Sagarmala Finance Corporation Limited has launched India’s first blue bond to raise ₹600 crore for ocean and coast related infrastructure. The 10 year debt issue includes a ₹500 crore green shoe option and carries an AA+ rating, with SBI Capital Markets acting as arranger. The issue creates a new labelled debt route to fund ports, coastal shipping and related maritime assets within the current financial year.
What Are Blue Bonds and How Do They Work?
A blue bond is a fixed income debt security where the borrower promises to pay regular interest and return the principal on maturity, and the money raised is used only for ocean and water related projects. The Blue Bond in India follows the same global model, where proceeds are ring fenced for eligible maritime activities and tracked separately from other funds.
Blue bonds work like regular bonds for investors. An investor lends money to the issuer by buying the bond. The issuer pays a fixed interest, called a coupon, every year and repays the full principal at the end of the tenor, which is the total life of the bond. The difference lies in the use of proceeds. The issuer must publish a framework that lists which projects qualify, how projects will be selected, how money will be managed, and how allocation and environmental impact will be reported.
Eligible blue projects usually cover sustainable ports and shipping, clean coastal transport, marine pollution control, sustainable fisheries and aquaculture, offshore renewable energy, marine ecosystem protection, and clean water and wastewater management. The International Finance Corporation (IFC) Guidelines for Blue Finance, first issued in 2022, and the International Capital Market Association (ICMA) Practitioner’s Guide for Bonds to Finance the Sustainable Blue Economy, issued in September 2023, set the global reference for these categories. Both guides treat blue bonds as a use of proceeds bond aligned with the Green Bond Principles and linked to Sustainable Development Goal 6 (Clean Water and Sanitation) and Sustainable Development Goal 14 (Life Below Water).
The world’s first sovereign blue bond was issued by the Republic of Seychelles in October 2018. The Seychelles raised $15 million through a 10 year bond with support from the World Bank and the Global Environment Facility (GEF) to fund sustainable fisheries and marine protection. Fiji, Indonesia, Belize and several companies and banks, including the Asian Development Bank (ADB), later issued blue bonds. India had so far participated mainly through sovereign green bonds, so the Sagarmala issue marks the formal entry of the blue label in domestic debt markets.
Sagarmala Finance Corporation: India’s First Maritime NBFC
Sagarmala Finance Corporation Limited (SMFCL) is India’s first Non Banking Financial Company (NBFC) dedicated only to the maritime sector. An NBFC is a financial company registered with the Reserve Bank of India (RBI) that gives loans and makes investments like a bank but cannot accept demand deposits from the public. SMFCL fills a long standing gap because ports, shipping, shipbuilding and inland waterways need large, long term loans that regular lenders often avoid due to long gestation and sector specific risks.
Is Sagarmala Finance Corporation a Government or Private Entity?
Sagarmala Finance Corporation Limited is a fully government owned Mini Ratna Category-I Central Public Sector Enterprise under the Ministry of Ports, Shipping and Waterways. The company is 100 percent owned by the Government of India and operates as a non deposit taking NBFC registered with the Reserve Bank of India.
SMFCL traces its origin to the Sagarmala Development Company Limited (SDCL), which was incorporated on 31 August 2016 under the Companies Act, 2013 to support the Sagarmala Programme through equity support to project companies. Shareholders approved the change of name to Sagarmala Finance Corporation Limited in May 2025 after the Reserve Bank of India recommended a sector specific NBFC structure. The RBI issued the Certificate of Registration on 19 June 2025, and Union Minister for Ports, Shipping and Waterways Sarbananda Sonowal inaugurated SMFCL as a maritime NBFC in June 2025.
As an NBFC, SMFCL offers short, medium and long term funding to port authorities, shipping companies, shipyards, Micro, Small and Medium Enterprises (MSMEs), startups, maritime educational institutions and logistics players. The mandate also covers emerging areas such as green shipping, cruise tourism, ship repair, renewable maritime energy and maritime knowledge clusters. The company operates under the administrative control of the Ministry of Ports, Shipping and Waterways and aligns its lending with the Maritime Amrit Kaal Vision 2047, the national roadmap to make India a leading global maritime power by 2047.
What Is the Sagarmala Project?
The Sagarmala Programme is the flagship port led development initiative of the Government of India under the Ministry of Ports, Shipping and Waterways. The Union Cabinet gave in principle approval to the Sagarmala concept on 25 March 2015, and the National Perspective Plan for the programme was released by the Prime Minister on 14 April 2016 at the Maritime India Summit. The word Sagarmala means garland of the sea, and the motto of the programme is port led prosperity.
