Models have demonstrated Models in Models have Promising models Models in experiment Models have attracted regions offer a conducive environment in-market as profitability and experiment demonstrated have attracted stage with one pilot private sector capital, for EVs: 1.6. Investment Opportunity Areas evidenced by attracted private stage with few profitability and venture capital, but project and few but have not yet been investors sector investments, tenders issued attracted private have not yet been emerging ideas such proven as profitable - Overview interest? albeit only recently by GoI sector investments, proven as profitable as swappable batteries • Uttar Pradesh has a draft policy for EVs, while albeit only recently

Punjab has a notified policy dedicated to the While IOAs such as floating solar projects and Mature IOA White space: strong Emerging Emerging White space: strong Emerging subject charging infrastructure for EVs came up as Opportunity type scale potential but IOA IOA scale potential but IOA not successful not successful IOAs with a potential for strong development business models business models • States of Tamil Nadu, Karnataka and impact, the commercial viability of such models Maharashtra offer a conducive ecosystem, Emerging On-grid or Off-grid rooftop Floating solar Manufacturing EV-based ride- Point-based Solar-wind hybrid remains unproven. Business models in these business model(s) solar panel installation plants, which units for EVs sharing or rental charging projects, or hybridization with adequate state policy momentum, as well projects to serve energy involve installing across 2/3/4 services (EV buses, E- infrastructure of existing solar and 'white spaces' currently face significant needs of industrial clusters solar panels on wheeler taxis, E-rickshaws or wind plants to allow 24 as existing market forces of suppliers and Battery swapping commercial hurdles and need to develop further (including MSME floating passenger E-bikes), offering hour electricity consumers manufacturing clusters structures on a segments and EV inter-city and intra- model for charging generation (resulting in before they attract large-scale commercial across industries, food waterbody buses, which city, affordable EVs, which may reduced variability of parks, etc.), residential and would include micro-mobility, also including energy generation), • Metropolitan cities with heavy traffic private investments. commercial complexes, manufacturing of logistics or setting up an with the rated power housing societies, vehicles by hyperlocal delivery agency to handle capacity (maximum (including Delhi, Bangalore and Pune) can be battery quality Rooftop solar to serve residential, commercial community centres, assembly of EV services output/generation) of suitable areas for sale of EVs for both government organizations components, checks to one source of energy to and industrial energy needs on the other hand, and private institutions. In thereby enabling facilitate battery be at least 25% of the personal and commercial use addition to reduction in users to enjoy swapping model rated power capacity of not only has the potential to address key electricity costs, on-grid lower operating Battery disposal the other source. Such Ministry of Heavy Industries and Public development needs but has also demonstrated solar rooftop projects allow costs systems hybrid projects would users to earn additional lead to savings in capital Enterprises has shortlisted 11223 cities (namely interest from a range of private sector investors. income by supplying extra cost (in comparison to electricity generated to the cost incurred on Delhi, Ahmedabad, Bengaluru, Jaipur, Mumbai, Companies in this IOA have been able to community/central grid, stand-alone solar and thereby making them wind projects), with Lucknow, Hyderabad, Indore, Kolkata, Jammu demonstrate profitability and offer successful eligible for generation- improved utilization of and Guwahati) in the country for introduction of exits to early investors. Continued commercial based incentives and USD common infrastructure 0.03 (INR 2) per unit of such as land, approach EVs in their public transport systems under the private interest is expected in this 'mature' IOA. electricity generated roads and evacuation Faster Adoption and Manufacturing of (Hybrid) infrastructure While models under manufacturing of EVs, EV for and Electric Vehicles (FAME) scheme and has the service industry and wind-solar hybrid (WSH) SDGs impacted made subsidy allocations to that effect. projects are still relatively nascent; they have According to India Brand Equity Foundation's gained significant traction from investors/large (IBEF) published research, Inter-ministerial panel corporations over the past few years. Investment sanctioned 5,645224 electric buses for 65 cities in activity in this 'emerging opportunity area' is 2019. GoI also plans to set up incubation centre expected to continue growing in medium to long- Sources: for start-ups working in the EV space. 1. Niti Aayog (2020). Zero-Emission Vehicles (ZEVs) 2020. Niti Aayog. Available at: https://niti.gov.in/sites/default/files/2020-01/IEA- term horizon. These areas have also been Indiapercent202020-In-depth-EnergyPolicy_0.pdf 1.5.3. Wind technology and project developers included as part of the Investor Map. (Please refer 2. TERI (2019). Floating Solar Photovoltaic (FSPV): A Third Pillar to Solar PV Sector? Available at: https://www.teriin.org/sites/default/files/2020- to Annexure III for detailed analysis of the 01/floating-solar-PV-report.pdf. As per MNRE data, Gujarat, Karnataka, 3. www.ibef.org. (n.d.). Electric Vehicle Market Likely To Be Rs 50,000 cr Opportunity In India By 2025 | IBEF. shortlisting process followed to arrive at the Available at: https://www.ibef.org/news/electric-vehicle-market-likely-to-be-rs-50000-crore-opportunity-in-india-by-2025-report. Maharashtra, Andhra Pradesh, Rajasthan, final IOAs) 4. www.ETAuto.com (2019). Opinion: EV adoption in shared mobility is gamechanger for Indian auto inc - ET Auto. ETAuto.com. Madhya Pradesh and Telangana have a high Available at: https://auto.economictimes.indiatimes.com/news/industry/opinion-ev-adoption-in-shared-mobility-segment-a-game-changer-for- potential for both wind and solar power indian-automobile-industry/72022796#:~:text=The%20shared%20mobility%20market%20in%20India%20is%20one%20of%20the 5. www.businesswire.com. (2019). India Electric Vehicle Charging Infrastructure Market Report 2019: Drivers, Restraints, Opportunities, Trends, and Forecast up to 2025 - ResearchAndMarkets.com. Available at: https://www.businesswire.com/news/home/20190813005366/en/India-Electric- Vehicle-Charging-Infrastructure-Market-Report 6. CRISIL (2020). The new power couple in town: Wind-solar hybrid finding favor with Centre and states.

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1.7. Renewable Resources & around USD 16,550 with a 25-year lifetime of the Risk India is highly dependent on other countries for import of solar panels and equipment, 85% of which are installation227 . Reaching GoI targets to achieve 40 factors: imported. Unless India is able to manufacture these products internally, cost of setting up rooftop Alternative Energy Investment projects cannot be reduced GW of solar rooftop capacity by 2022 can help in Opportunity Areas Deep Dive 228 Due to the pandemic and a nationwide lockdown, rooftop solar segment has been adversely impacted as saving more than 10,000 MW of electricity with most players are small-sized companies, with limited financial capacity to sustain sudden heavy losses 1.7.1. Rooftop solar to serve residential, avoidance of transmission and distribution (T&D) resulting due to low demand. Inability to sustain may result in such players going bankrupt, or exiting the commercial and industrial energy needs losses. As of 2019, cumulative solar rooftop business. Demand for rooftop solar is likely to be low due to financial insecurity and job losses among installations in India accounted for ~4.4 GW229 . consumers. Bank debt is also expected to get tighter for most consumers due to low level of credibility India's power sector is responsible for half of Ministry of New and Renewable Energy (MNRE) and India's CO2 emissions. However, with GoI's push various state governments have several policies to Impact Investments falling under this IOA are likely to benefit stakeholders (IMP classification B), given that towards adoption of Renewable Resources & management: such business models yield an important and intended outcome that can meet power needs of multiple incentivize and facilitate rooftop installations. Alternative Energy sources and slower growth in users, while reducing electricity costs and lowering carbon footprint of India coal-based power generation, the rate of growth A number of companies in this space have Source: UNDP research for India Investor Map in CO2 emissions in 2019 slowed down by ~2 already raised capital and have even percent225 (i.e., lower than the annual increase demonstrated profitability. Investors can expect 230 seen in any year since 2001). During 2020, 35.22 an average 16 percent unleveraged IRR in 1.7.2. Manufacturing of Electric Vehicles Experts predict that startups in this space will rooftop solar installation projects for commercial/ need approximately 3-5 years to find stability, percent of total electricity was generated from As per NITI Aayog, EVs are a sunrise opportunity industrial segment. While the gestation period of ward off major competition and start becoming renewable sources, with solar power in India, the fourth largest automobile market in conventional power plants is between 5 to 6 core players in this space. M&A and fundraising contributing 24.3 percent to the total Renewable the world. EVs can help in reducing local 226 years, the gestation period of a solar power plant activities are likely to pick up in medium and long Resources & Alternative Energy basket . concentrations of pollutants in cities, open up would be approximately six months231 . Thus, term, with the valuation of EV start-ups Solar rooftop projects can serve residential, job opportunities and reduce India's dependence small 1-5 MW solar power plants can be built becoming attractive for investors in the short commercial and industrial energy needs. Solar on imported crude oil to meet transportation around rural communities or MSME clusters to term compared to pre-COVID-19 era. With many rooftops not only offer a clean alternative to 232 needs. In addition, GoI launched National meet their immediate electricity demand . large corporations investing strategic stakes in conventional energy sources but also help in Mission on Transformative Mobility and Battery Therefore, Rooftop Solar has been identified as newer ventures, experts expect acquisitions to saving energy costs. A typical residential rooftop Storage, National E-Mobility Programme and the a key IOA. eventually become a theme in this space. solar can save up to USD 662 per KW a year or FAME-II Scheme to develop and promote effective means of sustainable transport in the The area has also seen growing private sector 1.7.1. Rooftop solar to serve residential, commercial and industrial energy needs - Market Insights country. Under draft 'Delhi Electric Vehicle Policy interest, with some companies having raised 2020' Delhi government targets to increase its capital and demonstrated scalability. Therefore, Investors can focus on companies offering rooftop solar panel installation to serve energy needs of Overview: residential, commercial and industrial sectors, enabling them to reduce their energy costs per year market share of battery-EVs to 25 percent (of the manufacturing of EVs has been identified as new vehicles added) by 2024233. Goods and a key IOA. Services Tax (GST) Council also announced its A typical residential rooftop solar can save up to USD 662 per KW a year or around USD 16,550 with a 25- Need case: year lifetime of the installation. Achieving GoI's target of 40 GW rooftop solar by 2022 can help in saving plans to reduce tax rates on e-vehicles from 234 more than 10,000 MW of electricity with avoidance of T&D losses 12 percent to 5 percent . This IOA could contribute directly to SDG7 (Affordable and Clean Energy), particularly 7.2.1. (Renewable energy share in the total installed electricity generation) and SDG13 (Climate Action), while 1.7. 2. Manufacturing of Electric Vehicles - Market Insights it contributes indirectly to SDG11 (Sustainable Cities and Communities), SDG12 (Sustainable Consumption and Production), SDG14 (Life Below Water) and SDG15 (Life on Land) Investors can focus on companies engaged in manufacturing of EVs, under 2/3/4 wheeler segment, or in Overview: manufacturing of EV buses, thereby supporting GoI's initiatives towards reducing use of fossil fuels and User or This IOA can benefit residential, commercial and industrial users with lower electricity bills since tariff achieving target of 25% EVs by 2023 beneficiary: rates for rooftop solar in comparison to industrial and commercial tariff rates are cheaper by 17% and 27% respectively Use of EVs can help in reducing India's dependence on crude oil imports (oil import bill of USD 112 billion Need case: The model can also help in generating employment opportunities for locals in FY19) to cover over 80% of its transport fuel demand. GoI targets to reduce transport’s share of nitrogen oxide (NOX) emissions from 40% in FY2019 to less than 20% in 2040

Economic Investors can expect average 16% (unleveraged) in rooftop solar installation for commercial/industrial This IOA could contribute directly to SDG7 (Aﬀordable and Clean Energy), particularly 7.2.1. factors: segment (Renewable energy share in the total installed electricity generation), SDG9 (Industry, Innovation and Infrastructure), particularly 9.4.1. (CO2 emission per unit of value added) and SDG13 (Climate Action), As per experts, typical gestation period of a solar power plant would be six months. Several small 1-5 MW while it contributes indirectly to SDG3 (Good Health and Well-Being), SDG11 (Sustainable Cities and solar power plants can be built around rural communities to meet the immediate electricity demand due Communities), SDG12 (Sustainable Consumption and Production), SDG14 (Life Below Water) and to shorter gestation period of solar projects and low operating costs SDG15 (Life on Land)

Enabling The vertical has a strong partner environment with significant interest from commercial investors and factors: private corporations User or This IOA can benefit owners of an EV with lower running costs. Electricity to charge an EV costs one-third Strong policy momentum to incentivize and facilitate rooftop installations through budget (for year 2020- beneficiary: the cost per kilometer of petrol. Expenditure on servicing and other motor parts is comparatively low 21) allocation of USD 121 million subsidy under Surya Gujarat Yojana, as well as inclusion of grid- Metropolitan cities like Delhi, Mumbai, Bangalore, etc., which have heavy vehicular traffic will benefit connected solar rooftop systems under RBI's priority sector lending category from lower level of pollution caused by use of EVs in comparison to Internal Combustion Engines (ICEs)

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1.7.3. Electric Vehicle-based services for logistics, hyperlocal delivery and micro-mobility - Market Insights Economic Experts predict that startups in this space will need 3-5 years to find stability, ward off major competition factors: and start becoming core players in this space Investors can focus on companies engaged in EV-based ride-sharing or rental services, EV-based tour Startups operating in the EV sector are crucial for developing this sector in India. Mergers and Acquisitions Overview: operations or limited distance EVs (Buses) offering point-to-point commute services. This would enable (M&A) and fundraising activities are likely to pick up in medium and long term, with valuation of EV owners to operate EV-based commercial vehicles at a lower operating cost startups becoming attractive for investors in the short term compared to pre-COVID-19 era. With many large corporations investing strategic stakes in newer ventures, experts expect acquisitions to eventually become a theme in this space Adoption of EVs for commercial usage, supported by a clean energy mix and optimized charging patterns, Need case: will help in reducing emissions, improving air quality and benefiting human health Enabling The vertical has a strong partner environment with significant interest from commercial investors and This IOA could contribute directly to SDG7 (Affordable and Clean Energy), particularly 7.2.1. (Renewable factors: private corporations energy share in the total installed electricity generation), SDG9 (Industry, Innovation and Strong policy momentum with the release of Delhi Government's draft ‘Delhi Electric Vehicle Policy 2018’, Infrastructure), particularly 9.4.1. (CO2 emission per unit of value added) and SDG13 (Climate Action), as well as GoI's initiatives towards launch of National Mission on Transformative Mobility and Battery while it contributes indirectly to SDG3 (Good Health and Well-Being), SDG11 (Sustainable Cities and Storage and the FAME-II Scheme. In 2018, GoI launched a National E-Mobility Programme (to be Communities), SDG12 (Sustainable Consumption and Production), SDG14 (Life Below Water) and implemented by Energy Efficiency Services Limited (EESL)), to augment demand for EVs SDG15 (Life on Land)

Risk Despite a low operating cost, an EV is twice as expensive as the comparable petrol vehicle. As a result, User or This IOA can benefit travel operators as total cost of ownership (TCO) for EV is comparatively lower than factors: manufacturers have been losing money in the past. Complementary measures may still be needed to beneficiary: that of a traditional (petrol/diesel) vehicle. Not only is the fuel cost is quite high, but the distance covered address the high upfront purchase price of EVs, boost investment in EV manufacturing, ensure sufficient by an EV per charge is almost 5-6 times the mileage of a traditional vehicle availability of charging infrastructure and improve the efficiency of EVs High traffic zones, as well as tourist destinations can benefit from lower level of pollution caused by use India is highly dependent on other countries for import of battery storage equipment and permanent of EVs in comparison to ICEs magnets for electric car motors. Therefore, increased focus on domestic manufacturing of energy equipment is imperative for the growth of this sector Economic As per experts, most companies in this segment are likely to take a while before they become factors: profitable. Although new companies in this domain may not be profitable, but have been successful in Impact Investments falling under this IOA are likely to contribute to solutions (IMP classification C), given that raising VC funding management: these business models yield an important and intended outcome that can offer clean and efficient Under the service segment, experts expect to see consolidation among some of the incumbents transportation solutions to the population at large, while also lowering the level of pollution before they become acquisition targets for the likes of Ola or Uber. However, for any exit to materialize, these startups will have to prove their ability through a differentiated technology and Source: UNDP research for India Investor Map validation through revenues

Enabling The vertical has a strong partner environment with significant interest from commercial investors and factors: private corporations 1.7.3. Electric Vehicle-based services Gas (CNG) counterparts (for all types of vehicles Under the second phase of FAME India scheme, GoI aims to electrify the entire public transport fleet for logistics, hyperlocal delivery and – 2-wheelers, 3-wheelers, cars, buses and trucks), including buses, taxis and auto-rickshaws. Department of Heavy Industries (DHI) has emphasized on the micro-mobility operating such vehicles will be more economical need for 100% electrification of public transport in order to reduce pollution level in India for their owners. With the growing penetration of shared mobility Risk EV-based car-hire companies have not taken off in a big way because of many challenges such as upfront in India, vehicle utilization has increased, leading As per experts, most companies in this segment factors: purchase cost, battery life, safety (possibility of battery explosions), insufficient charging infrastructure to an increase in demand for commercial are likely to take a while before they become and public perception vehicles. Commercial vehicle production in India profitable but have been successful in raising VC Many players in this segment feel that the main challenge is to manage the battery swap or charging increased from 416,870 vehicles in 2009 to funding. Under the service segment, experts infrastructure. Electric cars need charging stations with uninterrupted power, and power shortages in the country pose a hindrance in this space 1,112,176 vehicles in 2019235 . Adoption of EVs for expect to see consolidation among some of the commercial usage, supported by a clean energy incumbents before they become acquisition Impact Investments falling under this IOA are likely to benefit stakeholders (IMP classification B), given that 238 mix and optimized charging patterns, will help in targets for the likes of Ola or Uber . However, management: such business models yield an important and intended outcome that can offer clean, efficient and reducing emissions, improving air quality and for any exit to materialize, these startups will economical transportation solutions, while also lowering carbon footprint of India benefiting human health. have to prove their ability through the use of differentiated technology and validation Source: UNDP research for India Investor Map GoI plans to electrify all 2-wheelers up to 150cc through revenues. electric by 2025, which would contribute 90 percent236 of the total two-wheeler market in Given its strong potential to meet India's India. Since 2-wheelers consume approximately development need, favourable policy 60-65 percent of total petrol available, adoption momentum and significant private sector of EV-based 2-wheelers would help in reducing interest, EVs for service industry is a key IOA. India's crude oil import burden. Moreover, since running cost associated with EVs is lower than that of their petrol, diesel or Compressed Natural

