December 28, 2021
Investee Company of Neev Fund (I) : Collection of agri-residue for the biomass energy
Investee Company of Neev Fund (I) : Dairy farmers delivering milk at the collection centre
Investee Company of Neev Fund (II) : Pollution control devices on diesel gensets
On December 24, Japan International Cooperation Agency (JICA) concluded a 2.14 billion Indian rupee (approximately 3.2 billion yen) investment agreement with the SVL-SME Fund (commonly known as Neev Fund II), whose fund manager is SBICAP Ventures Limited (SVL), a subsidiary of India's largest state-owned bank, State Bank of India (SBI). JICA’s investment will be appropriated for investment in small and medium-sized enterprises (SMEs) that are engaged in solving social and environmental issues in India.
In spite of India continuing to experience rapid economic and population growth, the unemployment rate as of 2019 stands at 5.27%, the highest among other South Asian countries. The creation of new employment opportunities has become an important issue for sustainable socio-economic growth. The country is home to 63.38 million SMEs (as of 2020), which account for 31% of GDP, 45% of exports, and about 25% of the workforce, or 124 million jobs (as of 2018), and plays an important role in job creation. On the other hand, SMEs in the country are experiencing challenges in raising funds, and the gap between supply and demand for investments is approximately 283 billion dollars (as of 2017), making it difficult for them to develop new businesses that involve aggressive risk-taking. This fund will create jobs by facilitating the expansion of SMEs in India that are engaged in businesses such as renewable energy, climate action, environmental improvement, sustainable agriculture, and urban transportation, in addition to clean water, health and sanitation. It will also contribute to solving ESG (Environment, Social and Governance) issues as well as achieving the SDGs (Sustainable Development Goals) Goal 1 (No Poverty) and Goal 8 (Decent Work and Economic Growth).
SVL-SME Fund is an impact investment fund that pursues social and environmental impacts together with economic returns from its investments. It is characterized by the cooperation of global and local financial institutions to support improvement in the ESG response of its investments, as well as its impact assessment system. In 2015, at the initiative of Prime Minister Modi of India and then Prime Minister Cameron of the United Kingdom, the first fund (Neev Fund I) was established and has a track record of providing support to SMEs, especially those conducting business in low-income states in India. The Neev Fund II, in which JICA will invest this time, is positioned as the successor to this fund.
JICA will continue its efforts to support SMEs and funds that are tackling social issues in emerging countries by leveraging the knowledge and network it has acquired through its collaboration with this fund.