The core vision of the Sagarmala Programme is to cut logistics cost and time for export import and domestic cargo by using India’s 11,099 km long coastline and about 14,500 km of potentially navigable waterways. India sits on key international maritime trade routes, and the programme seeks to shift cargo from costly road and rail routes to cheaper coastal shipping and inland waterways, while building modern ports and linking them to the hinterland through rail, road and waterways.
The programme is organised around five pillars. Each pillar addresses a different link in the maritime logistics chain, from port capacity to industrial use and community benefits.
| Pillar | Focus Area |
|---|---|
| Port modernisation and new port development | Upgrading existing major and non major ports, building deep drafts, mechanisation and greenfield ports |
| Port connectivity enhancement | Better rail, road and inland waterway links from ports to hinterland and logistics hubs |
| Port led industrialisation | Coastal Economic Zones, industrial clusters, smart industrial port cities and logistics parks near ports |
| Coastal community development | Skill training, fisheries support, tourism and livelihood programmes for coastal districts |
| Coastal shipping and inland water transport | Promoting coastal shipping, inland vessels and modal shift to waterways to save cost and fuel |
Under the programme, more than 800 projects with an estimated investment of about ₹5.79 lakh crore have been identified for implementation by 2035, with central ministries, state governments and major ports as implementing agencies. SMFCL now acts as a central financing arm for this pipeline and also supports related schemes such as the Maritime Development Fund and shipbuilding assistance programmes.
First Blue Bond in India: Issue Structure and Key Terms
Sagarmala Finance Corporation Limited plans to raise ₹600 crore through 10 year bonds, with the option to keep extra subscriptions up to ₹500 crore. The Sagarmala blue bond bidding was scheduled around 28 September and the proceeds are meant for maritime sector lending, greenfield port projects, coastal road networks and related coastal infrastructure to be used within the current financial year.
The headline terms of the issue can be read together in a single view.
| Term | Detail |
|---|---|
| Issuer | Sagarmala Finance Corporation Limited, Mini Ratna Category-I public enterprise |
| Instrument | Blue bond, a labelled use of proceeds debt security |
| Base target | ₹600 crore |
| Green shoe option | ₹500 crore, taking total collection up to ₹1,100 crore if fully used |
| Tenor | 10 years |
| Credit rating | AA+ from ICRA and CARE Ratings |
| Arranger | SBI Capital Markets Limited |
| Use of proceeds | Maritime lending, greenfield ports, coastal roads and related blue projects |
What Is a Green Shoe Option?
A green shoe option in a bond or Non Convertible Debenture (NCD) issue means the right to retain extra subscriptions beyond the base size. An NCD is a fixed tenure loan paper that cannot be converted into company shares. In this issue, the base size is ₹600 crore. If investor demand crosses that level, Sagarmala Finance Corporation can accept up to ₹500 crore more instead of refunding the extra money. The total issue can therefore expand to ₹1,100 crore. The rating for the issue must cover the full amount including the green shoe portion.
AA+ Rating and Transaction Parties
The blue bond carries an AA+ credit rating from ICRA and CARE Ratings. A credit rating is an independent score of how safely a borrower can repay debt. AA+ sits in the upper tier of domestic long term ratings and signals a high degree of safety with very low credit risk, though it is one notch below the highest AAA grade. A higher rating usually helps the issuer borrow at a lower interest cost because investors see lower risk.
SBI Capital Markets Limited (SBICAPS) served as the arranger for the issuance. SBICAPS is a Category I merchant banker registered with the Securities and Exchange Board of India (SEBI). The company was incorporated in 1986 as a wholly owned subsidiary of the State Bank of India (SBI) and is headquartered in Mumbai. As arranger, SBICAPS structures the issue, prepares documentation, reaches out to investors and manages bidding and allotment. Investors were invited to submit coupon and commitment bids, and the final coupon would reflect market demand for the 10 year paper.
Blue Bonds vs Green Bonds
Green bonds raise money for a wide set of environmental projects, while blue bonds raise money only for ocean and water related projects within that wider set. In global practice, a blue bond is treated as a green bond whose proceeds go fully to blue activities. Both follow the same four tests of use of proceeds, project selection, management of money and reporting, along with a public framework and an external second opinion.