101 102 SDG Investor Map Report for India-2020

1.7.4. Innovative solutions to ensure As per experts, WSH projects would lead to Economic At a tariff rate of Rs 2.5 per unit and with a wind solar mix of 50:50, the IRR for a wind-solar hybrid project round- the-clock energy generation, savings in capital cost (about 7-10 percent243 in factors: is estimated to be higher by about 60-70 bps against a standalone wind or solar power project, with other things like funding structure, cost of debt, power purchase agreement terms and operation and reducing variability in renewable power capital investments in comparison to standalone maintenance cost remaining same generation and achieving better grid stability solar/wind projects) with improved utilization of Such projects generally have an operating life of approximately 25 years based on PPAs issued common infrastructure such as land, approach WSH systems provide round-the-clock power roads and evacuation infrastructure, and thus solutions since the batteries connected to them Enabling The vertical has a strong partner environment with significant interest from commercial investors and improve the returns for the developers. can efficiently store energy and provide a backup factors: private corporations Furthermore, WSH assets are expected to at the time of an electricity outage, or during the 'National Wind-Solar Hybrid Policy’, introduced by MNRE in 2018, aims at optimizing and improving the operate at higher debt coverage metrics efficacy of the usage of transmission infrastructure and land, which in turn will mitigate inconsistencies night. The potential reduction in energy from a (compared to a standalone wind or solar plant), associated with generation of renewable power and help in attaining better grid stability. Apart from WSH power plant is likely to be in the range of achieve savings in operating cost and incur a that, the policy will also stimulate the development of solutions and technological advancements in the 2-3 percent239 below the cumulative level of field of WSH power generation lower cost for complying with the forecasting energy from independent solar and wind farms and scheduling regulations, which would further of similar capacities. Individually, the average Low ceiling tariffs of 2.7 per unit set by Solar Energy Corporation of India (SECI); expectation of a boost the returns for the developers. Thus, the Risk Plant Load Factor (PLF) of a wind plant is 28 factors: minimum 38% combined utilization factor (CUF) in the tenders; and lack of good sites are among the estimated IRR for a WSH plant is estimated to be percent, while that of a solar plant is 18.7 reasons impacting hybrid projects higher by ~10 percent244 , compared to percent240 . Thus, PLF of a WSH plant is ~41.8 As per Investment Information and Credit Rating Agency of India (ICRA), hybrid projects would face standalone wind or solar power project (IRRs for challenges related to selection of sites suitable for both wind and solar power generation, availability of percent241 . Moreover, hybridization of wind and solar and wind projects are estimated to be adequate transmission infrastructure, technical challenges in integrating the two generation sources and solar assets is likely to lower the capital cost by 5-7 setting up systems to manage the generation from wind and solar resources between 9 and 11 percent245 ), with other factors percent242 in comparison to the cost of standalone (like funding structure, cost of debt, power wind and solar assets, thus improving the returns purchase agreement terms and operation and Impact Investments falling under this IOA are likely to act to avoid harm (IMP classification A), given that for the developers. management: outcome is likely to be positive because projects can generate power for 24 hours, resulting higher PLFs maintenance cost) remaining the same. Such and higher returns for developers 'National Wind-Solar Hybrid Policy', introduced projects generally have an operating life of by the MNRE in 2018, aims at optimizing and approximately 25 years based on Power Source: UNDP research for India Investor Map improving the efficacy of the usage of Purchase Agreements (PPAs) issued. Although a transmission infrastructure and land, which in number of corporations have invested in this turn will mitigate inconsistencies associated space, they are yet to achieve profitability. Given with the generation of renewable power and its strong potential to meet India's development 1.8. Renewable Energy White Spaces installing a floating solar project is higher than help in attaining better grid stability. Apart need, favourable policy momentum and Deep Dive that of a ground-mounted solar project, from that, the policy will also stimulate the significant private sector interest, WSH projects is additional generation from a floating solar development of solutions and technological a key IOA. 1.8.1. Innovative solutions for resolving project will make the levelized cost of both advancements in the field of WSH limited land-bank issues which impact the comparable. power generation. solar industry GoI plans to develop 10 GW of floating solar Typically, solar farms require 4-5 times more land capacity in the country by 2021248 . Experts believe than a traditional power generation facility246 . 1.7.4. Innovative solutions to ensure round-the-clock energy generation, reducing variability in renewable power that India has the potential to set up 300 GW of generation and achieving better grid stability - Market Insights While it is difficult to resolve fragmented land floating solar projects by utilizing only 10-15 ownership and cost-compensation issues, most percent of water bodies in states such as Kerala, Investors can focus on companies engaged in operating Wind-Solar Hybrid projects or in hybridization of water bodies are owned by utilities and 249 Overview: Assam, Odisha and West Bengal . Although existing solar and wind plants. Such projects would offer round-the-clock energy production, while also governments. Thus, floating solar projects, which some players have invested in this space, models increasing the PLF involve installing solar panels on floating are still in an experimental stage with few structures on a water body, can offer an efficient tenders issued by GoI. A typical WSH project can be operated at a higher PLF and lower capital cost, thus offering higher returns Need case: solution to the land acquisition issue which to investors 247 Given its strong potential to meet India's plagues our country. As per experts , building This IOA could contribute directly to SDG7 (Affordable and Clean Energy), particularly 7.2.1. development need and growing policy floating solar plants near existing hydropower (Renewable energy share in the total installed electricity generation) and SDG13 (Climate Action), while momentum, we expect private investment in this it contributes indirectly to SDG11 (Sustainable Cities and Communities), SDG12 (Sustainable projects can enable leveraging of existing space to pick up. Thus, Floating Solar Systems is Consumption and Production), SDG14 (Life Below Water) and SDG15 (Life on Land) infrastructure. Although Engineering, recognized as a white space. Procurement and Construction (EPC) cost for User or This IOA can benefit developers by generating better returns with round-the-clock energy generation and beneficiary: improved PLFs Environment, at large, shall benefit from greater use of renewable energy sources for power generation, leading to reduced carbon footprint

103 104 SDG Investor Map Report for India-2020

1.8.1. Innovative solutions for resolving limited land-bank issues which impact the solar industry - Market Insights 1.8.2. Charging infrastructure for Electric Vehicles - Market Insights

Investors can focus on companies engaged in ﬂoating solar plants which can help in resolving land Investors can focus on companies engaged in developing charging infrastructure or oﬀering innovative Overview: Overview: acquisition issues in the country solutions such as swappable battery models or battery disposal systems

This segment is ancillary to the EV industry Such models can help in addressing India’s land-bank issue, while achieving GoI’s target of 10 GW Need case: Need case: This IOA could contribute directly to SDG7 (Affordable and Clean Energy), particularly 7.2.1. floating solar power capacity by FY21 (Renewable energy share in the total installed electricity generation), SDG9 (Industry, Innovation This IOA could contribute directly to SDG7 (Affordable and Clean Energy), particularly 7.2.1. and Infrastructure), particularly 9.4.1. (CO2 emission per unit of value added) and SDG13 (Climate (Renewable energy share in the total installed electricity generation) and SDG13 (Climate Action), Action), while it contributes indirectly to SDG3 (Good Health and Well-Being), SDG11 (Sustainable while it contributes indirectly to SDG11 (Sustainable Cities and Communities), SDG12 (Sustainable Cities and Communities), SDG12 (Sustainable Consumption and Production), SDG14 (Life Below Consumption and Production), SDG14 (Life Below Water) and SDG15 (Life on Land) Water) and SDG15 (Life on Land)

User or This IOA can benefit developers with better level of power generation User or Adequate charging infrastructure will enable owners of EVs to operate without any untimely delays of stoppages due to battery outage beneficiary: Building floating solar plants near existing hydropower projects can enable developers leverage on beneficiary: existing infrastructure Environment shall benefit from reduction in transport-related emissions, leading to reduced carbon footprint

Risk Floats, used to set up a floating solar project, are made from high-density polyethylene (HDPE) materials Risk Although, Ministry of Power de-licensed setting up of charging infrastructure, guidelines are not clear factors: that are UV resistant. Thus, transporting such bulky floats to site is challenging factors: Battery swapping models have the potential to take away both the high upfront cost and long charging Securely anchoring and mooring the floating solar farms is difficult. For example, they need to be times, with dedicated swap stations. However, vehicle owners may have safety concerns related to the anchored in a way that can withstand weather extremities quality of battery installed and its impact on the operation of vehicle in the long-run

Impact Investments falling under this IOA are likely to contribute to solutions (IMP classification C), given that Impact Investments falling under this IOA are likely to benefit stakeholders (IMP classification B), given that management: these business models yield an important and intended outcome that can offer clean energy solutions management: such business models yield an important and intended outcome that can help in supporting the growth by addressing the land acquisition issues in India of the entire EV segment

Source: UNDP research for India Investor Map Source: UNDP research for India Investor Map

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FINANCIALS FINANCIALS Outlook. Available at: https://powerinsight.vision-media.co.in/ EnergyWorld. ETEnergyworld.com. Available at: FINANCIALS FINANCIALS rooftop-solar-pv-sector-india-overview-outlook/#:~:text=Yearly% https://energy.economictimes.indiatimes.com/news/renewable/fl 20capacity%20addition%20is%20expected oating-solar-is-a-300-gw-opportunity-for-india-mitesh-patel- FINANCIALS FINANCIALS 229. Sanjay, P. (2019). India Added 5.4 GW of Solar in 9M 2019, with 2.2 black-veatch/69585066 FINANCIALS FINANCIALS GW Installed in Q3 2019. Mercom India. Available at: 247. www.ETEnergyworld.com (n.d.). Floating solar is a 300 Gw https://mercomindia.com/india-solar-installed-q3-2019/ opportunity for India: Mitesh Patel, Black & Veatch - ET FINANCIALS 230. Distributed Energy. (n.d.). IRR Expectations from Solar Rooftop EnergyWorld. ETEnergyworld.com. Available at: Projects. Available at: https://de.energy/blog/irr-expectations- https://energy.economictimes.indiatimes.com/news/renewable/fl oating-solar-is-a-300-gw-opportunity-for-india-mitesh-patel- FINANCIALS from-solar-rooftop-projects/ FINANCIALS black-veatch/69585066 231. Asian Power. (n.d.). India on the move towards solar energy. FINANCIALS Available at: https://asian-power.com/regulation/commentary/ 248. www.ETEnergyworld.com (n.d.). Floating solar is a 300 Gw india-move-towards-solar-energy opportunity for India: Mitesh Patel, Black & Veatch - ET EnergyWorld. ETEnergyworld.com. Available at: FINANCIALS 232. Asian Power. (n.d.). India on the move towards solar energy. https://energy.economictimes.indiatimes.com/news/renewable/fl Available at: https://asian-power.com/regulation/commentary/ oating-solar-is-a-300-gw-opportunity-for-india-mitesh-patel- india-move-towards-solar-energy FINANCIALS black-veatch/69585066 233. Transport Department, Government of NCR (2020). Delhi Electric 249. www.ETEnergyworld.com (n.d.). Floating solar is a 300 Gw Vehicles Policy, 2020. Available at: https://transport.delhi.gov.in/ FINANCIALSFINANCIALS opportunity for India: Mitesh Patel, Black & Veatch - ET FINANCIALS sites/default/files/All-PDF/Delhi_Electric_Vehicles_Policy_2020.pdf. EnergyWorld. ETEnergyworld.com. Available at: 234. www.ETAuto.com (n.d.). 5,645 electric buses sanctioned for 65 https://energy.economictimes.indiatimes.com/news/renewable/fl cities: Kant - ET Auto. ETAuto.com. Available at: oating-solar-is-a-300-gw-opportunity-for-india-mitesh-patel- https://auto.economictimes.indiatimes.com/news/commercial- black-veatch/69585066 vehicle/mhcv/5645-electric-buses-sanctioned-for-65-cities- 250. www.businesswire.com. (2019). India Electric Vehicle Charging kant/70434005. Infrastructure Market Report 2019: Drivers, Restraints, 235. Statista. (n.d.). India: commercial vehicle production 2018. Opportunities, Trends, and Forecast up to 2025 - FINANCIALS Available at: https://www.statista.com/statistics/ ResearchAndMarkets.com. Available at: 318027/commercial-vehicle-production-in-india/#:~:text= https://www.businesswire.com/news/home/20190813005366/en/ This%20graph%20displays%20India%27s%20commercial India-Electric-Vehicle-Charging-Infrastructure-Market-Report 236. The New Indian Express. (n.d.). EV makeover: Scooter sharing 251. Aryan, A. (2020). Battery Swapping-Is It a Success In India? service provider Bounce gears up for next wave of change. Entrepreneur. Available at: Available at: https://www.newindianexpress.com/business/ https://www.entrepreneur.com/article/353581. FINANCIALSFINANCIALS 107 FINANCIALS FINANCIALS FINANCIALS FINANCIALS FINANCIALS FINANCIALS FINANCIALS FINANCIALS FINANCIALS FINANCIALS SDG Investor Map Report for India-2020

1.1. Sectoral development needs – Standard & Poor, titled – Financial Literacy Financials around the world254 reports that 24 percent of 253 A review of key policy documents , human the adult population in India are financially development reports and stakeholder literate255 . As the financial services sector in India consultations highlighted the most pressing becomes increasingly more competitive to offer sectoral development needs as the following: financial products to underserved populations, 1.1.1. Financial literacy there is a need to further improve financial and digital literacy outcomes to not only ensure the Information asymmetries in understanding uptake of these services but also to help new financial concepts hinders consumers to fully consumers make the best use of these services engage with financial products in an informed as per their needs. manner. A recent study by a global rating agency

Chart 9: Variation in Financial Literacy Around the World

80% 80%

60% 60%

40% 40%

20% 20% 1. Sector overview South Africa China Russian Federation Canada France Germany Italy Japan United Kingdom United States Brazil India inancial Inclusion is a key enabler of the 2030 SDG developmental goals where it is featured 0% 0% as a target in 8 of the 17 goals252 . India has also made significant advancements in the space Major advanced economies Major emerging economies of financial inclusion. The roll out of Pradhan Mantri Jan Dhan Yojana (PMJDY), a GoI scheme F Source: https://gflec.org/wp-content/uploads/2015/11/3313-Finlit_Report_FINAL-5.11.16.pdf?x38887 to provide universal access to bank accounts in India, has played a pivotal role in creating a gateway to accessing formal financial services. By 2017, 80 percent of Indians had at least a Basic Savings Basic Deposits Accounts (BSBDA). Since the roll out of the scheme, parallel efforts such as roll out of a universal, biometric-based unique identification system – Aadhar, bolstering of 1.1.2. Adoption of formal banking may nudge higher levels of engagement with payments infrastructure to enable digital transactions through Unified Payments Interface (UPI), services (SDG 8) formal bank accounts. The challenge now is to ensure regular use of these accounts, by helping roll out of insurance cover through Pradhan Mantri Suraksha Bima Yojana (PMSBY) and coverage GoI's, PMJDY created almost universal access to account holders bridge gaps in financial and of pension through Atal Pension Yojana (APY) have been made to offer a holistic package of bank accounts by opening 0.4 billion BSBDA, digital literacy – a key objective also resonated in services that improve socio-economic resilience of citizens. These initiatives are further scaffolded across 0.2 billion households that have mobilised RBI's National Financial Inclusion Strategy (NFIS) by a push by India's Central Bank, RBI for MSMEs, a majority of which are run by entrepreneurs in close to ~USD 17.6 billion in deposits as of 2019-24. Besides, generally most transactions low resource settings to access credit through commercial banking entities to bolster job creation September 2020256 . The scheme has ensured that take place in cash, creating a need for a stronger and overall contribution to the growth and development of the country. The shift to digital by 2017 over 80 percent of Indians had a bank digital ecosystem where cash flows to channels for delivery and engagement provides a strong opportunity to reduce costs and improve account, a jump of almost 45 percent since 2011. households and businesses digitally, thereby depth of operations through acceptance infrastructure such as improved coverage of Automated When segmented by income poverty, 77 percent providing them with the incentive to engage with Teller Machine (ATM) infrastructure, Business Correspondent (BCs) network to handhold transition of the bottom 40 percent also had access to a digital channels for onward transactions. Greater to digital platforms and leveraging of increasing mobile penetration for Fintech solutions that bank account257 . However, as of 2018, only 43 engagement levels will help last-mile consumers enable digital transactions. The private sector can play a significant role in addressing the gaps in percent of bank account owners had made any adopt products such as insurance and pensions making formal financial services universally accessible especially in an ecosystem made deposits into or withdrawals from their bank and realise the goals of the PMJDY scheme. favourable by a strong policy and regulatory momentum in India. accounts258 . Developments such as cash transfers by GoI through PMJDY accounts for COVID relief

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Chart 10: Account ownership with a bank or a mobile money service provider Figure 19: Total credit supply to Micro, Small and Medium Enterprises in India by source (percent of the population, age 15+) - India and peers compared as of 2017

Total Supply of Debt to MSMEs ( USD 1.1 trillion)

Formal Sources Informal Sources (USD 168 billion) (USD 898 billion) 94.80%

79.80% 80.20% 68.50% 68.50% Scheduled Commercial NBFCs Other Banks Government Institutions Banks (USD 139.6 billion) (USD 23.8 billion) (USD 8.89 billion) (USD 0.63 billion)

Regional Rural Small Industries Public Sector Banks Banks (RRBs) Development (USD 85.7 billion) (USD 1.75 billion) Bank of India (SIDBI) 30.70% (USD 0.16 billion)

Private Sector Banks Urban Cooperative State Financial (USD 49.2 billion) Banks (UCBs) Corporations (SFCs) (USD 7.14 billion) (USD 0.47 billion)

Foreign Banks (USD 4.76 billion)

World India Brazil Rep. of Korea China Vietnam Source: Financing India's MSMEs: Estimation of debt requirement of MSMEs in India https://www.intellecap.com/wp-content/uploads/2019/04/Financing-Indias-MSMEs-Estimation-of-Debt-Requireme-nt-of-MSMEs-in_India.pdf

Source: data.worldbank.org

1.1.3. Access to credit (SDG 9) imbalances. However, access to affordable 1.1.4. Digital payments infrastructure for the upon transparent and affordable channels for finance has been a concern for the sector261 . The underserved, rural population (SDG 8) remittances. Some business models in the Contribution of MSMEs to India's GDP is 29.7 informal nature of MSMEs coupled with lack of fintech/payments space appear to have percent259 as of 2019 and the share of MSME The 2016 Financial Inclusion Insights survey documentation regarding their cash flows, credit struggled because their services do not meet the related products in total export from India during found that only 30 percent of the Indian histories and governance, leads to hesitation on differentiated needs of Indian populations, 2018-19 is 48.10 percent260 . According to the population was digitally financially included and part of formal financing institutions to optimally particularly with the vernacular market National Sample Survey (NSS), 73rd round were able to access their accounts through 266 serve the sector with credit262 . The addressable remaining largely underserved. conducted during the period 2015-16, MSME electronic means such as debit and credit cards, credit gap to the sector has grown at a CAGR of 264 sector has been creating 111 million jobs across electronic money transfers, or mobile phones. 1.1.5. Access points for banking transactions 37 percent to USD 397 billion. As a result, over 84 rural and urban areas in the country, thereby Moreover, PMJDY facilitated bank accounts also (SDG 8) percent of total demand for credit for MSMEs is share a close link with GoI's Direct Benefit playing a crucial role in employment generation 263 One of the reasons for low engagement with the serviced through informal sources . Transfer *(DBT) mission that hopes to reduce and reducing regional, social and economic formal banking system is the low penetration of leakages in BoP segments' access to subsidies as banking infrastructure. As seen in Chart 11, India well as provide a primary use case for bank has only 14 bank branches per 100,000 account usage.265 There is an opportunity for population totalling to 120,000 branches across more innovation to create payment solutions the country of which only 30 percent are in rural and products that are suited to the BoP segment, areas.267 In contrast, two-thirds of the Indian many of whom are first time users. This includes population reside in rural areas. Additionally, domestic migrants that are heavily dependent

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although the number of ATMs has been about 30 need to deploy more ATMs, particularly in Tier III 1.1.6. Penetration of products to build socio- crisis and its impact on capital markets and percent YoY growth in the number deployed in to Tier VI areas of the country268 . Infrastructure economic resilience269 (SDG 1, SDG 3) businesses across, banks and NBFCs will face the country since 2008, ATM penetration on a such as micro-ATMs facilitated through BCs that clients who are potentially experiencing stressed Over 80 percent of the Indian workforce is per capita basis continues to be lower in can help handhold the engagement have also financial conditions, including deterioration of employed in the informal sector and have limited comparison to other countries (Chart 12). As 71 proved to be useful in increasing usage and their credit ratings and credit quality. There is or no social protection measures in place. percent of transactions at the point of sale (POS) adoption of formal banking services. also a high potential for current loans turning Financial products like insurance and pensions are still done through cash in India, there is a into NPAs274 . are crucial for helping them build socio- economic resilience, and mitigate the impacts of However, the crisis has proven to be an financial emergencies, more so for individuals opportunity for Fintech apps. These have seen a Chart 11: Commercial bank branches per 100,000 adults - India and peers compared as of 2018 and households in low resource settings that surge in consumers using digital payment apps have limited means for recourse in the event of for transactions since the lockdown began in socio-economic shocks. As of 2018, the life India. UPI, an instant real-time payment system insurance penetration in India was at only 2.74 operated by the National Payments Corporation 20 18.9 percent and the coverage of non-life insurance of India (NPCI), processed 1.23 billion 15.4 was even lower at 0.97 percent for the same transactions worth ~USD 33 billion in June 2020 14.5 period.270 In addition, only 24 percent of the alone, the highest value recorded by the channel 15 population in the pensionable age are covered in a month. 11.5 under pension in India. Though the APY accounts 10.2 have helped cover over 17 million members of 1.2. Policy momentum 8.8 10 the BoP workforce, it is still gaining traction, with Financial Inclusion is listed as one of the key 50 percent of the accounts having recorded growth drivers for the Indian economy in NITI 271 transactions in the last year. Aayog's Strategy for New India @ 75. In addition, 3.9 the 2020 Voluntary National Review submitted by 5 1.1.7. Unequal access to finance by women entrepreneurs NITI Aayog towards India's commitment and progress on SDG goals has noted financial India currently ranks 70th in the Female inclusion to be an important performance 0 Entrepreneurship Index and demonstrates the indicator to drive commitments made by India third-highest gender gap in entrepreneurship across SDGs to foster social protection and World India Brazil Rep. of Korea China Malaysia Vietnam across the world. A key reason for this is that access to financial services. Further, RBI has Women entrepreneurs find it hard to raise launched the National Financial Inclusion finance and have limited access to financial Source: data.worldbank.org Strategy (NFIS) 2019-24 to follow a target-based services, despite evidence suggesting that approach to achieve financial inclusion objectives women-owned enterprises are profitable for India with a key focus on last-mile delivery of segments that demonstrate greater brand services. Chart 12: ATMs per 100,000 adults - India and peer countries compared as of 2018 loyalty, higher savings percentages and similar repayment rates as male-owned enterprises. Strategy for New India @ 75 prioritizes banking 273 for the unbanked through universal access to 300 1.1.8. Impact of COVID-19 bank accounts and digital payment services, securing the unsecured populations through 250 The broad-based loss of cash flows due to the COVID containment measures has triggered a insurance and asset diversification and better 200 chain of non-payments throughout the economy, access to credit at affordable prices for those 150 105 97 including to the financial sector272 . Uncertainty that are presently excluded as the key objectives under its financial inclusion mandate. To 100 40 47 around future income due to the spread of the 21.7 25 pandemic including unpredictability around its actualize the GoI's vision to further financial 50 decline and lowering of purchasing power of inclusion, the government and RBI have taken 0 customers further endangers the MSMEs to steps to foster innovation by leveraging the Category 1 smoothly ride out the pandemic. According to a growing access to internet and mobile phone World India Brazil Rep. of Korea China Malaysia Vietnam survey conducted by Microsave Consulting in usage, improve access to formal banking June 2020, nearly 75 percent of MSMEs have services, create opportunities for private sector reported a loss in income273 . Given the current participation, and provide regulatory guidelines Source: data.worldbank.org

