NEW DELHI - The Indian government's first ever green bonds will focus on funding solar power projects, followed by wind and small hydro projects, as Asia's third largest economy attempts to tap the domestic debt market to finance clean projects.

The proceeds from green bonds will not be used to fund hydropower plants larger than 25 MW, nuclear projects and any biomass-based power generation with biomass originating from protected areas, the government said in the green bond framework released on Wednesday.

The plan to issue sovereign green bonds was announced by Finance Minister Nirmala Sitharaman in the 2022/2023 budget as a part of overall market borrowing with the intention to use the funds to build green infrastructure.

The government aims to issue 160 billion rupees ($1.93 billion) of such bonds between October and March.

A green finance working committee headed by the Chief Economic Adviser V Anantha Nageswaran will select public sector projects for green financing from those submitted by government departments.

The committee will be guided by environment specialists and representatives of ministry of environment, forests and climate change for choosing projects, the government said.

The committee will annually identify fresh projects to be funded through green bonds.

The panel will ensure proceeds from the bonds will be allocated within 24 months from the date of issuance.

The Indian government had sought assistance for its green bond framework from the World Bank and CICERO Shades of Green, a Danish firm that helps with environment assessments on green bond frameworks.

(Reporting by Nikunj Ohri and Shivangi Acharya, Editing by Louise Heavens and Tomasz Janowski)