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Most of India’s port sector relied on financing methods that were largely inappropriate. Port and waterway projects take a long time to recoup the cost of the investment, potentially over a decade. Financing projects of this nature are often incompatible with traditional banking, as loans are typically short-term.
This mismatch is being actively resolved. Sagarmala Finance Corporation Limited (SMFCL), the dedicated financing arm born out of India’s flagship maritime programme, is committed to developing long-term funding from the bond market rather than short-term funding from banks. This includes the preliminary work associated with issuing India’s first blue bond. If you follow the financing of India’s infrastructure and are interested in how the maritime economy is focusing its efforts to improve the health of its balance sheet, this piece provides the who, what, how, and why of these recent changes.
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Sagarmala Programme Explained: Funding India’s Ports
Sagarmala Pariyojana, introduced in March 2015, is India’s major port-led development initiative to modernize ports, enhance coastal connectivity, and boost traffic on inland waterways. After eleven years, over 845 projects valued at ₹6.06 lakh crore have been taken up, and 315 projects, worth ₹1.57 lakh crore, have been completed as of March 24, 2026 [1]. In the past, the funding of such large pipelines meant relying on commercial bank loans and sometimes external commercial borrowings.
For instance, in 2016, the Jawaharlal Nehru Port Trust entered into a dollar-denominated External Commercial Borrowing agreement with SBI and DBS (Singapore), primarily for financing port-connecting road infrastructure. But infrastructure bank credit has its own limitations; most banks prefer a shorter period of credit than is consistent with the longer requirement for the repayment of large port or waterway projects, and this has remained a persistent constraint on the sector.
How a Funding Gap Pushed Sagarmala Toward Bonds
The clearest evidence of why Sagarmala is pivoting to bonds shows up in its own numbers. Sagarmala Finance currently faces an asset-liability mismatch, with its average loan disbursement tenure running around 12 years, while its existing term borrowings from banks average only 3.5 years. That’s a serious structural problem; lending long while borrowing short is exactly the kind of mismatch that strains a balance sheet over time. Diversifying into longer-tenure bonds is a direct fix.
A few key steps demonstrate this initiative:
- NBFC conversion—In June 2025, Sagarmala Development Company Limited was restructured into Sagarmala Finance Corporation Limited, India’s first maritime-sector-specific NBFC, giving it a formal platform to raise debt.
- ₹8,000 crore FY26 borrowing plan: SMFCL planned to raise up to ₹8,000 crore during FY2025–26 through banks, financial institutions, and debt/bond issuances to support its financing activities [2].
- A bigger ask for FY27—According to Reuters, SMFCL plans to raise ₹100 billion (₹10,000 crore) in FY2027 to fund greenfield and brownfield ports, shipbuilding, inland waterways, and coastal connectivity [3].
- A first-of-its-kind blue bond—SMFCL intends to issue up to ₹1,000 crore through India’s first blue bond, with a ₹500 crore greenshoe option, and has appointed Trust Capital, AK Capital, and Tipsons as advisers on the transaction.
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Sagarmala Finance Corporation: Key Numbers & Funds
| Metric | Figure |
| Maritime Development Fund corpus | ₹25,000 crore |
| Maritime Investment Fund | ₹20,000 crore |
| Interest Incentivisation Fund | ₹5,000 crore |
| FY26 mobilisation target | ₹8,000 crore |
| FY27 planned fundraising | Up to ₹10,000 crore |
| Proposed maiden blue bond | Up to ₹1,000 crore (₹500 crore + ₹500 crore greenshoe) |
| Loan sanctions as of Dec. 2025 | ~₹4,300 crore |
| Loan sanctions as of Mar. 31, 2026 | ~₹7,173.8 crore |
| Average loan-asset tenure/gestation | ~12 years |
| Average borrowing repayment period | ~3.5 years |
Sources: PIB
Why Blue Bonds Specifically?
Blue bonds are similar to green bonds but are dedicated loans that finance ocean- and water-linked projects. Total global issuance of blue bonds stood at $15 billion by mid-2025, with the Bank of China issuing Asia’s first blue bond in 2020 and some island nations like Seychelles among early sovereign issuers. For SMFCL, issuing these bonds is not just about ticking a box, as blue bonds finance marine energy, sustainable fishing, ports, and coastal infrastructure projects in line with the funding needs of Sagarmala 2.0. Additionally, SMFCL would get a chance to access a particular segment of ESG-related global investors who are quite picky in their investments, something a plain-vanilla bond would not necessarily attract.
But there are challenges, and the timing is not perfect: India’s benchmark 10-year government bond yield increased by approximately 35 basis points after the US-Iran conflict began. This has negatively impacted activity in bond markets, a reminder that even the best-designed bond plans are only successful if the right market opportunities exist.
What This Means for India’s Maritime Infrastructure Push
This story goes beyond a single NBFC changing funding sources; it demonstrates India’s preference for alternative means of funding large and time-consuming infrastructure projects. As ports corporatize, they gain access to financing through the capital markets via bonds rather than relying solely on bank loans, a structural change that supports projects like Sagarmala and new ports such as Vadhavan. With Sagarmala 2.0 looking to allocate ₹85,482 crore to support ₹3.6 lakh crore of total investment, this sector will need to utilize every financing method it can employ, and bonds, blue or otherwise, look set to carry a growing share of that load.
Conclusion: A Financing Model Catching Up With Maritime Ambition
India’s ports have always had the potential to matter on a global scale; with a coastline that stretches 7,500 km and a growing cargo base, this is natural. However, the largest-scale ports have always needed financing structures for long-term infrastructure projects. Sagarmala Finance Corporation’s recent pivot towards bonds, with the planned debut of blue bonds, is clearly responding to this gap. It won’t fix the sector’s funding needs overnight, and market conditions will keep testing the timing of each issuance. But the direction is clear: India’s maritime infrastructure is moving away from short-term bank debt and toward capital-market instruments built to match how long these assets actually take to earn their keep.
Sagarmala’s Bond Market Frequently Asked Questions
Sagarmala Finance Corporation’s loans typically have a much longer tenure than its existing borrowings. Its current borrowings average around 3.5 years, while the loans it provides can have an average tenor of about 12 years, creating an asset-liability mismatch.
If an NBFC lends for 12 years but funds those loans with debt that matures much sooner, it must repeatedly refinance its borrowings. This can expose it to higher refinancing and interest-rate risks.
Longer-tenure bonds can give SMFCL funding that better matches the duration of its loans. This can reduce reliance on short-term or medium-term borrowing and improve the alignment between its assets and liabilities.
A blue bond is a debt instrument designed to raise funds for projects linked to oceans, marine ecosystems, water resources, or the broader blue economy. Sagarmala’s proposed issue is intended to channel bond-market funding toward maritime infrastructure.
The corporation plans to issue what has been described as India’s first blue bond, with a proposed base issue of ₹500 crore and a greenshoe option of another ₹500 crore, for a potential total of ₹1,000 crore. The funds are intended to support maritime-related projects.
Sources
- https://www.pib.gov.in/PressReleasePage.aspx?PRID=2251071&lang=1®=3&
- https://www.pib.gov.in/PressReleasePage.aspx?PRID=2210308&lang=2®=48&
- https://economictimes.indiatimes.com/news/economy/finance/indias-first-maritime-focused-lender-eyes-1-bln-fy27-fundraise/articleshow/130326673.cms
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