113 114 for improved access to such services in rural concentrated in NBFCs. The MSME debt demand Bottlenecks for private sector areas. In addition, RBI has also issued licenses is expected to almost double in the next five and regulatory guidelines for various banking years and presents a significant opportunity as investments in the Financials sector entities with distinct functions to cater to credit this demand remains largely unaddressed. and liability needs of customers with a focus on Multiple lending entities including banks, NBFCs, For MSMEs financial inclusion. Such entities are NBFC, MFIs, fintech firms and e-commerce players are trying Small Finance Banks (SFBs), Payment Banks, to tap into this new opportunity which is likely to 275 Growth related challenges for MSMEs RRBs, Fintech companies for furthering digital gain investor traction in the future . Together financial inclusion, among others. Insurance with VC deals made in the NBFC sector, the total MSMEs often find it difficult to achieve economies of scale and fail to capture Regulatory and Development Authority of India investments made in the space stood at USD 9.1 market opportunities which require large production facilities. Their weak (IRDAI), the insurance regulator for India has also billion for 2019, up by 20 percent from 2018. In 01 governance structures further hinder the internalisation of functions such as committed to promoting innovations in 2019, a total of 188 PE/VC deals were made in market research, technology innovation and market intelligence. The sector is also designing need-based policies and laying down the financial services sector, highest recorded for vulnerable to market and economic fluctuations since MSMEs are not scaffolded regulatory obligations to ensure policyholder any sector276 . by protection measures such as insurance. protection. Fintech continues to be the largest cross-sector Challenges in credit assessment of MSMEs A list of key policy initiatives driving the growth of technology segment in India for PE investments, 94 percent of MSMEs are not registered with the government278 and lack the Financials (financial inclusion) sector in India is both in terms of deal value and volume, adequate paperwork, digital trail and credit history to access formal financial available in Annexure II. substantially growing from USD 0.7 billion (49 02 services. This makes financial service providers hesitant to lend optimally to deals) in 2018 to USD 2.4 billion investments (83 these businesses and to manage the anticipated high-risk profiles of MSMEs. 1.3. Private sector participation deals) in 2019. The key sub-segments within the Further, Credit Information Companies have also found it challenging to gather Fintech space that have drawn most investments Recent investment trends in the BFSI sector have the data needed to establish the creditworthiness of SMEs279 though they have are payments, lending followed by Insurtech and been marked by deals in banks as well as NBFCs been largely successful in covering micro-enterprises that access loans from wealth management in order of deal volumes. that continue to draw significant investor microfinance institutions. interest. NBFCs have created a strong business Investments in payments and lending case for segments that are either inaccessible or companies, together account for nearly 80 Challenges in equity investments percent of total investment in fintech in 2019. unattractive for traditional banks and MSME 03 Due to challenges around governance structures, business plans, risk mitigation lending continues to be a significant opportunity Return multiples on PE exits have, on the whole, seen an upward trend for the BFSI sector measures, particularly for micro and small enterprises, investors do not find the to meet the large unaddressed debt demand. segment attractive for equity investments. Smaller investment size per Overall, in the last five years, BFSI, among other averaging at 3.8, greater by 0.3 points on the overall cross-sectoral average of 3.5277 . investment drives up the transaction and management costs making such sectors have seen above-average returns and the investment models unviable. highest multiples with investments largely Challenges faced by lending companies due to regional and MSME cluster related peculiarities 04 There is a need to understand the diversity within the MSME sector and how closely they are tied to the regional socio-economic contexts. Therefore, the investment and effort required in terms of creating a differentiated and tailored product suite, that can cater to the needs of MSME business owners, can be challenging as a Kirana shop will be very different from a textile manufacturing unit in terms of their cash flows, working capital requirements and risk thresholds. There is a need to better understand the diversity in the MSME sector and create financial products that can achieve scale.

Quantum of MSME loans classiﬁed as NPA is high 05 High NPAs recorded for MSMEs is another factor that dissuades lenders in providing credit. The YoY growth of NPAs from June 2018 to June 2019 is 12 percent in MSMEs as compared to 10.8 percent in large enterprises280 . However, according to expert consultations, a positive trend is being observed among ﬁrst-time entrepreneurs who are better informed about the value of strong credit history and are less likely to default wilfully.

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For Low-Income Households Tailwinds in the Financials sector promising become part of the product basket. The use of greater flow of commercial capital alternative data has the potential to change the insurance industry by triggering changes in The bottlenecks notwithstanding, investors have High costs of underwriting for last-mile population customers' behaviour to achieve better risk- been bullish in the BFSI sector. Emerging based product pricing. Underwriting for financial products requires credit history, asset-based collateral technologies that improve digital outreach of or proof of a steady cash flow that low-income households are often not equipped financial services promise to substantially reduce 1.4. Priority subsectors 06 with. This is especially challenging for recently operational businesses, with no operational costs and policies such as universal priors that often have to work with sub-optimal credit lines, stifling their growth banking schemes and a largely amenable and Through a review of the subsectoral prospects. well-regulated sector makes for a strong case development needs and policy priorities, from an investment point of view. Initiatives such following are the key development themes that emerged as priority areas for the Financials Lack of viable models in the social protection space as creation and scaling of digital infrastructure like UPI has further strengthened the Digital sector with particular emphasis on last-mile Investors have traditionally chosen to invest only in mature insurance India story as the platform continues to record customers from underserved geographies: companies that serve the middle and high-income segments where business higher volumes of transactions with 138 percent 1. Access to credit for MSME segments for their 07 models are viable with strong commercial returns. There are challenges in 283 YoY growth since 2018 and average growth of 8 working capital needs underwriting costs for small-ticket premiums for low-income populations. percent every month since. The platform, that Though there are promising Insurtech start-ups with innovative distribution currently hosts 168 banks, offers opportunities 2. Access to equity by MSMEs for business solutions for claims management, fraud detection, customer satisfaction, for Fintech players to leverage an interoperable, growth and expansion grievance redressal, among others they are still on the fringes and yet to easy-to-use platform to move beyond urban and 3. Fintech platforms for lending and payments achieve scale. peri-urban markets to serve underserved regions services in the country. However, to make use of these Regulatory hurdles for White Label ATM Operators (WLAOs) tailwinds, the penetration of internet services 4. Asset lean banking infrastructure to provide 08 Due to cash management norms announced by RBI in 2018 that required banks and the provision of supporting infrastructure in financial services and ATM managed service providers to revamp technology including electronic currently underserved regions of the country 5. Insurance services with a primary focus on life surveillance at ATM premises, digital locks, upgrading operating systems, etc., led needs to be bolstered. To solve for challenges and health to stagnation in the growth of these business models. However, expert around assessing credit history and risk profile of consultations with investors suggested that business models in this space will MSMEs, RBI announced the establishment of a 6. Lending models with particular focus on value bounce back given RBI's push for greater ATM penetration281 , especially in Public Credit Registry (PCR) in April 2018 and is chain financing for sectors such as agriculture underserved locations. currently in the process of identifying Consultations with private sector investors, implementation partners. The PCR is envisioned Low penetration of internet services in rural areas particularly PE funds, also suggested wealth as a centralized and state-owned database that management and investment services as one of 09 Even though India offers one of the most affordable internet services across will aggregate financial and non-financial the focus sub-themes under Financials. However, the globe, the penetration of internet and data services in rural areas is only 27 information from several databases. This public most of the business models in this area, percent. Further, the availability of service is extremely fragmented with the utility platform has the potential to democratize including the growing WealthTech-based models, top 8 metros accounting for 63 percent of total internet users282 . The non- the availability of data and create a seamless are currently designed for and serve high-income uniformity of seamless data services creates hurdles for business models that onboarding experience for MSMEs by financial segments with an increasing interest in the seek to leverage technology to scale rapidly and creates a challenge for the institutions and allow service providers to assess middle-income population segments. These do usage and adoption of financial services at last mile. and manage risk thresholds for their customers not serve the low-income segments as of yet and efficiently. Fintech firms are also scaffolding their do not find the demand-side dynamics as business models using alternative data such as commercially viable. GST data, utility bills payment data, to not just assess the capacity of their customer to service a The development and policy priority themes loan but to also assess behavioural patterns to were further pressure tested with the sector determine their willingness to repay. and investment experts. Access to Credit for MSME segments, Fintech platforms for lending GoI's push for universal insurance coverage also and payment services, Asset lean infrastructure opens up opportunities for insurance players. for banking services emerged as key Coupled with growing interest on part of Fintech development needs that can be viably addressed players to move beyond urban and peri-urban by a greater flow of commercial capital in proven markets, investors believe that the time is ripe business models that are already mature or are for more complex products such as insurance to

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emerging with the potential to scale with under section 1.3 of this chapter. This subsector 1.5. Region ecosystem for the sector percent, followed by Tamil Nadu and promising returns. has been shortlisted as a white space given the Maharashtra at 8 percent287 . projected growth of business models over a 5 to Though microfinance institutions in India already Experts unanimously agree on the importance of Additionally, Remittances sent along migration 10 years horizon and with a more amenable have a presence in 615 of 739 districts, 80 Insurance products to provide social protection corridors are a promising avenue for business regulatory framework that IRDAI has percent of the total portfolio outstanding is and improve the financial resilience of customers models looking to strengthen their presence in committed to284 . accounted for by 210 districts. 11 percent of the and thereby also creating a stronger market for total loan outstanding for these institutions that the payments space. In a pre-pandemic situation, capital to flow in. However, commercially viable In alignment with SASB's SICS, the subsector include Banks, NBFCs, SFBs and not-for-profit these migration corridors contributed almost models are few and far between this subsector shortlisted for the Financials sector is Microfinance Institutions (MFIs), is constituted by ~USD 10.2 billion volume of transactions hosted owing to challenges that have been elaborated Consumer Finance. districts covered under the Aspirational Districts by Fintech companies and Payment Banks and 288 Programme, an outcomes-focused governance facilitated by BCs, with over 60 percent going to programme to improve India's most socio- Bihar and Uttar Pradesh. Odisha, Jharkhand, Figure 20: Subsector shortlist for Financials sector economically challenged districts285 . The Tamil Nadu and Andhra Pradesh are some of the presence of these traditional models is mostly other receiving states. concentrated in certain pockets within a State Alignment to development needs and policy priorities and subsequently within the district. Cost of operations, market dynamics, high-risk profiles in Chart 13: Major Fintech Clusters in India High Medium Low regions with limited economic activity, lack of key Shortlisted (subsectors mentioned (subsectors not (subsectors highlighted infrastructure may bar these institutions from subsectors as ‘top’ priorities by as ‘priority’ by mentioned by development development experts) development experts) sector experts) going deeper. For example, Tamil Nadu's share of total portfolio outstanding is 15 percent, the highest for any State in India. Yet, most of the Conducive for Subsector: Subsector: CONSUMER Subsector: CONSUMER CONSUMER FINANCE FINANCE FINANCE banking/microfinance activity is in only 10 private sector MSME financing Asset lean banking WealthTech platforms to districts of the 38 in the State286 . participation through digital and infrastructure for last- transform traditional offline models- CO mile outreach wealth and investment (subsectors Fintech platforms for - WLAOs, POS management services Fintech platforms have the potential to bridge New Delhi differentiated financial with PE infrastructure the geographical gap in reaching the last mile, Gurugram 196 products to last-mile - Agent Network 116 investments) customers Management (ANM) underserved regions, by leveraging the growing mobile phone penetration and data connectivity to create need-based products and low cost, Significant Subsector: INSURANCE Subsector: SOLAR affordable channels for delivery. However, most barriers to Digital and offline TECHNOLOGY & PROJECT of the Fintech companies are headquartered in affordable insurance DEVELOPERS scale (subsector products Manufacture of solar metro cities and struggle to run efficient Mumbai 428 Hyderabad with commercial Subsector: PENSION utility products assessments to optimally serve clients at the last Fintech Hub 125 bottlenecks to Digital and offline pension Trading/supply of solar Fintech Valley - Vizag products energy- based products to mile. Collaborative business models where investment) last- mile consumers Fintech companies tie up with NBFCs and

Private investor interest ANM companies (BCs) to take products/delivery Low scope for Subsector: CONSUMER channels to an already captive market is one commercial FINANCE Fintech platforms for value of the options for exponential scale and Bengaluru investor chain financing for sectors 432 participation like Agriculture, Clean depth of outreach. (subsectors with energy It is also important to note the presence of regulatory barriers) manufacturing and service clusters where Map not to scale financial service providers can focus their Number of Fintech startups Source: UNDP Investor Map research attention and cater to the MSME sector. The Fintech hubs state of Uttar Pradesh has the largest number of estimated MSMEs with a share of 14.20 percent of the total MSMEs in the country. West Bengal Source: Invest India comes as a close second with a share of 14 https://www.investindia.gov.in/sector/bfsi-fintech-financial-services

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Also, RBI has issued guidelines for different base branch, ordinarily, should not exceed 15 km banking entities and financial service providers in rural, semi-urban and urban areas and 5 km in SDGs impacted to prioritize regions for operations. For example. metropolitan centres. Guidelines for NBFC, MFIs, WLAOs are encouraged to enhance the spread of SFBs and Payment Banks have also been issued ATMs in semi-urban and rural areas, specifically by RBI and are available on the central bank's in Tier III to Tier VI areas, where bank-owned ATM website. network was not growing289 . Similarly, guidelines (State-wise SDG Maps and Indicators are issued in 2008 stipulates that the distance documented in Annexure IV) between the place of business of a BC and the Sources:

1. IFC (2018). Financing India's MSMEs: Estimation of Debt Requirement of MSMEs in India. Available at: https://www.intellecap.com/wp- 1.6. Investment Opportunity Areas - Overview content/uploads/2019/04/Financing-Indias-MSMEs-Estimation-of-Debt-Requireme-nt-of-MSMEs-in_India.pdf. 2. SME Finance Forum. (2018). MSME Finance Gap. Available at: https://www.smefinanceforum.org/data-sites/msme-finance-gap Figure 21: Investment Opportunity Areas shortlist for Financials Sector 3. Ken Research (2018). Bullion Management Market India, Cash Circulation Trend India, Importance of Cash India, Impact of Demonetization India, ATM Security Market India, Number of ATM Transactions India, India Cash Management Services, India Cash Management Services Market Value. Available at: https://www.kenresearch.com/blog/2018/09/india-atm-cash-management-services-market-is-expected-to-reach-over-inr-4100-crore-by- Subsector Consumer Finance Insurance fiscal-year-ending-march-2023-ken-research/#:~:text=India%20ATM%20Cash%20Management%20Services. 4. ATM PoS. (June 2020.). ATM, Acceptance Infrastructure and Card statistics for the month of June 2020. Asset lean MSME financing Fintech platforms Digital and offline Available at: https://rbidocs.rbi.org.in/rdocs/ATM/PDFs/ATM12BAC674B07F4949B581713AFAC63691.PDF Opportunity acceptance through Fintech and facilitating payments for insurance for 5. www.investindia.gov.in. (n.d.). BFSI – Fintech & Financial Services. Available at: https://www.investindia.gov.in/sector/bfsi-fintech-financial-services. Areas infrastructure for traditional models low-income segments low-income segments 6. COVID-19 and Women Informal Sector Workers in India. (2015). Economic and Political Weekly, 55(35), pp.7–8. last-mile banking Available at: https://www.epw.in/journal/2020/35/commentary/covid-19-and-women-informal-sector-workers-india.html Investors identified 7. Bain and Company, and IVC Association. India Private Equity Report 2020.Available at: area as fundamentally ? www.bain.com/globalassets/noindex/2020/bain_report_india_private_equity_report_2020.pdf. marketable? 8. PwC (2019). Competing in a new age of insurance: How India is adopting emerging technologies. Available at: https://www.pwc.in/assets/pdfs/consulting/financial-services/competing-in-a-new-age-of-insurance.pdf. Credit gap to MSMEs in The market for ATM Market size of Fintech India stands at managed services is and alternative Scale Potential 1 expected to be at finance industry Estimated market size of medical USD 397 bn 3 5 devices industry in India is with a potential to serve USD 0.5 bn USD 92 bn 8 63.5 million MSMEs2 with a potential to with a potential to serve USD 280 bn IOAs such as 'Insurance for low-income 1.7. Financials Investment serve 0.8 billion rural 63.5 million MSMEs, 400 segments through offline and digital channels' population4 million informal workers6 Opportunity Areas Deep Dive came up as an IOA with a potential for strong Proven in-market Commercial models at Promising WLAOs have Promising models Successful, commercially development impact; the commercial viability of 1.7.1. MSME financing through digital and as evidenced scale that have attracted attracted PE have attracted PE viable models to serve last such models remains unproven. Business offline channels by investors significant PE investments investments in the investments. Average mile, underserved both for the traditional past. Investors opine deal size for Fintech customers are still models in these 'white spaces' currently face interest? The COVID-19 pandemic has posed challenges to offline and the digital that the sector will payment platforms evolving but have not significant commercial hurdles and need to online business models. rebound with push from grew by 775% CAGR reached scale the growth of MSMEs due to the shutdown of 7 develop further from a policy and business In 2019, 80% of total the central bank between 2018-19 economic activities following the lockdown deal value for PE innovation standpoint, before they attract large- investments in Fintech protocol announced in March 2020. scale commercial private investments. was towards lending Considerable efforts have been made by GoI to platforms 'MSME financing through digital and offline create a more enabling environment for MSMEs channels', 'Asset lean banking infrastructure for to access financial services including efforts to Opportunity White space: Strong scale Mature Mature Emerging potential but not successful minimize imports to encourage uptake of locally type last-mile outreach' and 'Fintech platforms for business models facilitating payment products' on the other hand, manufactured products. not only have the potential to address key ATM Managed Fintech platforms Traditional Insurance Initiatives such as Public sector banks (PSB) Emerging Debt financing for development needs but have also demonstrated MSMEs through Services to facilitate offering payment companies offering online loans in 59 minutes allows access to an business model(s) last-mile access to services to affordable life and general interest from a range of private sector investors. traditional offline online marketplace for businesses to access models and digital banking services last-mile customers insurance products for low Companies in this IOA have been able to online models ANM companies to income households loans between ~USD 1,400 and ~USD 684,000. demonstrate profitability and offer successful Digital platforms facilitate access to Insurtech companies The scheme aims to ease access to credit, reduce offering Trade financial services as offering affordable life and exits to early investors. Continued commercial Points of Service general insurance products the time taken for the loan approval process and Receivables private sector interest is expected in this 'mature Discounting System for low income households avoid opportunity costs that are involved for through digital platforms IOA'. (Please refer to Annexure III for detailed (TReDS) to facilitate businesses to create a relationship with the discounting of analysis of the shortlisting process followed to invoices and bills of banking institution. GoI has also announced arrive at the final IOAs) exchange for MSMEs monetary measures to provide MSME units with to access credit collateral and guarantee free loans to help NBFCs, MFIs servicing micro-entrepreneurs

