New Delhi, Aug. 29 -- Currency hedging could add 6-8 per cent to the annual financing costs of green projects in India, raising the cost of foreign capital and potentially discouraging global institutional investors from committing funds at scale, according to the India Sustainability Taskforce, a joint initiative of the Confederation of Indian Industry (CII) and IIM Ahmedabad.

The taskforce said most green projects in India generate revenues in Indian rupees, while international investors typically lend in hard currencies such as the US Dollar or Euro, creating a currency mismatch that raises the effective cost of overseas financing.

"Hedging long-term currency exposure is effectively impossible or very costly: rolling short-term hedge...