The table below captures the working distinction that matters for labelled debt in India.
| Feature | Green Bond | Blue Bond |
|---|---|---|
| Eligible use | Renewable energy, clean transport, green buildings, waste management, land use and water projects | Sustainable ports, shipping, fisheries, marine protection, offshore energy and clean water projects linked to oceans |
| Standard | ICMA Green Bond Principles, SEBI framework for green debt securities | Same Green Bond Principles plus blue guidance from IFC and ICMA on sustainable blue economy |
| Indian example | Government of India Sovereign Green Bonds issued since 2022-23 for metros, renewable energy and related sectors | Sagarmala Finance Corporation blue bond for maritime and coastal infrastructure |
| Investor base | Broad environmental, social and governance mandates | Niche ocean focused mandates plus general green investors seeking diversification |
The Securities and Exchange Board of India, established in 1988 and given statutory status through the SEBI Act, 1992 with headquarters in Mumbai, regulates green debt securities in India. The regulator requires issuers to disclose the selection process, tracking of proceeds and annual impact reporting to prevent greenwashing, which means making false or inflated environmental claims. The same discipline of disclosure and external review is expected to shape blue bond practice as the market grows.
Sustainable Finance Context and Global Precedents
The Sagarmala blue bond arrives when India is already building a sovereign and corporate green debt record. The Union Budget for 2022-23 announced Sovereign Green Bonds to fund green infrastructure, and the Department of Economic Affairs in the Ministry of Finance published a framework aligned with ICMA principles. The framework is overseen by a Green Finance Working Committee chaired by the Chief Economic Adviser. India raised ₹16,000 crore through sovereign green bonds in 2022-23 and ₹20,000 crore in 2023-24, mainly for clean transport such as metro rail and electric locomotives, renewable energy and related sectors.
Globally, the blue bond market remains small but is growing fast from a low base. Market estimates placed annual blue bond issuance at about $2.5 billion in the previous year, still less than one percent of green bond volumes. Multilateral banks have issued about $2 billion of blue bonds so far, while private companies, led by Asian banks and shipping and port operators, have raised about $9 billion. Recent corporate examples include offshore wind, port and shipping companies that used proceeds to cut pollution from vessels, improve port efficiency and protect marine ecosystems.
For India, the blue economy link is direct. The blue economy means the sustainable use of ocean resources for growth, jobs and livelihoods while protecting ocean health. India’s coastline, island territories, fisheries, coastal tourism and 12 major ports and more than 200 non major ports create a large pipeline of bankable blue projects. The Sagarmala issue tests whether domestic investors will pay a fair price for a blue label and whether issuers will publish project level details that show how ports and coastal roads meet sustainability tests.
Significance for India’s Maritime Sector and Way Forward
The blue bond gives Sagarmala Finance Corporation a diversified funding source beyond budget support and bank loans. As a new NBFC, SMFCL needs long term market money to match the long life of port and connectivity assets. A successful 10 year issue would set a pricing benchmark for future maritime debt and show that investors accept port and coastal assets as sustainable when governed by clear selection and reporting rules.
For the maritime sector, the impact runs through cheaper logistics and faster project execution. Dedicated funds for greenfield ports, coastal roads, port rail links and coastal shipping can cut cargo movement cost, reduce fuel use and ease congestion at major gateways. Small borrowers such as MSMEs, startups and ship repair yards, which often lack collateral or sector specific appraisal, can gain from a lender that understands vessel cash flows and port revenues.
The way forward will depend on three tests. First, pricing and demand. The coupon that investors finally accept will show the real value of the blue label in India. Second, transparency. SMFCL will need to publish its blue framework, second opinion, allocation report and impact indicators such as emission savings, water treatment capacity or coastal resilience outcomes. Third, replication. Municipal bodies, port trusts and private operators are already studying similar issues, which could deepen the domestic sustainable bond market if early deals perform well and reporting stays credible.
Key Takeaways
- Sagarmala Finance Corporation Limited launched India’s first blue bond to raise ₹600 crore with a ₹500 crore green shoe option and a 10 year tenor.
- The issue is rated AA+ by ICRA and CARE Ratings and SBI Capital Markets acted as arranger.
- SMFCL is India’s first maritime sector NBFC, registered with the RBI on 19 June 2025 and owned by the Government of India under the Ministry of Ports, Shipping and Waterways.
- The Sagarmala Programme was approved on 25 March 2015 and its National Perspective Plan was released on 14 April 2016 to promote port led development.
- The world’s first sovereign blue bond was issued by Seychelles in October 2018 to raise $15 million for marine and fisheries projects.
- A green shoe option allows the issuer to retain extra subscriptions beyond the base size, here expanding the total issue up to ₹1,100 crore.