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resume business activity and safeguard the financing as a short-term working capital 1.7.1. Micro, Small and Medium Enterprises financing through digital and offline channels - Market Insights employment of people working for these units. facility based on unpaid invoices of MSME Investors can focus on Fintech and traditional lenders that provide secured and unsecured loans to Overview: An upcoming Public Registry System that aims to clients/customers connecting borrowers with MSMEs for their business, working capital, growth and expansion needs democratize data sharing between different lenders. Experts believe that building credit financial entities, the regulator, as well as assessment and collection processes will 63 million MSMEs in India contribute significantly to India’s GDP, total exports and provide over 111 million businesses and individual customers seeking be key to scale for the Fintech lending Need case: jobs across rural and urban areas. However, these enterprises are financially constrained with 84% of financial products, is also being facilitated by the business models MSMEs turn to informal sources for credit central bank. To innovate access to finance for • Cluster financing models Access to credit is compromised because businesses in this segment are not formally registered, lack of MSMEs, RBI has also issued TReDS licenses to documentation regarding their cash flows, credit histories and governance structures three private sector companies to create an Cluster-based approach to lending provides a Investment in this IOA can contribute directly to SDG 1, SDG 8, SDG 9 and indirectly to SDG 2, SDG 3, SDG online marketplace to match financiers with full-service approach to cater to the diverse 5, SDG 10 and SDG 17 businesses for the financing of business needs of MSME business unit operating in a receivables of MSMEs291 . However, most of these particular region and within a distinct, well- User or MSMEs that face challenges to establish their credit-worthiness and access formal line of credit at affordable interest rates initiatives are applicable for MSMEs that are defined business cluster. Financial service beneficiary: Low-income/middle-income households that draw their primary income from MSME enterprises registered with GoI and are GST compliant. 99.8 providers have been using this approach to percent of MSMEs that primarily lie in the micro identify clusters and organize them by similar Economic Credit gap to MSMEs stands at USD 397 billion as of 2020 with a potential to service over 63 million segment remain outside the ambit of such data points that allow for predictability around factors: MSME units initiatives and according to expert consultations, businesses' capacity to service debt, risk Examples of exit activity in this space have shown IRRs upwards of 50%. Investments in this space have are catered to by microfinance institutions profiles and product needs allowing them to provided higher returns than the benchmark 20-30% the investors expect from emerging markets like India through unsecured loans. scale quickly with lower operational costs to NBFCs and SFBs have achieved scale and profitability in less than 5 years of operation in this space. Investors reach business units with similar profiles293 in Fintech models also believe that tech based, cost efficient models may also start turning in a profit as early The private sector has risen to the challenges as within 2 years of setting up operations faced by MSMEs, utilizing the progressive policy • Traditional microfinance models and regulatory environment to innovate models Enabling Lending to MSMEs is covered under PSL norms allowing NBFCs and Fintechs to secure low-priced debt Using the Joint Liability Group (JLG) model, the to combat them. Some of the interesting factors: from banks MFI sector currently services 32.2 million RBI has released an ‘enabling framework for regulatory sandbox’ for Fintechs and other financial business models that were highlighted customers that are primarily from the micro institutions to test digital financial service innovations during consultations with sector experts and and small enterprise segments. NBFCs The vertical has a strong partner environment with participation from commercial investors, impact investors are: operating in this space have a proven, at-scale investors and foundations • Fintech lending models business model and have gradually moved from attracting capital from impact investors Risk Low availability of reliable data to determine credit-worthiness of MSMEs and lack of collateral can Also called Alternative Lending models, factors: hinder optimal supply of credit for their business needs to large capturing PE funds. Investments in Fintechs operating in the lending space cross- Fintech models for credit assessment and underwriting could lead to a typecasting customer profiles lending platforms, SFBs and NBFC-MFIs have sell by partnering with a licensed commercial potentially pushing out certain customer segments seen successful exits within a 5 years' bank or with a NBFC though some are also Information asymmetries and low financial literacy, especially among low income segments that might timeframe. Consultations with experts lead to frauds, data leakages applying for NBFC licenses. These companies suggested that if these traditional MFI models leverage technology to utilize alternative data were to transition to Fintech based models, Impact Investments falling under this IOA are likely to contribute to solutions (IMP classification C), as the such as GST that allows an insight into management: outcome is likely to be positive and intended as access to credit for income generating activities for they will have a strong competitive edge due business parameters such as inputs, value, underserved consumers builds financial resilience of households and businesses to the in-depth experience and understanding place of business, amount of taxes levied to of low-income segments derive information about business book size, Source: UNDP research for India Investor Map assess financial risk appetites and gauge Therefore, MSME financing through digital and capacity to service further debt obligations292 . offline channels has been shortlisted as a key Using such alternative data allows Fintechs to Investment Opportunity Area 1.7.2. Fintech platforms for facilitating norms that followed the spread of the COVID-19 service high-risk profiles and provide payment transactions pandemic. By the end of August 2020, 168 banks unsecured loans with low or zero collateral. were part of the UPI network with transactions of Strengthening the payment infrastructure is one Fintech lenders are also offering invoice ~USD 39.7 billion and the volume of transactions of the key performance metrics that has been set at ~USD 1.6 billion295 . These include Payment out in the NFIS 2019-24294 . Even though at the Banks, a new class of banking institution licensed point of sale, cash remains a dominant mode of by RBI in 2014, to provide payments/remittance transaction, payments through digital modes services to migrant labour workforce, low- have picked up pace – first post demonetization income households, small businesses, other and more recently due to social distancing

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unorganised sector entities and users. India is troubleshooting and in case of customers with Economic The market size for Fintech industry is estimated to reach USD 92 billion by 2021 forecasted to see the fastest growth in digital low digital literacy-handholding, are becoming factors: There are fewer PE exits in this space as most of the players are new entrants. However, exit activity for this payments transaction value between 2019 and important parts of seamless payment IOA show that investors have realised returns of 27X. Investments in this space have provided higher returns than the benchmark 20-30% the investors expect from emerging markets like India 2023 with a CAGR of 20.2 percent ahead of China experience. Experts believe that the rise of Fintech payment platforms have shown to return a profit between 5 to 10 years and the United States296 . Increased digital alternative distribution and marketing channels payments transactions, especially among the for awareness and lead generation, engaging Enabling Under ‘Startup India’ initiative, any startup that has been incorporated after April 1, 2016 can get a 100% newly banked PMJDY beneficiaries can also lead customers through gamification techniques in a factors: tax rebate on its profits for a total period of 3 years within a block of 10 years to augmentation of their digital financial collaborative environment leading to better RBI has released an ‘enabling framework for regulatory sandbox’ for Fintechs and other financial footprint, allowing for them to access more customer experience and reflecting on client institutions to test digital financial service innovations complex financial products like credit, insurance, retention are going to be main drivers for The vertical has a strong partner environment with participation from commercial, impact investors and among others. Another important use case for Fintechs in the payment space297 . Industry foundations digital payments infrastructure is remittances. experts also believe that there is greater India's internal remittances transactions are business viability in the B2B segment. Risk Inability of payment platforms to create vernacular interface will limit their market to English and Hindi factors: speaking consumer base and limit scale to underserved populations estimated to be in the volume of ~USD 10.2 One of the major contributing factors to the Fintech payment platforms are still a very urban/peri-urban phenomena and due to supply side billion annually hosted by Fintech companies exponential growth of digital payments in India is information asymmetries, potential to impact at last mile may still not be locked in as part of the and Payment Banks and facilitated by BCs. business model the huge inflow of funds from a diverse set of Information asymmetries and low financial literacy, especially among low-income segments that might GoI has made significant advances to push for domestic and international stakeholders. Some lead to frauds, data leakages digital payments and to encourage adoption of of the largest wallet players have received platforms such as National Electronic Funds funding from American and Japanese Impact Investments falling under this IOA are likely to benefit the stakeholders (IMP classification B), the Transfer and Real Time Gross Settlement System corporations, looking to diversify their portfolio management: outcome is likely to be positive and intended for business models that are concertedly building solutions facilities that are offered ubiquitously with and establish a foothold in the Indian payments particularly for low income and vernacular populations to use payment solutions, thereby including them in the folds of formal financial services savings bank accounts. The launch of UPI, Bharat space. Similar investment activity has also been Quick Response (QR) code and Aadhar-enabled observed in the VC space, both domestic and Source: UNDP research for India Investor Map Payment System (AePS) by NPCI has resulted in international. In 2019, PE deals for the Fintech the roll-out of interoperable payment services space amounted to USD 1.45 billion of which 1.7.3. Asset lean acceptance infrastructure for Payment operators. WLAOs have played a amongst Fintechs and incumbent institutions, USD 70 million was in the payments sub- last-mile banking connectivity significant role in taking the ATM leading to greater usage of digital payments segment298 . With many citing returns of upwards infrastructure to the last mile with 47 percent across merchants and customers. of 25x. The investment timeframe for payment To bridge the divide between uptake, usage and of total deployments made in rural areas models is short to medium term. adoption of financial services, acceptance Fintech startups are competitively looking for compared to 9 percent by Private Banks and infrastructure that allows for easy access to such gaps in the ecosystem that can be addressed by Therefore, Fintech platforms for facilitating 20 percent by Public Sector Banks. After a dip services is important. Under this IOA, two key using innovative tech-based solutions such as big payment transactions has been shortlisted as in deployments between 2017-20 due to RBI business models have been highlighted: data analytics, artificial intelligence, blockchain, a key IOA. mandated technical upgrades that pushed the Internet of Things (IoT) and real-time payments. • ATM managed services: Cash dominates the cost of setting up ATMs by almost 15 percent, Support services to address client grievances, mode of transactions in India. Ease and ability the sector is set to revive after the central to withdraw cash from bank accounts at a bank took cognizance of challenges faced and

1.7.2. Fintech platforms for facilitating payment transactions - Market Insights time and place of the account holder's choice has set up a committee to review deployment give more confidence to the customer to keep norms for WLAOs in June 2020299 . Besides, RBI Investors can focus on Fintech companies offering mobile-based payment solutions that can help Overview: cash in bank accounts and allow for greater has also eased business guidelines for WLAOs, businesses and individuals in underserved regions and from low-income segments that engage with circulation of cash through formal banking allowing companies that manage these digital financial services to bridge gaps caused due to the absence of formal banking infrastructure channels. However, ATM deployment, machines to source cash directly from the particularly in rural and peri-urban areas central bank, offer non-bank services like bill India has over 100 million internal migrants and distinct migration corridors. Strengthening digital Need case: payment systems will provide a safe, transparent channel for processing high volumes of domestic continues to be low. Outsourcing of ATM payments and advertise non-financial remittances estimated to be ~USD 10.2 billion annually services by commercial banks to WLAOs has products in their premises, increasing the 300 MSMEs stand to manage their income and expenditures by using transaction accounts through payment helped expand banking network beyond revenue earning scope for these companies . platforms, thus, offering them freedom to make a choice about place and time for transactions urban and peri-urban areas. RBI granted Companies are also considering setting up Investment in this IOA can contribute directly to SDG 1, SDG 8 and indirectly to SDG 2, SDG 3, SDG 5, SDG licenses in 2012 for non-bank entities to set of 'recycler' machines that accept deposits 9, SDG 10 and SDG 17 up ATMs to plug in a key gap in the access to as well as dispense cash thereby according the financial services value chain and also to the status of a virtual bank branch User or Rural migrant workers who require affordable, transparent and safe remittance solutions to send and beneficiary: receive money allowed for interoperability provided by the to ATMs, further augmented by the Small business owners who can use affordable payment platforms for conducting their business authorized shared ATM network/Card interoperability of these machines. Currently, transactions in a safe and transparent manner 125 126 SDG Investor Map Report for India-2020

14.6 percent of the total ATMs in India are in literacy to conduct financial transactions. With Economic ANM service providers who are also in the lending business returned a profit in 5 years like most the recycler segment301 . the advent of AePS, micro-ATMs as acceptance factors: successful NBFCs infrastructure has recorded a growth of 150 WLAO is a capex heavy business and with value-added services and strategic spread of operations in Investment timeframe for companies in the urban and rural areas, can return a profit in 5-10 years. Investors opine that the exit barriers for WLAO percent since 2016302 . The biometric acceptance infrastructure space is short to model are high authentication provides safety, transparency medium term. There have been no significant that it reduces risks around leakages and exits for the ATM managed services business Enabling RBI has eased business guidelines for WLAOs allowing them to source cash directly from the central frauds and the proximity to the nearest BC factors: bank, offer non-bank services like bill payments and advertise non-financial products on their premises, models but experts anticipate a return of 15- agent offers easy access. ANM also plays an increasing the revenue earning scope for these companies 20 percent on investments made. In addition, important role in transitioning customers to BC Registry has been set up by Indian Banks’ Association to offer a BC certification course and to offer consultations also suggested that ATM capacity building to prospective BCs digital platforms by encouraging customers to Management Services is a CAPEX heavy gain knowledge and comfort with the uses business model requiring significant upfront and potential of digital finance platforms. The Risk WLAO is a capex intensive business. Frequent changes in regulations, especially with respect to investments. To fulfil the financial inclusion technology upgrades may impact profitability and expansion plans for the businesses in this segment BC channel backed by the AePS infrastructure factors: mandate, WLAO must maintain outreach in Absence of regulations to license White Label Agent Networks to operate restricts the mapping of BCs to recorded the highest number of transactions rural areas where transaction amount and a single bank reducing their options for better revenues among all the payment platforms as GoI frequency is limited and the costs of which is Information asymmetries and low financial literacy, especially among low-income segments that might routed relief fund through this channel during lead to frauds, data leakages while using ATMs and other digital financial infrastructure offset by ATMs installed in urban locations the pandemic303 . The ANM Companies with higher customer engagement. operating in this space have also diversified Impact Investments falling under this IOA are likely to contribute to solutions (IMP classification C) and the • Agent Network Management services: into lending and offer services such as deposit management: outcome is likely to be positive and intended since the business models for providing asset lean solutions These models allow a human interface to mobilization and payments. Given their for last mile banking have the potential to greatly reduce the cost of accessing formal banking infrastructure by last-mile consumers, thereby helping them access products that can improve their onboard, assist in transactions and handhold proximity to their clients and a deep financial resilience the transition to digital channels for financial understanding of socio-economic behaviours Source: UNDP research for India Investor Map transactions. Services include the of last-mile consumers, ANM companies gain management of micro/small entrepreneurs a competitive edge and can manage their (BCs) who act as banking points for financial assets effectively. commercial banks and NBFCs. These agents Business models under this IOA have the play a pivotal role in extending financial potential to provide financial services at last 1.8. White spaces in the while having garnered significant investor services in underserved regions with limited mile without the banks having to invest in Financials sector interest, have not yet ventured into the low- banking infrastructure and also handhold operating expenditure (OPEX) heavy brick and income space due to the cost of underwriting for customers with low digital and financial 1.8.1. Life and non-life insurance for low- mortar branches. small premiums. Moreover, such companies income segments through traditional and already have a competitive room to service the Insurtech models middle income and high-income segments with 1.7.3. Asset lean acceptance infrastructure for last-mile banking connectivity - Market Insights insurance products, a space that is far from For the Financials sector, Insurance services for Acceptance infrastructure for banking like ATMs and BC networks empowered with Micro-ATMs can help saturating soon. Low acceptance for insurance Overview: rural areas particularly serving low-income reach underserved geographies with limited banking infrastructure helping low-income customers on- products, information asymmetries and segments came up as the potential for high board digital platforms for transactions, increase usage of bank accounts and resolve information infrastructure gaps that define rural markets and asymmetries. Investments can be made in WLAOs and ANM services to increase acceptance of formal development impact though the commercial underserved markets, do not offer the viable banking and create avenues for the supply of financial and non-financial products viability of such models remains unproven. From cost economics that is required for commercial a regulation perspective, insurance remains a 71% of transactions at point of sale take place in cash in India often disincentivizing consumers from investments to flow in. As a result, their offerings Need case: protected sector and 100 percent FDI is not engaging with their bank accounts are unlikely to be as competitive as what the permitted for insurance companies even though Penetration of ATMs in India is low with only 22 ATMs per 100,000 people making withdrawal and deposit government is offering through schemes like in a recent move, GoI announced an allowance of of cash challenging, especially in rural areas PMSBY, a renewable one-year accidental death- 100 percent FDI for insurance intermediaries Due to information asymmetries, low financial and digital literacy in underserved areas, people do not cum-disability cover of ~USD 2,735, offered to all engage with formal financial services in the absence of reliable and ubiquitous banking infrastructure and such as insurance brokerage firms, web the bank account holders in the age group of 18- handholding support aggregators, corporate agents and insurance 70 years for a premium as low as ~USD 0.16 per Investment in this IOA can contribute directly to SDG 1, SDG 8 and indirectly to SDG 2, SDG 3, SDG 5, surveyors, among others. This move is slated to annum. In addition, for specific non-life SDG 9, SDG 10 and SDG 17 boost investments by bringing in international insurance products like health insurance, the best practices for product sales and increasing User or Low-income populations in low resource settings with limited access to financial information services fragmented healthcare infrastructure, especially distribution networks in locations beyond Tier I beneficiary: and accessible banking infrastructure in rural regions does not inspire confidence to Small businesses who have the opportunity to add an additional source of revenue/income by becoming cities which can otherwise be fairly capital 304 service claims efficiently. Availability of data to Business Correspondents for financial service providers or leasing out real estate for setting up ATM intensive . Pure play insurance companies, infrastructure assess risk profiles of customers with

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fragmented Know Your Customer (KYC) further insurance players to join forces either through Sources: makes the space unamenable at this point. strategic investments or operational 252. These include SDG1, on eradicating poverty; SDG 2 on ending https://economictimes.indiatimes.com/industry/banking/finance/ partnerships particularly by leveraging hunger, achieving food security and promoting sustainable banking/govt-asks-banks-to-open-15000-branches-in- Challenges faced by the sector, however, has not agriculture; SDG 3 on profiting health and well-being; SDG 5 on fy21/articleshow/73286116.cms?from=mdr technology to reach potential customers beyond deterred investor interest, especially in the achieving gender equality and economic empowerment of 268. Worldplay FIS (2020). 2020 Global Payments Report. Tier I and Tier II cities. Consultations with experts women; SDG 8 on promoting economic growth and jobs; SDG 9 worldpaymentsreport.com. Available at: insurance distribution and servicing space. Deal suggest that innovations that bring together on supporting industry, innovation, and infrastructure; and SDG https://worldpaymentsreport.com/resources/world-payments- value for PE investments in the Insurtech space 10 on reducing inequality. Additionally, in SDG 17 on report-2020/. strengthening the means of implementation there is an implicit 305 digital technologies for underwriting and 269. “Financial resilience can be defined as ability of people, amounted to USD 41.8 million in 2019 though role for greater financial inclusion through greater savings outreach of traditional insurance companies with particularly the BoP segment, who would be able to withstand a mobilization for investment and consumption that can spur most of the investee companies work in the crisis without a fundamental deterioration of their individual and feet on the ground, building upon the successful growth middle and high-income space. 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Financials White space - Insurance - Market Insights Available at: https://gflec.org/wp-content/uploads/2015/11/3313- 270. Insurance Regulatory and Development Authority of India (2019). Finlit_Report_FINAL-5.11.16.pdf?x38887 Annual Report 2018-19. [online] www.irdai.gov.in. Available at: 255. For the purposes of the study, the authors used 4 dimensions to https://www.irdai.gov.in/ADMINCMS/cms/frmGeneral_NoYearList. Investors can support innovations in insurance product distribution and servicing for life and non-life Overview: determine financial literacy- Risk Diversification, Numeracy aspx?DF=AR&mid=11.1. products for low-income segments, especially in underserved rural areas. Business models that can (ability to calculate interest rates), Compound Interest and 271. Singh, A. (2019). The State of Micro-pensions in India. [online] leverage technology to service last-mile segments, thereby reducing operational costs and increasing Inflation. Dvara Research Blog. 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Available at: As of 2018, life insurance penetration in India was 2.74% and the coverage of non-life insurance was Need case: population ages 15+) - India, Brazil, China, Korea, Rep., World, https://www.worldbank.org/en/news/press- even lower at 0.97% for the same period Malaysia, Vietnam | Data. Available at: release/2020/06/30/world-bank-approves-750-million- Due to information asymmetries, low financial and digital literacy in underserved areas, people do https://data.worldbank.org/indicator/FX.OWN.TOTL.ZS?locations= emergency-response-program-for-micro-small-and-medium- not engage with formal financial services in the absence of reliable and ubiquitous digital IN-BR-CN-KR-1W-MY-VN. enterprises-in-india. infrastructure, and handholding support 258. Worldbank.org. (2017). Home | Global Findex. Available at: 273. MicroSave Consulting (2020). Impact of COVID-19 pandemic on https://globalfindex.worldbank.org/. micro, small, and medium enterprises (MSMEs): India Report. 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Available at: in-India%E2%80%93Powering-mobile-payments.pdf. https://www.irdai.gov.in/ADMINCMS/cms/frmGeneral_Layout.asp 297. PwC (2019). Global FinTech Survey 2016: How FinTech is x?page=PageNo4196&flag=1. reshaping banking. Available at: 285. The programme, which is currently being implemented in 117 https://www.pwc.com/gx/en/industries/financial- districts of India focuses on Financial Inclusion as one of the key services/assets/fin-tech-banking-2016.pdf. core areas besides health and nutrition, education, agriculture 298. Bain and Company, and IVC Association. India Private Equity and water resources, skill development and basic infrastructure Report 2020.Available at: development. www.bain.com/globalassets/noindex/2020/bain_report_india_priv 286. SIDBI (2020). Microfinance Pulse. Available at: ate_equity_report_2020.pdf. https://www.sidbi.in/files/article/articlefiles/Microfinance-Pulse- 299. Mohan, R. (2020). RBI relaxes norms for the deployment of ATMs June-2020.pdf. by white-label players. Business Standard India. [online] 16 Jun. 287. India Briefing News. (2020). Micro, Small, and Medium Available at: https://www.business- Enterprises in India – An Explainer. Available at: standard.com/article/finance/rbi-relaxes-norms-for-the- https://www.india-briefing.com/news/micro-small-medium- deployment-of-atms-by-white-label-players- enterprises-india-explainer- 120061601463_1.html. 17887.html/#:~:text=As%20per%20the%20official%20estimates 300. www.rbi.org.in. (n.d.). Reserve Bank of India - Notifications. 288. Shukla, S. and Manikandan, A. (2020.). Remittances to Bharat hit Section 23 of the Banking Regulation Act, 1949 – Master Circular by return of the native. The Economic Times. Available at: on Branch Authorisation Available at: https://economictimes.indiatimes.com/news/economy/finance/re https://www.rbi.org.in/SCRIPTs/NotificationUser.aspx?Id=9014&M mittances-to-bharat-hit-by-return-of-the- ode=0 native/articleshow/74974059.cms?from=mdr 301. Electronic Payment and Services Ltd. (2016). REVOLUTIONIZING 289. Mohan, R. (2020). RBI relaxes norms for the deployment of ATMs THE INDIAN ATM INDUSTRY. Available at: by white-label players. Business Standard India. 16 Jun. Available https://www.electronicpay.in/wp-content/uploads/2019/01/EPS- at: https://www.business-standard.com/article/finance/rbi- Revolutionising-Th-Indian-ATM-Industry.pdf. relaxes-norms-for-the-deployment-of-atms-by-white-label- 302. Manikandan, A. (2019). Micro ATMs a big hit in rural India: players-120061601463_1.html Transactions may hit 33.5 million. [online] Available at: 290. www.rbi.org.in. (n.d.). Reserve Bank of India - Notifications. https://economictimes.indiatimes.com/industry/banking/finance/ SUSTAINABLE ENVIRONMENT Section 23 of the Banking Regulation Act, 1949 – Master Circular banking/micro-atms-a-big-hit-in-rural-india-transactions-in-may- on Branch Authorisation Available at: touch-33-5-million/articleshow/69983878.cms?utm_source SUSTAINABLE https://www.rbi.org.in/SCRIPTs/NotificationUser.aspx?Id=9014&M =contentofinterest&utm_medium=text&utm_campaign=cppst. ode=0 303. The Reserve Bank of India (2020). CREDIT DELIVERY AND SUSTAINABLE 291. V, N. (2019). TreDS platform charts explosive growth. Available at: FINANCIAL INCLUSION.Available at: ENVIRONMENT https://www.thehindubusinessline.com/companies/treds- https://rbidocs.rbi.org.in/rdocs/AnnualReport/PDFs/2IVCREDITDE platform-charts-explosive-growth/article27119220.ece LIVERYA1FF80FBDB87490C9B01520D262DD431.PDF. 292. PwC (2019). Emerging technologies disrupting the financial 304. IRDAI (2019). Notification: Insurance Regulatory and Development SUSTAINABLE ENVIRONMENT sector. Available at: Authority of India (Insurance Intermediaries) (Amendment) https://www.pwc.in/assets/pdfs/consulting/financial- Regulations, 2019. Available at: ENVIRONMENT SUSTAINABLE services/fintech/publications/emerging-technologies-disrupting- https://www.irdai.gov.in/ADMINCMS/cms/frmGeneral_Layout.asp ENVIRONMENT the-financial-sector.pdf. x?page=PageNo3945&flag=1. SUSTAINABLE 293. United Nations Industrial Development Organisation (UNIDO) has 305. Bain and Company, and IVC Association. India Private Equity identified 388 clusters spread over 21 states in various parts of Report 2020.Available at: ENVIRONMENT SUSTAINABLE the country and the Ministry of MSME has advised banks to focus www.bain.com/globalassets/noindex/2020/bain_report_india_priv their lending mandates for sectors on these. ate_equity_report_2020.pdf. SUSTAINABLE ENVIRONMENT 294. RBI (2019). National Strategy for Financial Inclusion: 2019-2024. SUSTAINABLE Available at: SUSTAINABLE ENVIRONMENT ENVIRONMENT SUSTAINABLE ENVIRONMENTSUSTAINABLE ENVIRONMENT SUSTAINABLE ENVIRONMENT SUSTAINABLE ENVIRONMENT SUSTAINABLE ENVIRONMENT SUSTAINABLE ENVIRONMENT SUSTAINABLE SUSTAINABLE ENVIRONMENT ENVIRONMENT SUSTAINABLE ENVIRONMENT SUSTAINABLE ENVIRONMENT SUSTAINABLE SUSTAINABLE SUSTAINABLE ENVIRONMENT ENVIRONMENT SUSTAINABLE ENVIRONMENT SUSTAINABLE SUSTAINABLE ENVIRONMENT ENVIRONMENT 131 SUSTAINABLE ENVIRONMENT SUSTAINABLE ENVIRONMENT SUSTAINABLE SUSTAINABLE ENVIRONMENT SUSTAINABLE ENVIRONMENT ENVIRONMENT

