OVERVIEW:

• REC Limited, a ‘Maharatna’ company under the administrative control of the Ministry of Power, has applied to open a subsidiary in GIFT CITY.

• This move will enable the company to start financing offshore projects.

• The move alings with the company’s broader goals of exploring global opportunities and expanding its footprint beyond domestic markets. 

ABOUT REC LIMITED:

• Rural Electrification Corporation Limited (REC Limited) finances various power infrastructure projects, including generation, transmission, distribution, renewable energy, and emerging technologies like electric vehicles and green hydrogen

• Recently, the company has also ventured into non-power infrastructure sectors, such as roads, expressways, metro rail, airports, IT communication, and social and commercial infrastructure.

EXPANSION INTO NON-POWER INFRASTRUCTURE: 

• REC Limited has broadened its scope beyond the power sector to include various non-power infrastructure projects like roads, expressways, metro rail, airports, IT communication, social and commercial infrastructure(educational institutions, hospitals) nad refineries.

RENEWABLE ENERGY FOCUS:

• REC Ltd is shifting a significant portion of its book towards renewable energy projects.

• REC Ltd aims to allocate approximately 30% of its loan book to renewable energy by 2030. This includes funding for green hydrogen, battery storage, pump storage projects, green ammonia projects.

POTENTIAL BENEFITS OF THE SUBSIDIARY:

• Operating from GIFT City offers REC access to various tax benefits, including exemptions on dividend distribution tax, long-term capital gains tax, and more, which are instrumental for offshore financing.

• GIFT City provides a platform for REC to access global financial markets and tap into international capital at competitive rates.

• This subsidiary will benefit from the supportive regulatory environment in GIFT City, designed to facilitate international financial operations with minimal bureaucratic hurdles.             

IMPACT ON REC AND THE INDIAN ECONOMY:

• By entering the international financing market, REC will enhance its financial position and gain access to a larger pool of capital.

• The establishment of this subsidiary aligns with the Indian government’s vision of making GIFT City a hub for international finance, attracting global businesses to India.                          

CONCLUSION:

• The company’s initiative to expand into GIFT City not only support its ambitious target of doubling its loan book by 2030 but also complements its efforts to balance investments across various sectors.

• REC can further its commitment to sustainable development, drive growth in renewable energy projects, and contribute to large-scale infrastructure development.

• Overall, REC Limited’s move into GIFT City underscores its strategic focus on global expansion and diversification, reinforcing its role as a significant player in both domestic and international financial and infrastructure markets.