SUSTAINABLE ENVIRONMENT SUSTAINABLE ENVIRONMENT SUSTAINABLE ENVIRONMENT SUSTAINABLE ENVIRONMENT SDG Investor Map Report for India-2020

1.1. Sectoral development needs management, alignment of cropping patterns Sustainable Environment to the agroclimatic zones and construction of Our review of key policy documents, human field channels (Command Area Development development reports and stakeholder (CAD) works) are some of the measures consultations highlighted the following sectoral required to be undertaken development needs in India: • Impact of COVID-19: Best practices in hygiene 1.1.1. Water resources (SDG 6, 12, 15) that are currently being endorsed by different • Water scarcity: As per the Central Water development institutions involve behaviour Commission (CWC), per capita water change communication around handwashing, availability in India declined from 1,816 cubic etc., which is likely to consume more water metres (cu m) in 2001 to 1544 cu m in 2011312 . than conserve it. According to Centre for With the urban population (where the rate of Science and Environment (CSE), ~20-40 litres increase in demand for water is higher of water is consumed each day, assuming that compared to rural areas313 ) set to rise to ~607 each person cleans their hands at least 10 million in 2030, and ~877 million by 2050, times a day, instead of a usual average of five 318 water demand is projected to be twice its times a day . Thus, there is an urgent need supply by 2030314 to come up with alternative methods for hygiene practices that push for water • Access to drinking water: As per NITI conservation behaviours Aayog's report on Composite Water Management Index (CWMI), there is a scope 1.1.2. Waste management (SDG 11, 12) for significant improvement as gaps exist in • Waste generation: Solid waste generation access to piped and potable drinking water. and its treatment is a pressing concern. In Only 25 percent of households have drinking 2016, GoI had estimated an annual waste water on their premises, and 16 percent of generation of 62 million tonnes in the country, rural households have access to piped water including 5.6 million tonnes of plastic waste, 315 which is largely unpotable 0.17 million tonnes of bio-medical waste, 7.90 1. Sector overview • Deteriorating groundwater resources: million tonnes of hazardous waste and 1.5 319 s with other developing countries, India faces environmental challenges associated with Subsidized pricing of water in various states million tonnes of e-waste . Of this, only ~22 320 inadequate management, segregation and treatment of both water resources and has resulted in non-revenue water and a to 28 percent was processed and treated solid/wet waste. As per NITI Aayog, India is currently ranked 120th among 122 countries sharp decline in groundwater levels in all • Growing urban population resulting in A 306 in the water quality index and faces high to extreme water stress. By 2030, the country's water states. According to the Central Ground Water rising Municipal Solid Waste (MSW): MSW demand is projected to be twice the available supply307 , due to water scarcity and water Commission (CGWC), the annual replenishable produced in India is composed of ~41 percent contamination. This could result in a ~6 percent308 loss in the country's GDP. Solid Waste groundwater resources in India stood at 432 organic, ~40 percent inert (i.e., waste which is Management (SWM) needs greater attention, especially in urban centres, where an estimated 50 billion cubic metres (bcm) in 2017, of which neither chemically, nor biologically reactive, percent of India's population will reside by 2050, resulting in waste generation growing by 5 393 bcm was the annual 'extractable' and does not decompose easily), and ~19 309. 316 percent per year The existing waste management system in India is currently not fully equipped 321 groundwater availability . Out of this, ~230 percent potentially recyclable materials . to cope with the volume of waste generated by an increasingly urban population. Capital inflow in bcm of groundwater is drawn each year for Cities producing the maximum level of these areas can help address many of these issues. India's wastewater treatment plants market irrigation purposes, while overall groundwater garbage volume per day include Hyderabad, stood at around USD 2.4 billion in 2019 and is projected to reach USD 4.3 billion by 2025, owing to depletion in India is in the range of 122–199 Ahmedabad, Bengaluru, Chennai, Kolkata, 317 increasing demand for sophisticated municipal water as well as sewage treatment plants across bcm . As a result, many parts of the country 322 310 Delhi and Mumbai the country . India's waste management sector is expected to be worth USD 13.62 billion by are experiencing rapid depletion of 311 2025, with an annual growth rate of 7.17 percent . groundwater • Improper management of waste: In the absence of adequate sustainable The report includes initiatives under Sustainable Environment, particularly under waste • Need for improved agriculture practices: management practices, specifically in the management due to the high priority accorded to the sector from a development impact lens. There is a clear evidence of rising water stress agriculture sector, approximately 92 metric Even though most initiatives fall in the 'white space' area, there is a significant opportunity for and there continues to be a need to more tonnes of crop waste is burned every year in scale and subsequent commercial returns. effectively manage water usage, particularly India, causing excessive particulate matter in key sectors such as agriculture. emissions and air pollution323 . There is a need Effective implementation and maintenance of to establish alternative methods of disposal projects, including participatory irrigation and offer economically productive use of crop 133 134 SDG Investor Map Report for India-2020

residues. Moreover, improper collection of Ganga has been launched to address the 1.3. Private sector participation enable companies and investors to benefit from waste in dump yards also adversely impacts challenges posed by water pollution, particularly India's planned industrialization in the near both, the environment and public health. along the polluted riverine length of 12,363 km326 . 1.3.1. Water resources future. Awareness among consumers towards Central Pollution Control Board (CPCB) has adopting better waste management methods in • COVID-19: The pandemic has increased the Indian water market requires significant private identified 302 polluted river stretches on 275 their daily lives is growing, augmented by level of bio-medical waste generated. As per investment to meet the development needs of rivers, spanning 28 States and 8 UTs327 . Ministry municipal level behaviour change public data, before the COVID-19 outbreak, a the sector. As per a joint study by Associated of Jal Shakti was created to deal with matters communication. This change in attitude can be government or a private hospital generated Chambers of Commerce and Industry of India - relating to water at one place in an integrated leveraged by business models and help attract an average of 500 grams of biomedical waste Price Waterhouse and Coopers (ASSOCHAM- manner. To regulate over-exploitation and private investment in this space. (like syringes, urine bags, gauze, etc.) per bed, PWC), plugging the demand-supply gap for water consequent depletion of groundwater, per day. During the pandemic, this level has (which is estimated to reach ~50 percent by a Model Bill has been circulated to all 1.4. Priority subsectors gone up to ~2.5 kg to 4 kg per bed, per day324 2030) would require an additional investment of States/UTs to enable them to enact suitable ~USD 291 billion328 . GoI has undertaken various Review of the subsectoral development needs 1.2. Policy momentum groundwater legislation for the regulation of its initiatives to encourage private sector and policy priorities and deep-dive consultations development, which includes the provision of participation, including Jawaharlal Nehru with sector experts and investors led to 'waste 'Sustainable Environment' has been highlighted rainwater harvesting. National Urban Renewal Mission (JNNURM), management' emerging as a subsector with as a priority sector by the country's apex policy which encourages PPPs and makes public funds potential to address development needs, think tank, NITI Aayog. GoI has undertaken 1.2.2. Waste management available for such projects. Despite such through the support of sufficient policy several measures to facilitate water and waste In 2016, the Union Ministry of Environment, initiatives, private sector players are reluctant to momentum. Thus, the same was shortlisted for management. Forests and Climate Change (MoEF&CC), invest in this segment. As per investors, the further analysis. 1.2.1. Water resources introduced new SWM Rules, i.e., the sixth water segment requires patient capital as not ‘Water Resources' was excluded from our category of waste management rules, which do only is the revenue stream slow and spread out GoI aims to establish an efficient water resource research as this area does not offer attractive not include plastic, e-waste, biomedical, over time but also dealing with municipal management system to harness the benefits of commercials and operating environment for hazardous and construction and demolition corporations (as the end customer of services) is water by ensuring that there is sufficient water of private sector participation. waste. The Waste Management and Handling unviable for enterprises. Majority of players adequate quality for drinking water and Rules in India were introduced by MoEF&CC, operating in this area participate through the Expert consultations highlighted that despite sanitation services, food production, energy although their compliance is variable and PPP model because investors find it difficult to GoI's efforts to promote this segment, only a few generation, inland water transport, and water- limited. The MoEF&CC issued MSW Management operate a business and generate profits without successful outliers exist which are engaged in based recreational, as well as sustaining healthy and Handling Rules, 2000 to ensure proper government incentives. Furthermore, water is technology-based business models that enable water-dependent ecosystems. Budget 2021 waste management in India. Municipal treated as a public good and has largely efficiencies in water, energy and waste which allocated USD 50.95 billion for Jal Jeevan authorities are responsible for implementing remained outside the ambit of a strict regulatory may pique investors' interest. Mission325 , which aims to provide safe and these rules and for developing infrastructure for framework, leading to overconsumption and adequate drinking water through individual collection, storage, segregation, transportation, inequitable distribution of this precious 1.5. Investment Opportunity household tap connections to all households in processing and disposal of MSW. commodity. As a result, there are no visible Areas - Overview rural India by 2024. National Mission for Clean business models that can work independent of While 'waste management' came up as an IOA government support and have proven to be with a potential for strong development impact, sustainable in this space. the commercial viability of such models remains 1.3.2. Waste management unproven. Business models in this 'white space' currently face significant commercial hurdles and As per investors, solid and liquid waste need to develop further before they attract large- management is an immediate priority and GoI scale commercial private investments. has been encouraging private sector participation in this sector through Swachh 1.6. White Spaces Deep Dive Bharat Mission. Additionally, SWM Rules, 2016 encourage Urban Local Bodies (ULBs) to partner 1.6.1. Waste management with private companies in planning and Waste management in India has immense scope implementing waste management solutions. As a for development and is expected to reach a result of such initiatives, various startups and market size of USD 13.62 billion, at a YOY growth SMEs have already begun offering effective 329 of 7.17 percent by 2025 . Growing urbanization, waste management solutions. With the planned industrialization and economic growth have creation of 100 smart cities in India, offering resulted in increased MSW generation per effective waste management solutions will

135 136 SDG Investor Map Report for India-2020

person. Waste produced in urban areas of India waste-to-energy facilities. Furthermore, Sources: is approximately 170,000 tonnes per day and is improvement in waste collection and transport 306. Niti Aayog Water Index report 2018 319. Sambyal, S. (2018). Government notifies new solid waste expected to increase by ~5 percent per year infrastructure can help create employment 307. Niti Aayog (2019). SDG India Index 2019-20. Niti Aayog. Available management rules. [online] Downtoearth.org.in. Available at: owing to growing population and changing opportunities through the formalization of this at: https://niti.gov.in/sites/default/files/2019-12/SDG-India-Index- https://www.downtoearth.org.in/news/waste/solid-waste- 2.0_27-Dec.pdf. management-rules-2016-53443. lifestyles330 . sector, while also contributing to an 308. By 2030, India's water demand to be twice the available supply 320. Sambyal, S. (2018). Government notifies new solid waste improvement in public health. indicating severe water scarcity: Report. (n.d.). The Economic management rules. [online] Downtoearth.org.in. Available at: Despite significant development in social, Times. Available at: https://www.downtoearth.org.in/news/waste/solid-waste- economic and environmental areas, SWM Although players are working in this area that https://economictimes.indiatimes.com/news/economy/agricultur management-rules-2016-53443. systems in India are relatively underdeveloped, have been successful in raising private capital e/by-2030-indias-water-demand-to-be-twice-the-available-supply- 321. Kumar, S., Smith, S.R., Fowler, G., Velis, C., Kumar, S.J., Arya, S., indicating-severe-water-scarcity- Rena, Kumar, R. and Cheeseman, C. (2017). Challenges and with informal sector playing a key role in inflow, such businesses appear to be outliers in report/articleshow/64679218.cms?from=mdr opportunities associated with waste management in India. Royal extracting value from waste. Thus, there is a the system (examples include NEPRA Resource 309. Niti Aayog (2019). SDG India Index 2019-20. Niti Aayog. Available Society Open Science, 4(3), p.160764. at: https://niti.gov.in/sites/default/files/2019-12/SDG-India-Index- 322. Jun 9, S.A./ T./, 2018 and Ist, 07:28 (n.d.). Hyderabad tops in per growing need for a more sustainable SWM, Management Pvt. Ltd. and Ramky Enviro 2.0_27-Dec.pdf. capita waste generation | Hyderabad News - Times of India. The requiring new management systems and waste Engineers Limited). Since business models in this 310. www.businesswire.com. (2020). India Wastewater Treatment Times of India. Available at: https://timesofindia.indiatimes.com/ management facilities. Investment in this sector space require government dealing and Plants Market Stood at Around $ 2.4 Billion in 2019 & is Projected city/hyderabad/hyderabad-tops-in-per-capita-waste- to Reach $ 4.3 Billion by 2025 - ResearchAndMarkets.com. generation/articleshow/64515720.cms can help address various issues (related to involvement, achieving scale and profitability is a Available at: 323. Bhuvaneshwari, S., Hettiarachchi, H. and Meegoda, J. (2019). Crop environmental and health) arising due to challenge. However, given its strong potential to https://www.businesswire.com/news/home/20200313005294/en/ Residue Burning in India: Policy Challenges and Potential improper collection, segregation and treatment meet India's development need and growing India-Wastewater-Treatment-Plants-Market-Stood- Solutions. International Journal of Environmental Research and 2.4#:~:text=%26%20Opportunities%2C%202025%E2%80%9D- Public Health, 16(5), p.832. 331 of waste. For instance, ~90 percent of residual policy momentum, we expect private investment [Accessed 27 Oct. 2020]. 324. Hindustan Times. (2020). India stares at biomedical waste crisis. waste is dumped, instead of being efficiently in this space to pick up. Thus, waste 311. Briefing, I. (2017). The Waste Management Industry in India: ]Available at: https://www.hindustantimes.com/india-news/india- Investment Opportunities - India Briefing News. India Briefing stares-at-biomedical-waste-crisis/story- landfilled. Disposal of residual waste after management is recognized as a white space. News. Available at: https://www.india-briefing.com/news/the- SpPZrA1tutAAuYhE57p7UI.html. extraction of material resources needs waste-management-industry-india-investment-opportunities- 325. www.ibef.org. (n.d.). Union Budget of India 2020 - 21 | IBEF. engineered landfill sites and/or investment in 14032.html/. Available at: https://www.ibef.org/economy/union-budget-2020- 312. nwm.gov.in. (n.d.). Synopsis of Water Data in India | National 21 Water Mission, Ministry of Jal Shakti, Department of Water 326. Delhi February 14, A.V.N., April 4, 2015UPDATED: and Ist, 2015 1.6.1. Waste Management - Market Insights Resources, RD & GR, Government of India. Available at: 07:48 (n.d.). Polluted rivers in country have doubled over past 5 http://nwm.gov.in/?q=synopsis-water-data-india. years. India Today. Available at: https://www.indiatoday.in/mail- 313. Qazi Syed Wamiq Ali, Nathaniel B Dkhar (2018). India's rampant today/story/polluted-rivers-indian-environment-survey-247101- Investors can focus on companies engaged in carrying out efficient waste management processes, urban water issues and challenges. www.teriin.org 28 Dec 2018. 2015-02-14#:~:text=The%20total%20polluted% Overview: including collection, storage, segregation, transportation, processing, treatment and disposal Available at: https://www.teriin.org/article/indias-rampant-urban- 20riverine%20length water-issues-and-challenges 327. Koshy, J. (2018). More river stretches are critically polluted: 314. Seetharaman, G. (n.d.). The private sector has transformed India's Central Pollution Control Board. The Hindu. 17 Sep. Available at: Waste produced in urban areas of India is approximately ~170,000 tonnes per day, and is expected to highways, airports. Can it do the same for water supply? The https://www.thehindu.com/news/national/more-river-stretches- Need case: increase by ~5% per annum owing to growing population and changing lifestyles Economic Times. Available at: critically-polluted-cpcb/article24962440.ece https://economictimes.indiatimes.com/news/economy/infrastruc Such models could contribute directly to SDG11 (Sustainable Cities and Communities), particularly 328. Jun 30, J.S./ T./ U., 2017 and Ist, 18:02 (n.d.). investments: ture/the-private-sector-has-transformed-indias-highways- Investments worth $291 billion needed to plug water demand- 11.6.1. (Proportion of urban solid waste regularly collected and with adequate final discharge out of airports-can-it-do-the-same-for-water- supply gap in India: Study | Mangaluru News - Times of India. The total urban solid waste generated, by cities) and SDG12 (Sustainable Consumption and supply/articleshow/66787613.cms?from=mdr Times of India. Available at: Production), particularly 12.4.2. (Hazardous waste generated per capita and proportion of hazardous 315. NITI Aayog's report on Composite Water Management Index https://timesofindia.indiatimes.com/city/mangaluru/investments- waste treated, by type of treatment), while it contributes indirectly to SDG3 (Good Health and Well- (CWMI) worth-291-billion-needed-to-plug-water-demand-supply-gap-in- Being), SDG14 (Life Below Water) and SDG15 (Life on Land) 316. Service, T.N. (n.d.). Atal Bhujal Yojana aims to arrest groundwater india-study/articleshow/59387268.cms depletion. Tribuneindia News Service. Available at: 329. Briefing, I. (2017). The Waste Management Industry in India: https://www.tribuneindia.com/news/features/atal-bhujal-yojana- Investment Opportunities - India Briefing News. India Briefing User or Efficient waste management can benefit the community with improved public health as a result of lesser aims-to-arrest-the-slide-22187. News. Available at: https://www.india-briefing.com/news/the- beneficiary: land and air pollution 317. Prasad, R. (2018). Groundwater depletion alarming in northwest, waste-management-industry-india-investment-opportunities- Improvement in waste collection and transport infrastructure can help create employment opportunities central India. The Hindu. 10 Nov. Available at: 14032.html/. https://www.thehindu.com/sci-tech/groundwater-depletion- 330. Kumar, S., Smith, S.R., Fowler, G., Velis, C., Kumar, S.J., Arya, S., alarming-in-northwest-central-india/article25463716.ece#: Rena, Kumar, R. and Cheeseman, C. (2017). Challenges and Risk Although, municipal authorities are responsible for managing MSW in India, their budgets are insufficient ~:text=With%20230%20billion%20metre%20cube opportunities associated with waste management in India. Royal factors: to cover costs associated with developing proper waste collection, storage, treatment and disposal. The 318. www.downtoearth.org.in. (n.d.). COVID-19: The need is to Society Open Science, 4(3), p.160764. lack of strategic MSW plans, waste collection/segregation and a government finance regulatory decentralise how we manage wastewater. Available at: 331. Kumar, S., Smith, S.R., Fowler, G., Velis, C., Kumar, S.J., Arya, S., framework are major barriers to achieving effective SWM in India https://www.downtoearth.org.in/blog/water/covid-19-the-need- Rena, Kumar, R. and Cheeseman, C. (2017). Challenges and Limited environmental awareness combined with low motivation has inhibited innovation and the is-to-decentralise-how-we-manage-wastewater-70991 opportunities associated with waste management in India. Royal Society Open Science, 4(3), p.160764. adoption of new technologies that could transform waste management in India

Impact Investments falling under this IOA are likely to contribute to solutions (IMP classiﬁcation C), given that management: these business models can help in contributing towards sustainable development and improvement in public health through upgradation in waste management systems, which would in turn help in generating employment opportunities for the informal sector workers

Source: UNDP research for India Investor Map

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Next Steps ANNEXURE I: Experts Consulted for the Report Inputs from Invest India

NDP and Invest India, in their organizational and collaborative capacities, endeavour to further Sector Stakeholder Consulted Type of Stakeholder Name of Expert drive dialogue and action between policymakers and investors. It is a vision to forge and Elevar Equity Venture Capital Fund Amie Patel foster multi-stakeholder partnerships to enable a strong ecosystem of SDG investment and U Gaja Capital Private Equity Fund Imran Jafar facilitation in India. Global Innovation Fund Impact Investors Avinash Mishra Invest India, as the national investment promotion and facilitation agency of GoI, looks forward to Education Invest India Investment Promotion Agency Vishal Kumar developing strategic investor outreach and promotion initiatives, especially targeted to attract investments Kaizenvest Venture Capital Fund Nirav Khambhati towards the 18 IOAs and 8 white spaces across 6 sectors and 13 subsectors highlighted in this report. It is equally crucial to address constraints and mitigate risks that foreign and domestic investors face, such as MSDF Foundation Geeta Goel navigating entry barriers, information asymmetry, policy implementation gap, etc., especially in the Prayog Advisors Venture Capital Fund Sheeba D Mello domain of investments aligned towards the SDGs. Accel Venture Capital Fund Barath Shankar Subramanian UNDP, in its strategic role in supporting the 2030 agenda, allows it to develop a globally unifying vision, framework and standards for what it means to invest for SDG achievement. Based on the SDG Investor Bill and Melinda Gates Foundation Foundation Arnav Kapur Maps, the UNDP country offices will, through their network and collaborative partnerships, convene to Healthcare Invest India Investment Promotion Agency Aakriti Bajaj facilitate matchmaking between enterprises and investors to increase SDG-aligned private sector Prayog Advisors Venture Capital Fund Sheeba D Mello investments. Public-private policy dialogues will also be convened to identify recommendations to Samara Capital Private Equity Fund Abhishek Thanvi improve the enabling environment for SDG-aligned investments. UNDP Dr. Manish Pant Further, UNDP's SDG Impact's three pillars of work – Impact Management, Impact Intelligence and Aavishkar Impact Investors Noshir Colah Impact Facilitation are closely tied to the market intelligence produced through the Investor Map. For Elevar Equity Venture Capital Fund Amie Patel instance, under Impact Management, the SDG Impact Assurance Standards have developed a set of global Food & Beverages Global Innovation Fund Impact Investors Avinash Mishra standards for how investors and enterprises manage and measure their impacts on the SDGs. There is Invest India Investment Promotion Agency Gaurav Sisodia currently no defined standard that enables auditors to assure that an investor's impact management practice is of sufficient quality to be considered 'SDG-enabling'. This is critical to driving consistency, Omnivore Venture Capital Fund Shruti Srivastava comparability and accountability. Samunnati Impact Investors Hari Rajagopal Canada Investment Plan Pension Fund Sujeet Govinda It is envisioned that a focused manoeuvre in this regard and effective promotion of bankable projects will Pension Board (CIPPB) Raju help champion the push towards private investment for sustainable development in India. International Finance Corporation DFI Bhanu Mehrotra

Renewable International Finance Corporation DFI Hemant Mandal Resources & Invest India Investment Promotion Agency Kanika Verma, Alternative Pallavi Bishnoi Energy ReNew Power Independent Power Sukant Gupta Producer of RE The Bridgespan Group Management Consulting Sudershan Sampath Kumar Aavishkar Impact Investors Sushma Kaushik Caspian Impact Impact Investors Ragini Bajaj Investments Pvt. Ltd. Chaudhary Elevar Equity Venture Capital Fund Amie Patel Financials Gojo Capital Private Equity Fund Sanjay Gandhi Invest India Investment Promotion Agency Prerna Soni, Rahul Agarwal KKR Private Equity Fund Simrun Mehta National Investment and Sovereign Fund Nilesh Shrivastava Infrastructure Fund

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Asha Impact Impact Investors Aditi Gupta Sustainable Environment Invest India Investment Promotion Agency Shivam Batham ANNEXURE II: Sector Relevant Policy Landscape Sagana Impact Investors Akash Singh Brookings India Think Tank Vikram Singh Mehta Federation of Indian Chambers of Industry Network Abhay Singh, EDUCATION General/Sector Commerce & Industry (FICCI) Eittee Gupta Agnostic Impact Investors Council Investment Promotion Agency Ramraj Pai Policy/ Description Implications NITI Aayog GoI Think Tank Sanyukta Samaddar Initiatives UNDP UNDP Economist Dr. Basudeb Guha- Union Budget GoI allocated USD 8 billion (0.3 percent Thrust on enhancing access, retention, Khasnobis 2020-21 of GDP) for the Department of School transition under RTE Act, 2009. Improving Facebook Corporate Aankhi Das Education and Literacy the quality of education including teacher Technology & Invest India Investment Promotion Agency Atul Bist training to improve learning outcomes. Communications Samara Capital Private Equity Abhishek Thanvi Reduction of gender gaps in education and improving access for SC, ST and other UNDP - Accelerator Lab UNDP Krishnan, Rozita, minorities Shwetha Samagra Shiksha, 2019 An overarching framework extending To treat school education holistically from pre-school to class 12 was prepared without segmentation from pre-nursery in 2019 subsuming all existing schemes to Class 12; To improve the quality of for school education school education by focusing on the two T's – Teacher and Technology

National Initiative for School Heads' and To train 4.2 million teachers to build Teachers' Holistic Advancement (NISHTHA) at teaching competencies, empower them the elementary stage (Classes I-VIII), with assessment frameworks, teaching customized for online mode of delivery owing to COVID-19, to be conducted through aids with direct implications on quality of Digital Infrastructure for Knowledge Sharing education and student learning (DIKSHA) and NISHTHA portals by the NCERT. outcomes.

New Education To improve early childhood care and Universalization of education from pre- Policy, 2020 education, increase foundational literacy school to secondary level with 100 and numeracy skills and ensure universal percent GER in school education by access to school education 2030; to bring 20 million out-of-school The New Education Policy 2020 lays out children back into mainstream the blueprint to revamp the higher education education system and create world-class multidisciplinary higher education institutions across India

PM eVIDYA, 2020 A programme for multi-mode access to To promote online education across the digital/online education country including hosting of online content; vocationalization of education

National Skills A competency-based framework that Enable a person to acquire desired Qualifications organizes qualifications according to a series competency levels, transit to the job market Framework (NSQF) of knowledge, skills and aptitude and opportunities for acquiring additional The NSQF levels, graded from one to ten, are skills to upgrade competencies defined in terms of learning outcomes which the learner must possess regardless of whether they are obtained through formal, non-formal or informal learning

A ﬁve-year vision planned for ushering Implementation Plan for the National Education Quality transformation in India's higher education Education Policy Upgradation and system EQUIP has been prepared from reports Inclusion Programme of ten Expert Groups, suggesting more than 50 (EQUIP) initiatives that would transform the higher education sector completely

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Policy/ Skill India, 2015 To enable youth to take up training to To train 400 million Indians by 2022 Description Implications secure a better livelihood Initiatives

Scheme for Promotion Financing Common Infrastructure Expected to reduce the manufacturing Skills Acquisition and Outcomes-focused schemes marking a Develop a skilling ecosystem that will of Medical Facilities in four Medical Device Parks cost of medical devices in the country Knowledge Awareness shift in the government's implementation support domestic industrial sectors by a Device Parks, 2020 with financial implications of USD 55 The Schemes (Parks and PLI) will lead to for Livelihood strategy in vocational education and steady supply of skilled workforce million to promote Medical Device Parks the generation of additional employment Promotion' (SANKALP) training from inputs to results in the country in partnership with State of 33,750 jobs over five years and 'Skill governments. A maximum grant-in-aid Strengthening for of USD 13.6 million per park will be Industrial Value provided to the States Enhancement' (STRIVE), 2017 The Medical Device Regulate all medical devices falling under Ensuring the quality and safety of (Amendment) Rules, the definition and treat them as drugs medical devices Scheme for Higher To enhance the employability by To cover 5 million students by 2022 2020 Education Youth in providing 'on the job work exposure' Apprenticeship and Ayushman Bharat, One of the world's largest healthcare Increased benefit cover to nearly 40 Skills (SHREYAS), 2019 National Health schemes covering 100 million percent of the population, especially Protection Scheme, underprivileged five-member families. from the BoP segment and vulnerable 2018 Providing USD 71,000 in insurance populations coverage to each family Covering almost all secondary and many tertiary hospitalizations (barring HEALTHCARE those from an exception list)

National Health Aimed at achieving universal health Raising public health expenditure to 2.5 Policy/ Description Implications Initiatives Policy, 2017 coverage and delivering quality percent of the GDP in a time-bound healthcare services to all at affordable manner The policy intends to increase Union Healthcare USD 5.09 billion has been allocated for Implications for rural healthcare- cost life expectancy at birth from 67.5 to 70 Budget 2020-21 nutrition-related programmes improved primary healthcare services, Recommends establishing a regulatory by 2025 and reduce the infant mortality The Government has announced USD screening and management of NCDs; body for medical device rate to 28 by 2019 and reduce under- 9.87 billion outlay for the health sector increased availability of drugs and five mortality rate to 23 by 2025 Harmonizing domestic regulatory that is inclusive of USD 915.72 million for diagnostics; shifts in key healthcare standards with international standards PM-JAY in Union Budget 2020-21 indices such as anaemia, MMR, among others Strengthening post-market surveillance for medical devices Foreign Direct For Greenfield projects, 100 percent FDI Startups and businesses in the E-portal Sugam, 2015 All applications for import, manufacture, High level of transparency to its Investment (FDI) Policy is allowed under the automatic route. healthcare sector can supplement sale, distribution, or clinical investigation stakeholders enabling ease of business For brownfield projects, 100 percent FDI domestic capital for boosting local must be made via the single online by providing an integrated workflow is permitted under the government route manufacturing, services and scaling central government portal with CDSCO process operations thereby improving availability and access and reducing National The government started regulating 24 To ensure uniformity and affordability of dependence on imports Pharmaceutical segments of medical devices which were pricing for medical devices Production Linked Promotion of domestic manufacturing of Target is to support 25-30 Pricing Authority notified/regulated as drugs under Drugs Incentive Scheme, 2020 critical KSM/Drug Intermediates and manufacturers under several categories (NPPA) monitoring & Cosmetics Act, 1940 and Drugs & APIs in India of medical devices, thereby improving Medical Devices under Cosmetics Rules, 1945. Of the above 24, Promoting domestic manufacturing of domestic production and significant Drugs (Prices Control) 4 medical devices: (i) Cardiac Stents, (ii) medical devices with financial reduction of dependence on imports Order, 2013 Drug-Eluting Stents, (iii) Condoms and implications of USD 466 million (iv) Intra-Uterine Device (Cu-T) are Incentive @ 5 percent of incremental scheduled medical devices for and are sales over the base year 2019-20 will be under price control provided on the segments of medical devices identified

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Policy/ Government Introduction of Indian Bio-medical Skill Strengthen the biomedical engineering Description Implications Initiatives Consortium (IBSC) set up jointly by skill sector Initiatives AMTZ, National Accreditation Board for Certification Bodies (NABCB) under the Pradhan Mantri Launched in 2016 to ensure As of September 2020, the scheme has Quality Council of India (QCI), and Surakshit Matritva comprehensive and quality benefited 25 million pregnant women Association of Indian Medical Devices Abhiyan (PMSMA) antenatal check-ups to pregnant who are availing government facilities Industry (AiMeD) women across India with free antenatal care services, thereby formalizing institutional care for The Indian Certification of Medical Enhancing patient safety, to provide pregnant women Devices (ICMED) is the first indigenously enhanced consumer protection along Mission Indradhanush Aims at improving coverage of Seeks to drive towards 90 percent full developed quality assurance system for with product credentials to immunization in the country and reach immunization coverage of India and medical devices as a Joint initiative of manufacturers for instilling confidence every child under two years of age and all provide vaccination against eight AiMeD, QCI, NABCB among buyers and users the pregnant women who have not been vaccine-preventable diseases part of the routine immunization Tax Incentives All healthcare education and training Encourage investments in capacity programme services are exempted from service tax building programmes for healthcare personnel and other stakeholders

Artiﬁcial heart is exempted from basic customs duty of 5 percent FOOD & BEVERAGES

Income tax exemption for 15 years for To promote 'Make in India' initiative Policy/ Description Implications domestically manufactured medical Initiatives technology products Union Budget 2020-21 USD 40.06 billion has been allocated to Promote the growth of the agriculture Relaxation of taxes on hospitals in these To encourage the private sector to the segment comprising of Agriculture sector and ensure achievement of NITI cities for the first five years establish hospitals in Tier II and and allied activities, Irrigation and Rural Aayog's goal of doubling of farmers' Tier III cities Development for the holistic income by 2022 development of India's Agriculture National Health The main programmatic components Aims achievement of universal access to (including USD 22.64 billion for Mission (NHS) include Health System Strengthening, equitable, affordable and quality Agriculture, Irrigation and allied activities Reproductive-Maternal-Neonatal-Child healthcare services that are accountable and USD 17.40 billion for Rural and Adolescent Health (RMNCH+A) and responsive to people's needs Development and Panchayati Raj) Single Window System Drug Controller General of India (DCGI) To promote 'Make in India' initiative, For the current fiscal, target of USD Provision of financial support and has proposed to set up a single-window boost ease of doing business 212.31 billion has been set for providing incentives to support the agriculture system for start-ups and innovators agriculture credit. The budget also states sector and its participants seeking approvals, consents and that Pradhan Mantri Kisan Samman Nidhi information regarding the regulatory (PM-KISAN) (offers income support to requirement small and marginal farmers owning 2 hectares land) beneficiaries shall be Pradhan Mantri With a financial outlay of USD 781 Improved tertiary healthcare and covered under the Kisan Credit Card Swasthya Suraksha million, the scheme aims at correcting medical education (KCC) scheme (offers financial support to Yojana (PMSSY) the imbalances in the availability of farmers) and NABARD Re-finance Scheme shall be expanded affordable healthcare facilities in different parts of the country in Under Budget 2021, USD 176.42 million Promote the growth of the food general and augmenting facilities for has been allocated to the Ministry of processing sector quality medical education in under- Food Processing served States

Telemedicine Practice The purpose of these guidelines is to give Improved outreach to medically Under Budget 2021, USD 447 million has Promote the growth of agriculture and Guidelines, March 2020 practical advice to doctors so that all vulnerable populations such as senior been allocated for Animal Husbandry allied sectors services and models of care used by citizens and rural locations with limited and Dairying doctors and health workers are healthcare infrastructure through quality encouraged to consider the use of medical advisory and diagnosis telemedicine as a part of normal practice

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Policy/ Reserve Bank of RBI Circular on priority sector lending Provision of financial support to support Description Implications India (RBI) Circular includes activities covered under the agriculture sector and its participants Initiatives Agriculture under three sub-categories viz. Farm credit, Agriculture Operation Green With an allocation of USD 68 million, this Protection of farmers engaged in the infrastructure and Ancillary activities Scheme scheme (for integrated development of production of fruits and vegetables from TOP value chain) has been extended to making distress sale due to nationwide Minimum Support For 2019 season, GoI has approved an Provision of financial support and ALL fruits and vegetables (TOTAL) lockdown and reduce the post-harvest Prices (MSPs) increase in MSPs for all Kharif crops, at a incentives to support the agriculture It offers a 50 percent subsidy on losses level of at least 150 percent of the cost sector and ensure achievement of NITI transportation from surplus to deficient of production Aayog's goal of 'doubling of farmers' markets and 50 percent subsidy on income by 2022 storage, including cold storages

Foreign Direct 100 percent FDI permitted for food To boost food processing sector by Pradhan Mantri Kisan GoI launched PMKSY, a USD 936.38 The GoI plans to increase the capacity Investment (FDI) Policy processing encouraging private sector investment Sampada Yojana billion project, which offers financing of the food processing sector in India 100 percent FDI under government (PMKSY), facilities for mega food parks, as the current level of processing is approval route for trading, including the infrastructure for agro-processing less than 10 percent of agriculture same through e-commerce, for food clusters, integrated cold chain and value produce. Opportunities for products manufactured and/or addition infrastructure. Ministry of Food investments in areas of efficient produced in India Processing Industries (MoFPI) offers storage infrastructure are present private investors incentives to provide Agriculture technology In its attempt to turn the building blocks To provide seamless credit services to integrated cold chain and preservation (Agri-tech) sector of the country's cooperative banking their farmer members and create infrastructure facilities, without any structure into multi-service centres, investment opportunities for rural youth break, from the farm gate to the NABARD has earmarked USD 0.68 in agriculture consumer. Also, National Housing Bank billion for computerization and up- (NHB), Ministry of Agriculture offer gradation of PACS incentives to investors to promote the Electronic National To strengthen the agriculture sector and Deployment of a common e-market viability of setting up such models Agriculture Market enable farmers to reap benefits of their platform of 585 selected regulated Formalization of Micro GoI announced this scheme (with an Financial, technical and business (eNAM) produce by selling it at the right price, wholesale agriculture market yards by Food Processing outlay of USD 1 billion) and new support for upgradation of existing GoI announced its plans to strengthen March 2018 Enterprises (FME) initiatives like planned infrastructure micro food processing enterprises eNAM (which aims to create a unified spend of ~USD 1 trillion and ~USD 340 national market for agricultural billion to boost the rural economy to put commodities) and dismantle APMCs, the food processing sector on a high which required farmers to sell through growth trajectory mandis, instead of selling to end- consumers directly National Programme GoI is making efforts for strengthening for Dairy Development GoI Initiatives to To combat the adverse effects of the Strengthening Agriculture Infrastructure infrastructure for the production of (NPDD), Dairy strengthen the pandemic, GoI announced a financing Logistics, Capacity Building, Governance quality milk, procurement, processing Entrepreneurship agriculture supply facility of USD 13.24 billion to fund and Administrative Reforms for and marketing of milk and milk products Development Scheme chain agriculture infrastructure projects at Agriculture, Fisheries and Food through various dairy development (DEDS) and Dairy farm gate and aggregation points Processing Sectors schemes Processing and GoI plans to amend the Essential To enable price realization for farmers Infrastructure Commodities Act to deregulate food by attracting investments and making Development Fund items like cereals, pulses and onion. agriculture more competitive (DIDF) This will help in making the agriculture GoI Initiatives A new scheme has been announced by Provision of financial support and sector more competitive, ensuring in Dairy Sector GoI, wherein interest subvention of 2 incentives to promote the growth of better price realization and removal of percent per annum will be provided to the dairy sector stock limits on all agri-commodities to dairy cooperatives in 2021, and an offer farmers the freedom to produce, additional interest subvention of 2 distribute and supply, resulting in percent per annum will be provided on economies of scale prompt payment of loans

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Policy/ Pradhan Mantri Fasal GoI launched this scheme with insurance Stabilizing the income of farmers, Description Implications Bima Yojana (PMFBY) coverage and agricultural credit at a encouraging farmers to adopt innovative Initiatives reduced rate of 4 percent per annum and modern agricultural practices and and to improve the last-mile reach of ensuring the flow of credit to the Government Targets India plans to add 30 GW of Renewable Promoting the use of renewable energy financial benefits agriculture sector and Budget Allocation Resources & Alternative Energy capacity sources at the pan-India level, and along the desert region on its western enabling achievement of GoI's target of Pradhan Mantri Kisan GoI launched this scheme to boost To boost farmers' income border, covering the states of Gujarat 450 GW by 2030 Scheme (PMKS) farmers' income by extending payment and Rajasthan of ~USD 79 per year to every farmer in State government of Rajasthan, in Budget the country and to improve the last-mile 2019-20 exempted solar energy from reach of financial benefits electricity duty, with an increased focus on utilization of solar power in Krishi Vigyan Kendras Farmers' access to new information, To ensure farmers' knowledge agriculture and public health sectors (KVKs) or Farmers' knowledge and skills is being enhancement and apprise them about Indian Railways plans to adopt sustained Science Centers strengthened through the network of new improved methods of agriculture by energy efficient measures and maximum KVKs or Farmers' Science Centers, and offering guidance from experts use of clean fuel to cut down emission agriculture extension support level by 33 percent by 2030 As per Indian Council of Agricultural Foreign Direct Up to 100 percent, FDI is allowed under the To simplify and promote private sector Research (ICAR) data 2020, 721 KVKs Investment (FDI) Policy automatic route for Renewable Resources participation in the Renewable have been set up across India & Alternative Energy generation and Resources & Alternative Energy sector National Food Public Distribution System has been A paradigm shift in the approach to food distribution projects subject to provisions to meet ambitious green energy targets Security Act (NFSA), revamped under NFSA, 2013 which security from welfare to a rights-based under the Electricity Act, 2003 set by GoI 2013 covers about two-third of the population approach Changes in FDI rules which made prior Preventing opportunistic takeover of (including 75 percent rural and 50 Around 0.8 billion persons have been approval of the government mandatory domestic firms amid COVID-19 percent urban population) to receive covered under NFSA at present for for foreign investments from countries pandemic under the FEMA law subsidized food grains – rice, wheat receiving highly subsidized food grains that share a border with India (including and coarse grains - at affordable prices China, Bangladesh, Pakistan, Bhutan, per kg Nepal, Myanmar and Afghanistan) Solar Rooftop Targets Target of 40 GW of rooftop solar by 2022, Facilitation of deployment of rooftop and Initiatives GoI plans to undertake Renewable solar PV on government buildings RENEWABLE RESOURCES & ALTERNATIVE ENERGY Purchase Obligations (RPOs), rooftop across states auctions and programmes

Policy/ Description Implications Initiatives such as 'One Sun One World Enable India to be recognized as a Initiatives One Grid' for which India is the solar energy dependent country headquarter Government Targets Target to achieve RE capacity of 175 GW Harnessing non-conventional energy and Budget Allocation by 2022 (and 450 GW by 2030), including sources to meet the demand of growing Under RBI's priority lending norms, RE The underserved population shall be 60 GW of utility-scale solar PV, 40 GW of economy and increase per capita projects and grid-connected solar able to beneﬁt from the use of RE- rooftop solar PV, 60 GW of wind power, 5 electricity consumption rooftop systems have been accorded the based electricity GW of small hydro and 10 GW of status of priority sectors. Department of bioenergy Financial Services has advised all public- sector banks to provide loans for grid- Budget 2020-21 proposed allocation of Support growth of the RE sector connected rooftop solar systems as a USD 3.11 billion for power and RE sector home loan or a home improvement loan, and the Department of Expenditure National Mission on advanced ultra- To promote cleaner coal utilization reduced the guarantee fee from 1.2 supercritical technologies, worth USD percent to 0.5 percent for multilateral 238 million, to be implemented loans totalling USD 1.370 billion

GoI plans to release a new Hydropower Pushing growth of hydro projects Solar Park Scheme Government and private land shall be Providing projects with a 'plug-and- policy for 2018-28 especially in north-eastern regions available to successful bidders for play' interface such that developers setting up solar park projects with the can focus on other aspects of project CCEA has approved ﬁnancial support of Promoting the use of solar in the assistance of State governments development and reduce project risks USD 6.5 billion by 2022 agriculture sector

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Delhi government announced plans to Promoting the use of RE sources, and Policy/ Description Implications shut down a thermal power plant in enabling achievement of GoI's target of Initiatives Rajghat and plans to develop it into 450 GW by 2030 5,000 KW solar park Andhra Pradesh's Andhra Pradesh formulated a Wind- Promote WSH projects through policy WSH Power Policy Solar Hybrid Power Policy in 2018 to set initiatives at state-level Ministry of New Providing central financial assistance for To incentivize and facilitate rooftop a 5 GW generation target from WSH & Renewable residential, institutional, social and installations projects by 2022 Energy (MNRE) government buildings Other State's initiatives Policies/Initiatives Advising States to implement net/gross Promote the use of solar power at the Windy states such as Gujarat and Promote WSH projects through policy for WSH projects for Solar Rooftop metering regulations and tariff orders pan-India level through policy Maharashtra have also identified land initiatives at state level initiatives at state level parcels to develop WSH projects

Providing a model memorandum of Promote the use of solar power at the Delhi Electric Vehicle To increase the market share of battery- To drive rapid adoption of Battery understanding, PPA and CAPEX pan-India level through policy Policy 2020 electric vehicles to 25 percent of all new Electric Vehicles (BEVs) and bring agreement for rooftop projects in the initiatives at state level vehicles by 2024 about a material improvement in government sector Delhi's environment by bringing down Appointing experts to support PSUs in Promote use and implementation of emissions from the transport sector the implementation of rooftop projects solar rooftop through policy initiatives in ministries and departments National E-Mobility To facilitate demand for EVs through India to emerge as a leader in 2-W and 4- Program, 2018 greater public procurement to be W EVs market in the world by 2020, with Provide custom and excise duty Boosting growth and increasing the market implemented by Energy Efficiency total sales of 6-7 million units thus benefits to the solar rooftop sector to reach for companies and enable them to Services Limited (EESL) enabling Indian automotive industry to lower the cost of setting up, as well as serve the last mile markets that face power achieve global manufacturing leadership generate power deficit and can leverage affordable solar and contributing to National Fuel Security power technology to bridge the gap National Mission on To develop and promote effective means To incentivize the procurement and Adopted guidelines for the Promote the use of solar rooftop at the Transformative Mobility of sustainable transportation, a budget usage of EVs and relevant charging implementation of Phase II of its Grid- pan-India level through policy initiatives and Battery Storage of over USD 1.4 billion upfront incentives infrastructure Connected Rooftop Solar Programme and the FAME-II for the purchase of EVs USD 1.35 billion (Faster Adoption and and for supporting the deployment of National Wind-Solar Optimize and improve the efficacy of To mitigate inconsistencies associated Manufacturing of charging infrastructure to the tune of Hybrid (WSH) Policy, the usage of transmission with the generation of renewable power (Hybrid) and Electric USD 0.14 billion 2018 infrastructure and land and help in attaining better grid stability Vehicles in India) Grant-In-Aid for test facility To promote R&D in the space of EVs Stimulate the development of solutions To minimize variability and optimal Scheme, 2019 infrastructure for EV performance and technological advancement in the field utilization of infrastructure including Certification from National Automotive of wind-solar hybrid power generation land and transmission systems Testing and R&D Infrastructure Project (NATRIP) Implementation Society under In 2019, MNRE issued the Draft Offer a transparent bidding process FAME scheme Guidelines for 'Tariff Based Competitive for promotion and implementation of Bidding Process for Procurement of WSH projects Tax Cut on GST Council decided to cut tax rates on Accelerating the adoption of EVs by Power From Grid Connected Wind-Solar Electric Vehicles e-vehicles from 12 percent to 5 percent offering financial incentives Hybrid Projects'

SECI Initiatives Issuing of Request for Selection (RfS) for Optimal utilization of transmission for WSH Projects development of solar-wind hybrid projects infrastructure and land, reducing the (tranche-I), under which letters of award (LoA) variability in renewable power generation were issued for 840 MW capacity in 2019. and achieving better grid stability RfS for tranche-II were issued in 2019 To set-up 5 GW of solar and wind projects Optimal utilization of transmission with storage under the EPC mode over infrastructure and land, reducing the the next 10 years, adding to the country's variability in renewable power total of 37.69 GW of wind energy capacity generation and achieving better grid and 35 GW of solar capacity as of ﬁscal stability 2020. It invited bids for 1.2 GW wind-solar hybrid capacity under its tranche-III tender for Renewable Resources & Alternative Energy projects

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FINANCIALS Policy/ Description Implications Initiatives Policy/ Description Implications Atal Pension Initiatives To improve penetration of pensions, To create a universal social security Yojana (APY) especially for workers engaged in the system for all Indians, especially the informal sector, guaranteed by GoI has BoP segment and workers in the National Financial RBI, the central bank for India and the Guidance for new policies that can help been introduced for newly enrolled unorganised sector Inclusion Strategy, regulator for the banking and payments in creating improved and diversified PMJDY account holders. Under the 2019-2024 sector launched the NFIS 2019-24 with access to financial services, particularly scheme, a subscriber in the age group of the vision to reduce income inequality for unserved and underserved 18 to 40 years will receive a fixed monthly and poverty, promote social geographies and population segments. pension in the range of ~USD 14 to ~USD cohesion and shared economic The document also focuses on creating 68 after completing 60 years of age development pathways for creating a competitive market ecosystem for the private sector Certified Credit Launched by SIDBI for creating a Advisory to entrepreneurs by offering to participate in and bolster business Counsellors (CCC) structured mechanism to assist MSMEs in help in preparing business proposals, models that can scale Scheme, 2017 preparing financial plans and project financial documents and financial Pradhan Mantri The programme leverages on the existing Approximately 409.8 million accounts reports to facilitate banks in making statements and bridge the gap between Jan-Dhan Yojana large banking network and technological have been opened as of September informed credit decisions MSMEs and formal banking services (PMJDY) scheme, 2014 innovations to provide every household 2020. Out of the accounts opened, 60 with access to basic financial services, percent are in rural areas and 40 psbloanin59minutes These web portals were launched to Seamless access to loans through thereby bridging the gap in the coverage percent are in urban areas. Share of simplify and reimagine the process to raise formal sources in a short of banking facilities. The scheme also female account holders is about 55 funds by MSMEs by providing in-principle turnaround time offers products such as an overdraft percent of the total accounts opened loan approvals in less than 59 minutes facility of USD 132, accidental death-cum- The focus has also shifted from opening RBI licenses for Trade TReDS platforms, an institutional mechanism An alternative means of accessing finance disability insurance cover, term-life cover account for every household to every Receivables set up to facilitate the trade receivable for MSMEs based on trade receivables on and old age pension to improve social individual to increase the depth of Discounting System financing of MSMEs from corporate buyers invoices raised by MSMEs potentially protection measures for the low-income coverage (TReDS) platforms through multiple financiers addressing the working capital needs population arising due to delayed payments Unique Identification A statutory authority under the Since August 2018, more than 83 Pradhan Mantri A scheme to finance small business Sanctioning of USD 23.8 billion across Authority of provisions of Aadhar (Targeted Delivery percent of operational PMJDY accounts Mudra Yojana (PMMY), enterprises has been launched whereby states and UTs. MUDRA has created three India (UIDAI) of Financial and other Subsidies, Benefits are Aadhaar seeded and the biometric 2015 lending institutions would finance to non- products namely 'Shishu', 'Kishore' and and Services) Act, 2016 under the identification programme has played a corporate, non-farm micro-entrepreneurs 'Tarun' to signify the stage of Ministry of Electronics and Information significant role in allowing digitally- up to USD 13,240. Interest subvention growth/development and funding needs Technology (MeitY) enabled financial services to rapidly scheme has been launched for MSMEs to of the beneficiary micro unit/entrepreneur achieve scale. Aadhar has direct UIDAI , responsible for issuing unique reduce the cost of borrowings and also provide a reference point for the implications on the financial inclusion identification based on a biometric next phase of graduation/growth agenda for India since it provides a cost- authentication system to every citizen of effective KYC authentication system in a GoI initiative To address the distress caused by the It is expected that about 4.5 million India. So far, 1.24 billion of the Indian digital, biometric format allowing for COVID-19 COVID-19 pandemic, GoI announced units can potentially access benefits population has been covered by Aadhar banking institutions and agent networks guarantee free and collateral-free loans accorded by this scheme, resume to provide a range of financial services for the MSME sector, amounting to total business activity and safeguard people in underserved regions with significantly ~USD 40 billion in the employ of these business units reduced infrastructure costs Self-Reliant As part of fiscal measures taken to ease To provide funding support to the India (SRI) Fund Pradhan Mantri GoI introduced the PMSBY, a renewable To bolster social protection for its distress caused by COVID-19 pandemic in Daughter Funds for onward provision to Suraksha Bima Yojana one-year accidental death-cum-disability citizens, especially for the population the MSME sector, GoI introduced MSME MSMEs as growth capital, in the form of (PMSBY) cover of ~USD 2,735, offered to all the engaged in the unorganised sector Fund of ~USD 6.8 billion to boost equity equity or quasi-equity bank account holders in the age group of Potential demand-side usage may lead financing for MSMEs 18-70 years for a premium as low as to greater private sector participation These fiscal measures also include an ~USD 0.16 per annum extension of the credit moratorium period for MSMEs Pradhan Mantri Jeevan PMJJBY is an insurance product, offering Creating a universal social security Jyoti Bima Yojana one-year term life cover of ~USD 2,735 and system, targeted especially for the BoP Unified Payments To boost digital infrastructure to increase To allow multiple bank accounts to be (PMJJBY) has also been introduced to bank account segment Interface (UPI), 2016 acceptance of digital financial services, GoI, hosted on a single platform and enable holders between the age of 18- 50 years at through NPCI, an initiative of RBI and Indian real-time settlement of payment transactions an annual premium of ~USD 4.5 Bankers Association (IBA) launched UPI and ubiquity in ensuring uptake and adoption of digital payments services

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Special Purpose NBFCs including those offering Given the impact on the liquidity of Policy/ Description Implications Vehicle (SPV) as a microfinance services and Housing NBFCs following the COVID-19 Initiatives liquidity scheme to Finance Companies (HFCs) will be eligible pandemic, SPV is slated to avoid any Namami Gange, 2015 de-stress NBFCs/HFCs for this scheme that will be managed by potential systemic risks to the Aims to clean and rejuvenate River Data for the period 2015-17 indicates an SBI Capital Markets Ltd. (SBICAP), a financial sector Ganga to maintain 'Aviral' and 'Nirmal improvement in water quality in terms of subsidiary of State Bank of India (SBI) that Dhara' and ensure its ecological and dissolved oxygen and coliform bacteria has set up a SPV for this purpose geological integrity The direct financial implication for GoI, National Water under this scheme, is ~USD 0.7 million. The objective of the National Water Policy Planning and development of water However, on invocation, the extent of Policy, 2012 is to take cognizance of the existing resources and their optimum utilization government liability would be equal to the situation, to propose a framework for the amount of default subject to the creation of a system of laws and Guarantee ceiling. The ceiling of aggregate institutions and a plan of action with a guarantee has been set at ~USD 4.1 unified national perspective billion, to be extended as per need Ministry of Water Providing technical and financial To promote conservation of Other Initiatives Initiatives such as granting of licenses to To make transactions more seamless in Resources, assistance to encourage sustainable water bodies by GoI FinTechs, introduction of Bharat QR, a a bid to strengthen the supply side River Development and development and efficient management contactless Quick Response (QR) code ecosystem and demand-side Ganga Rejuvenation of water resources through various acceptance of digital financial services (MoWR, RD & GR) schemes and programmes such as Repair, at different levels of the value chain (for Renovation and Restoration (RRR) of water example- Peer-to-Peer (P2P), B2B) bodies scheme and Dam Rehabilitation and Improvement Programme (DRIP)

SUSTAINABLE ENVIRONMENT National Groundwater The scheme is worth USD 794 million and Enhance the recharge of aquifers and Management Policy/ partially funded by the World Bank, was introduce water conservation practices; Description Implications Improvement Scheme launched to manage groundwater promote activities related to water Initiatives (NGMIS), 2017 resources in India harvesting, water management, and Jal Jeevan Mission Union Budget 2021 allocated USD 50.95 To provide safe and adequate drinking crop alignment billion for Jal Jeevan Mission water through individual household tap Master Plan for Central Ground Water Board prepared The plan resulted in an annual recharge connections to all households in rural Artificial Recharge this conceptual document which involved of 2.14 million cubic meters (MCM) of India by 2024 to Ground Water the construction of about 2.3 million groundwater National Mission The Act envisages five-tier structure at To address the challenges posed by in India, 2017 artificial recharge and rainwater for Clean Ganga national, state and district level to take water pollution, particularly along the harvesting structures in rural areas and measures for prevention, control and polluted riverine length of 12,363 km 8.8 million rainwater harvesting abatement of environmental pollution in structures in urban areas river Ganga. CPCB has identified 302 Solid Waste MoEF&CC Change introduced the sixth Source segregation of waste mandate to polluted river stretches on 275 rivers, Management (SWM) category of waste management rules, channelize the waste to wealth by spanning 28 States and 8 UTs ensure Rules, 2016 which do not include plastic, e-waste, recovery, reuse and recycle continuous adequate flow of water to biomedical, hazardous and construction rejuvenate the river Ganga and demolition waste Ministry of Jal Shakti To deal with matters relating to water at Optimal development, maintenance of Waste Management one place in an integrated manner. To quality and efficient use of water Rules were introduced by the Ministry To promote improved methods of waste and Handling Rules regulate over-exploitation and consequent resources to meet the growing demand of Environment and Forests (MoEF), segregation and management depletion of groundwater, a Model Bill has for water in the country although their compliance is variable been circulated to all States/UTs to enable and limited them to enact suitable groundwater MSW (Management The MoEF issued MSW Rules, 2000 to Specific directives to the Local Bodies, legislation for the regulation of its and Handling) Rules, ensure proper waste management in District Administrations aned the Urban development, which includes the provision 2000 India. Municipal authorities are Development Departments of the State of rainwater harvesting responsible for implementing these Governments for proper and scientific Pradhan Mantri An umbrella scheme for irrigation To achieve convergence of investments in rules and for developing infrastructure management of municipal solid waste Krishi Sinchayee prioritized 99 major and medium irrigation, expand cultivable area under for collection, storage, segregation, Yojana (PMKSY) irrigation projects for completion by assured irrigation, improve on-farm water transportation, processing and December 2019 use efficiency to reduce wastage of water, disposal of MSW enhance the adoption of precision-irrigation and other water-saving technologies

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Process Deployed for Investment HEALTHCARE ANNEXURE III: Opportunity Areas Shortlisting Themes that were pressure tested for the Healthcare sector for 'Development Needs' and 'Potential for Investment' ranking

EDUCATION Average priority order ranking from expert consultaons Alignment to Themes that were pressure tested for the Education sector for 'Development Needs' Potenal for private Examples of scalable Idenfied roadblocks to Development Private sector development needs and sector parcipaons models scale needs interest and 'Potential for Investment' ranking policy priories White Space: Aligned to Low-cost healthcare delivery at development needs but not Growing investment Models have achieved scale Highly fragmented market, 1 4 the last mile enough policy clarity for momentum and reduced costs need for policy momentum private sector Average priority order ranking from expert consultaons Use of technology to improve Demonstrated investment Penetraon of digital Early stage businesses accessibility and affordability of High momentum in early years infrastructure and internet 2 1 Alignment to models have achieved scale Potenal for private Examples of scalable Idenfied roadblocks to Development Private sector healthcare delivery space connecvity development needs and sector parcipaons models scale needs interest policy priories Affordable healthcare equipment Growing investment Models have achieved scale Capacies to manufacture Medium 3 3 Use of technology to improve B2C models have and supplies momentum and raised funding quality products at scale Demonstrated investment demonstrated proof of access and learning outcomes in High NA 4 1 momentum concept and raised late stage Limited scaled examples as K12 educaon investments Universal health coverage Medium Low investment momentum this segment is not well Need for policy momentum 5 5 Use of technology to impart Early stage businesses developed Growing investment High models which have raised NA 2 2 vocaonal, praccal and digital momentum funding recently skills Demonstrated investment Life sciences innovaons Medium Models have achieved scale NA 4 2 momentum Demonstrated investment Models have achieved scale Access to educaon financing High NA 4 3 momentum and raised funding Alternave medicaon systems NA 6 and wellness products Lower Low investment momentum No notable scalable models 6 Demonstrated investment High quality and affordable Models have achieved scale Medium momentum in early years NA 3 4 in the early years space schools space

High CAPEX requirements Limited scaled examples but Shortlisted Eliminated Potenal High quality terary educaon Lower Low investment momentum some new universies are and relavely lower cash 6 5 coming up ﬂows White Space: Aligned to Highly fragmented market Skills development of the development needs but not with low purchasing power Low investment momentum No notable scalable models 1 6 unorganised workforce enough policy clarity for of target group; need for private sector policy momentum

Shortlisted Eliminated White Space Ranked themes evaluated for 3 criteria for ﬁnal shortlist

Investment Investment Opportunity Areas idenfied in Subsector Fundamentally marketable Sufficiently at-scale Proven in-market Opportunity Area consultaons shortlisted Potenal to address need for Systemic hurdles exist which No notable commercially viable Primary care infrastructure primary healthcare, especially in White Space Ranked themes evaluated for 3 criteria for final shortlist hinder the growth in this segment models at scale rural areas

Models can lead to sufficient Potenal to increase bed/people Models are profitable and Investment Terary care outside Tier I cies Yes Investment Opportunity Areas idenfied in market returns at scale to doctor rao expanding to lower Tier cies Subsector Fundamentally marketable Sufficiently at-scale Proven in-market Opportunity Area Healthcare Delivery consultaons shortlisted Models can lead to sufficient Potenal to expand models into Companies have potenal for Specialty centres Yes market returns at scale Tier II and Tier III cies revenue growth Models which cater to higher income Models can lead to sufficient market Potenal to address the need of 200 Online supplementary educaon for K12 groups have been successful and are Yes returns at scale million students Decentralized prevenve, primary and secondary care Models can lead to sufficient Potenal to increase bed/people Companies have potenal for expanding to lower income groups Yes centres market returns at scale rao and government doctors revenue growth Educaon Companies have not reported profits, Technology Online upskilling plaorms for working Models can lead to sufficient market Potenal to increase access to Potenally (early success) but have potenal for revenue White Space Models are profitable and professionals (linked to outcomes) returns at scale Models can lead to sufficient expert healthcare advisory in the growth Telemedicine/digitally-enabled remote treatment expanding, especially given the Yes market returns at scale absence of brick and mortar Online upskilling plaorms for unorganised Systemic hurdles exist which hinder the High potenal to scale (400 million surge in the COVID-19 pandemic No notable models at scale No healthcare facilies workforce growth in this segment workers) MedTech Affordable school chains for early childhood Models can lead to sufficient market Potenal to scale and impact female Segment has aracted PE investment Systemic hurdles exist which Potenal of system is Yes Data management in healthcare No notable models at scale No educaon returns at scale workforce parcipaon and seen successful exits hinder the growth in this segment concentrated in urban areas Companies are at early stages with Potenal to address the need of 200 Systemic hurdles exist which Potenal to increase market K12 school chains Regulaons prohibit for-profit operaons No notable models at scale No Content plaorms challenges around customer No Formal Educaon million students hinder the growth in this segment awareness in rural areas sckiness While aer school coaching is Models can lead to sufficient market Companies are profitable and have Coaching centres for non-Tier 1 cies popular in India, the market size No Models can lead to sufficient Few companies have seen early returns at scale aracted PE investment Managed Care Medical insurance products High potenal to scale No remains small market returns at scale success

Informal Educaon: Systemic hurdles exist which hinder the High potenal to scale (400 million Vocaonal training centres No notable models at scale No Skills Development growth in this segment workers)

Models can lead to sufficient market 63 million students aend Segment has aracted PE investment Yes No Potenal Instute financing Yes returns at scale ‘affordable private schools’ and seen successful exits Educaon Financing Potenal to address needs of lower Systemic hurdles exist which hinder the Student financing purchasing power to access No notable models at scale No growth in this segment educaon

Yes No Potenal

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Ranked themes evaluated for 3 criteria for ﬁnal shortlist

Investment Investment Opportunity Areas idenfied in Investment Subsector Fundamentally marketable Sufficiently at-scale Proven in-market Opportunity Area Investment Opportunity Areas idenfied in consultaons Subsector Fundamentally marketable Sufficiently at-scale Proven in-market Opportunity Area shortlisted consultaons shortlisted Using digital tools and physical operaons to service and Models can lead to sufficient Potenal to create impact through Companies have aracted PE Yes Models can lead to sufficient Segment has seen successful increasing farmer reach market returns at scale farmer or specialized plaorms investment B2B hospital equipment (venlators, etc.) Potenally (early success) Yes market returns at scale models High potenal to scale for fresh Companies have aracted PE Use of digital plaorms to solve for supply -chain issue Digital trade can boost the acvity Yes Segment has seen successful produce investment Models can lead to sufficient Potenal to reach rural areas by B2B diagnosc equipment models but do not address No market returns at scale reducing cost of equipment Systemic hurdles if overcome can Companies have aracted PE affordability Food Retailers & Use of technology for efficient farming processes Potenally (early success) White Space Distributors support the growth in segment investment Affordable Models can lead to sufficient Segment has seen successful equipment & B2B: Consumables Potenally (early success) Yes Models can lead to sufficient Potenal to reach farmers by market returns at scale models Reducon in wastage of farm produce No notable models at scale White Space supplies market returns at scale increasing momentum Segment has seen successful Models can lead to sufficient Potenal to reach rural areas by B2B2C services, e.g., stents models but do not address No Systemic hurdles if overcome can Potenal to be scalable with Few companies have seen early market returns at scale reducing cost of equipment Storage infrastructure for agri-produce White Space affordability support the growth in segment demand for storage infra investments

Models can lead to suﬃcient Potenal to reach mass market by Few companies have seen early Systemic and policy hurdles if Segment has aracted PE Segment has aracted PE B2C: Medical devices Yes Food processing for value addion and improving life of market returns at scale reducing cost of devices success overcome can support the growth investment and seen successful investment and seen expansion in Yes food products in segment exits Tier I and Tier II cies Processed Foods Systemic hurdles & regulaons Few companies have seen early Vaccine manufacturing Potenal model is highly scalable No Systemic hurdles exist which Potenal to maintain the Companies have aracted PE hinder the growth in this segment success Export of processed foods No hinder the growth in this segment internaonal quality norms investment and high growth Regulatory hurdles of clinical trials Segment has seen successful Drug development and research to be eliminated for growth in this Potenally (early success) No models Life Sciences segment Managed Care Models can lead to suﬃcient Few companies have seen early Yes No Potenal APIs manufacturing Potenally (early success) Yes market returns at scale success

Models can lead to suﬃcient Segment has seen successful Drugs manufacturing Potenally (early success) Yes market returns at scale models

Yes No Potenal

FOOD & BEVERAGES Investment Investment Opportunity Areas idenfied in Subsector Fundamentally marketable Sufficiently at-scale Proven in-market Opportunity Area consultaons Themes that were pressure tested for the F&B sector for 'Development Needs' and 'Potential shortlisted Companies have not reported Producon and delivery of meat/dairy/fish market Systemic hurdles of cold chain Potenal in value added dairy for Investment' ranking profits, but have received No products exist to manage supply-demand products segments is scalable investments from PE

Meat, Poultry & Dairy Biotech inputs that can help in servicing value chains for Systemic hurdles hinder the Potenal to scale is seen among Companies have aracted PE No Average priority order ranking meat/dairy/fish market growth of segment few players investment from expert consultaons Post-harvest infra for servicing value chains for Models can lead to sufficient Alignment to Potenal model lacks scalability No notable models at scale No Potenal for private Examples of scalable Idenfied roadblocks to Development Private sector meat/dairy/fish market support from government development needs and sector parcipaons models scale needs interest Systemic and regulatory hurdles Potenal to reach last-mile policy priories Formal modes of financing for financing exist which hinder the growth in customer by increasing models in No notable models at scale No this segment the market Agri-tech (including E-markets Demonstrated investment Models have achieved scale and technological intervenons High NA 3 1 Risk-migaon products to safeguard farmers from Regulatory and policy reforms can Companies have aracted PE momentum and raised funding Agriculture Financing Potenally (early success) White Space in the agriculture space) future price falls in case of excess produce accelerate growth in this segment investments

Aligned to development Potenal to reach last-mile R&D in agriculture and agri- Growing investment Regulatory hurdles exist which needs but not enough policy No notable scalable models Need for policy momentum 2 5 Agri-insurance customer by increasing models in No notable models at scale No momentum hinder the growth in this segment biotechnology clarity for private sector the market

Limited scaled examples as Rural markets, logiscs and Demonstrated investment High this segment is not well NA 2 2 momentum supply chain to be strengthened developed Yes No Potenal Growing investment Models have achieved scale Food processing High NA 3 3 momentum and raised funding

Growing investment Models have achieved scale Poultry, Fish and Dairy farming High NA 3 3 momentum and raised funding

Aligned to development Limited scaled examples as NA Agri-ﬁnancing needs but not enough policy Low investment momentum this segment is not well 2 4 clarity for private sector developed

Shortlisted Eliminated Potenal

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Investment Investment Opportunity Areas idenﬁed in Subsector Fundamentally marketable Suﬃciently at-scale Proven in-market Opportunity Area RENEWABLE RESOURCES & ALTERNATIVE ENERGY consultaons shortlisted

Models can lead to suﬃcient Potenal of 81% of total vehicles Segment witnessed CAGR of 7.33% Themes that were pressure tested for the Renewable Resources & Alternative Energy sector Manufacturing of EVs Yes market returns at scale and incenves under FAME with sales volume of ~25 million

for 'Development Needs' and 'Potential for Investment' ranking Use of EVs in other industries for logiscs, hyperlocal Models can lead to suﬃcient Potenal to get implemented for Segment has market size of USD No Electric Vehicle (EV) delivery and micro-mobility market returns at scale short-distance commute opons 4.5 billion in shared mobility space

Delicensing to set-up charging Potenal to set-up charging infra Segment has aracted PE Charging infrastructure for EVs infra will boost private White Space Average priority order ranking through capital subsidies investment from expert consultaons parcipaon

Alignment to High capital and low returns Potenal to be scalable by being Potenal for private Examples of scalable Idenfied roadblocks to Development Private sector Component manufacturing for Wind energy sector No notable models at scale No development needs and prohibit for-profit operaons cost effecve sector parcipaons models scale needs interest policy priories Wind Technology & High capital cost prohibit for-profit Potenal experience high speed Wind energy projects No notable models at scale No Project Developers operaons wind turbines only in few regions Demonstrated investment Models have achieved scale Scalable solar energy projects High NA 1 1 momentum and raised funding Innovave soluons for resolving issues affecng the Models can lead to sufficient Potenal to evaluate issues Segment has aracted interest of Yes renewable energy sector market returns at scale through ulity dependent model investors in tendering process Early stage businesses Electric vehicle manufacturing Growing investment High models which have raised NA 3 3 momentum and infrastructure funding recently Yes No Potenal

Harnessing wind resources to Demonstrated investment Models have achieved scale Medium NA 2 2 meet energy needs momentum and raised funding

Limited scaled examples as Harnessing hydro power to meet Not very eco-friendly, highly Medium Low investment momentum this segment is not well 5 4 capital intensive energy needs developed

Converng waste to energy (such Limited scaled examples as Waste segregaon is not followed, which reduces the 4 as biofuels) Medium Low investment momentum this segment is not well 4 developed quality of raw materials

Upgrading industrial and Aligned to development agricultural technology to reduce needs but not enough policy Low investment momentum No notable scalable models Need for policy momentum 6 5 emissions clarity for private sector

Forestry Management and Need for policy momentum 6 FINANCIALS processing of forest produce Lower Low investment momentum No notable scalable models 7 Themes that were pressure tested for the FInancials sector for 'Development Needs' and 'Potential for Investment' ranking Shortlisted Eliminated Potenal

Average priority order ranking from expert consultaons Alignment to Potenal for private Examples of scalable Idenﬁed roadblocks to development needs and Development Private sector policy priories sector parcipaons models scale needs interest

Access to credit by SMEs and last- Demand side awareness; mile populaon for income Demonstrated investment Models have achieved scale availability of adequate data High 1 1 Ranked themes evaluated for 3 criteria for ﬁnal shortlist generang purposes and momentum and raised funding to determine credit- consumpon worthiness

Challenges in underwring, Access to insurance by last mile- Limited scaled examples as high transacon costs for Investment High Low investment momentum this segment is not well 3 3 populaon, parcularly from the last mile outreach, low developed Subsector Investment Opportunity Areas idenfied in consultaons Fundamentally marketable Sufficiently at-scale Proven in-market Opportunity Area informal sector demand side awareness shortlisted Access to pensions by last-mile Limited scaled examples as Unviable to scale in rural Solar component manufacturing, as well as assembly High lending rates and capital Potenal to address No notable models at scale No populaon, parcularly from the Medium Low investment momentum this segment is not well areas; low demand side 4 5 lines, to help reduce dependence on imports cost prohibit for-profit operaons manufacturing capacity of 10 GW informal sector developed awareness Potenal to grow if import Potenal to upli the segment Manufacturing of baeries used in solar panels dependence for raw materials can No notable models at scale No Asset lean models for last-mile Growing investment Models have achieved scale through introducon of policies High NA 2 2 be reduced delivery of financial services momentum and raised funding

Rooop solar to serve energy needs of residenal, Models can lead to sufficient Potenal to scale and impact Companies have aracted PE Yes Payment services for last-mile Early stage businesses Supply side iniaves to commercial and industrial needs market returns at scale employability in the country investment Growing investment populaon, parcularly from the Medium models which have raised create models for vernacular 4 6 momentum Potenal to be scalable by informal sector funding recently populaons Operang off-grid solar energy projects to supply Models can lead to sufficient Solar Technology & resolving polical/regulatory No notable models at scale No Project Developers electricity in remote areas market returns at scale Financial infrastructure to support issues Growing investment Models have achieved scale banking at last mile, parcularly the High NA 3 - Manufacture of solar ulity products to encourage use of Less commercially viable demand Potenal to reach economies of Schemes/iniaves undertaken momentum and raised funding No informal sector and SMEs clean energy based products prohibit for-profit operaons scale via OPEX subsidies by GoI to help farmers Limited scaled examples as Demand-supply gap exists due to Potenal to reach last-mile Financial services for sector-specific Trading/supply of solar energy based products to last- Companies have aracted PE Medium Low investment momentum this segment is not well- Scalability for 4 - high selling costs (due to customers by solarizing remote No value chains mile consumers investment developed component cost) areas Floang solar tenders have been Innovave soluons for resolving limited land -bank Potenal to grow if issues related Potenal to resolve limited land issued by SECI but models will White Space issues which plague the solar industry to tariff are resolved availability with floang solar take me to show results Shortlisted Eliminated Potenal

Yes No Potenal

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Ranked themes evaluated for 3 criteria for final shortlist ANNEXURE IV: SDG Performance Index for India Investment Investment Opportunity Areas idenfied in Subsector Fundamentally marketable Sufficiently at-scale Proven in-market Opportunity Area consultaons shortlisted Segment has aracted PE Models can lead to sufficient Potenal to address the credit gap investment and seen expansion MSME financing through digital and offline channels Yes SDG 1: No Poverty market returns at scale of USD 397 billion rural areas, serving last mile segments Segment has seen successful Models can lead to sufficient High potenal to scale in rural models in urban and peri-urban Fintech plaorms for facilitang payment transacons market returns. Potenal in rural areas with appropriate product Yes Consumer Finance areas with increasing reach in areas design and use case rural. Investor acvity is present but Infrastructure such as ATMs and successful exits awaited. Recent Asset lean acceptance infrastructure for last-mile Systemic hurdles if overcome can agent networks have reach in rural regulatory changes for ATMs Yes banking support the growth in segment areas with potenal for expansion expected to spur growth and expansion Indicators Expected changes in market Absence of models, specifically for Absence of business dynamics due to scale of GoI’s low-income segments with models/companies that have Insurance Digital and offline insurance for low income segments Ayushman Bharat scheme likely to White Space evidence of sufficient returns on proven, scalable models serving pave way for greater private • Population living below National Poverty Line investments rural, low income populaons sector parcipaon • Households with any usual member covered by any

Yes No Potenal health scheme or health insurance • People, who demanded employment under Mahatma Gandhi National Rural Employment Guarantee Act 2005 (MGNREGA), were provided the employment SUSTAINABLE ENVIRONMENT • Population receiving social protection beneﬁts Themes that were pressure tested for the Sustainable Environment sector for 'Development under Maternity Beneﬁt Needs' and 'Potential for Investment' ranking • Households living in kutcha houses

Average priority order ranking from expert consultaons Alignment to Potenal for private Examples of scalable Idenﬁed roadblocks to Development Private sector Achiever (>99) Performer (50 - 64) development needs and sector parcipaons models scale needs interest policy priories Front Runner (65 - 99) Aspirant (0 - 49)

Water resource management Limited scaled examples as Growing investment (including focus on food security), High this segment requires policy Need for policy momentum 2 2 momentum Water treatment and harvesng momentum for development

Willingness to pay for water Access to clean drinking water- Aligned to development needs but not commercially Low investment momentum No notable scalable models is limited; thus it is restricted 3 3 SDG 2: Zero Hunger especially in rural areas viable for private investment to CSR acvies

Limited scaled examples as Waste management, including Growing investment High this segment requires policy Need for policy momentum 1 1 momentum solid urban waste momentum for development

Toilet infrastructure to eliminate Aligned to development OD. Expeding construcon and needs but not commercially Low investment momentum No notable scalable models Limited to CSR acvies 4 3 leveraging technology viable for private investment Indicators

Shortlisted Eliminated Potenal • Ratio of rural households covered under public distribution system to rural households where the monthly income of the highest earning member is less than ` 5,000 Ranked themes evaluated for 3 criteria for ﬁnal shortlist • Children under 5 years of age are stunted and

Investment under 4 years are underweight Investment Opportunity Areas idenﬁed in Subsector Fundamentally marketable Suﬃciently at-scale Proven in-market Opportunity Area consultaons shortlisted • Pregnant women aged 15-49 years are anaemic Only a few outliers have been successful in raising private sector Regulatory and policy reforms can Potenal to scale is seen among Waste Management Solid waste management/treatment funding; but policy momentum is White Space • Children between 6–59 months are anemic accelerate growth in this segment few players required for growth and development of this segment • Rice, wheat and coarse cereals produced annually per unit area

Yes No Potenal • Gross value added in agriculture per worker

Achiever (>99) Performer (50 - 64) Front Runner (65 - 99) Aspirant (0 - 49)

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SDG 3: Good Health and Well-Being SDG 5: Gender Equality

Indicators Indicators • Female to male ratio of average wage/salary earning received during the preceding calendar • Maternal Mortality Ratio month among the wage salaried employees • Proportion of institutional deliveries (rural + urban)

• Under-ﬁve mortality rate per 1,000 lives • Rate of crimes against women per 100,000 female population • Fully immunized children in age group 0-5 • Married women aged 15-49 who have ever • Total case notiﬁcation rate of Tuberculosis per experienced spousal violence 1 lakh population • Proportion of sexual crime against girl children to • HIV incidence per 1,000 uninfected population total crimes against children • Currently married women aged 15-49 years who • Seats won by women in the general elections to use any modern method of family planning state legislative assembly • Total physicians, nurses and midwives per 10,000 • Female labour force participation rate (LFPR) population Achiever (>99) Performer (50 - 64) Achiever (>99) Performer (50 - 64) • Operational land holdings- gender-wise Front Runner (65 - 99) Aspirant (0 - 49) Front Runner (65 - 99) Aspirant (0 - 49)

SDG 4: Quality Education SDG 8: Decent Work and Economic Growth

Indicators

• Adjusted Net Enrolment Ratio at elementary and secondary education Indicators

• Children in the age group 6-13 are out of school • Annual growth rate of Net Domestic Product (NDP) • Average annual drop-out rate at secondary level per capita

• Percentage of students in grade III, V, VIII and X • Ease of doing business score (EODB) achieving at least a minimum proﬁciency level in terms of nationally deﬁned learning outcomes to • Unemployment rate be attained by pupils at the end of each of above • Labour Force Participation Rate grades • Number of banking outlets per 100,000 population • Gross Enrolment Ratio in higher education • Households with a bank account • Gender Parity Index for higher education • Population of women account holders under • Disabled children attending educational institution PMJDY • Proportion of trained teacher by education level

• Percentage of schools with Pupil Teacher ratio less than/equal to 30 Achiever (>99) Performer (50 - 64) Achiever (>99) Performer (50 - 64) Front Runner (65 - 99) Aspirant (0 - 49) Front Runner (65 - 99) Aspirant (0 - 49)

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SDG 10: Reduced Inequality SDG 12: Sustainable Consumption & Production

Indicators

• Growth rates of household expenditure per capita among the bottom 40 percent of population in Indicators rural India • Groundwater withdrawal against availability • Growth rates of household expenditure per capita among the bottom 40 percent of population in • Percentage use of nitrogen fertilizers out of NPK urban India • Per capita hazard waste generated • Gini coeﬃcient of household expenditure in • Ratio of processed quantity of hazard waste sent to rural India recycle to hazard waste generated • Gini coeﬃcient of household expenditure in • Municipal Solid Waste (MSW) treated to MSW urban India generated • Proportion of seats held by women in Panchayat • Installed capacity of grid interactive bio power per Raj Institutions 100,000 population • Proportions of SC/ST persons in state legislative • Wards with 100% source segregation assemblies

• Ratio of transgender labour force participation rate to male labour force participation rate

Achiever (>99) Performer (50 - 64) • Schedule caste sub plan fund utilized Achiever (>99) Performer (50 - 64) Front Runner (65 - 99) Aspirant (0 - 49) Front Runner (65 - 99) Aspirant (0 - 49) • Tribal sub plan fund utilized

SDG 11: Sustainable Cities & Communities SDG 13: Climate Action

Indicators Indicators • House completed under Pradhan Mantri Awas Yojana (PMAY) as a percentage of net demand • Number of human lives lost per 1,000,0000 assessment for houses population due to extreme weather events

• Urban households living in slums • Renewable share of installed generating capacity

• Wards with 100% door to door waste collection • CO2 saved from LED bulbs per 1,000 population

• Waste processed • Installed capacity of solar power as proportion of installed grid interactive renewable power • Installed sewage treatment capacity as a proportion of sewage generated in urban areas

Achiever (>99) Performer (50 - 64) Achiever (>99) Performer (50 - 64) Front Runner (65 - 99) Aspirant (0 - 49) Front Runner (65 - 99) Aspirant (0 - 49)

167 168 SDG 16: Peace, Justice & Strong Institutions

Indicators

• Reported murders per 1 lakh population

• Proportion of population subjected to physical, physiological or sexual violence in the previous 12 months

• Reported cognizable crimes against children per 1 lakh population

• Number of victims of human traﬃcking per 100,000 population by sex, age and form of exploitation

• Estimated number of courts per 10 lakh persons

• Cases reported under Prevention of Corruption Act & related sections of IPC per 100,000 population

• Births registered

• Population covered under Aadhar

Achiever (>99) Performer (50 - 64) Front Runner (65 - 99) Aspirant (0 - 49)

169 United Nations Development Programme (UNDP) 55 Lodhi Estate, Post Box 3059, New Delhi-110 003 (India) Telephone: 91-11-46532333 www.in.undp.org