International Finance Corporation (IFC), a member of the World Bank group will be investing close to $400 million in India this year. This will result in IFC's total cumulative exposure in India crossing the $1 billion mark in January December 2002.
"Our held portfolio of $632.6 million as of March 2002, makes India our third largest country of operations, after Argentina and Brazil. In recent years, we have grown our business substantially, with new commitments reaching $233 million in FY 2001," explained the regional manager South Asia, Vipul C Prakash.
"Out of the $400 million that we intend to invest around 80 per cent will be in the form of debt and the rest at $80 million will be equity," he added. Vipul also said that with possibility of funds moving to Argentina and Brazil getting bleaker, exposure in India will rise by virtue of stability both on political and economic fronts.
"For IFC, India-strategy involves concentration of assistance on improving government effectiveness, and on promoting private sector-led growth and investment by increasing the availability of high-quality infrastructure, accelerating rural growth promoting competitive private manufacturing and service industries and strengthening the financial sector," said Prakash.
As part of this strategy, IFC was focusing its activities on development of financial markets to effectively intermediate India's high domestic savings into productive investment, especially in infrastructure, through banking sector reform, capital market development, and micro-finance.
IFC would also invest in banks, private contractual savings institutions, housing finance companies and commercially sustainable micro-finance providers.
Investment would flow onto private provisioning of infrastructure including privatisation of public utilities and creation of new infrastructure assets, restructuring and modernisation of the manufacturing and services sectors.
"To help Indian industry meet the challenges of globalisation, IFC will invest in manufacturing and service companies that are expanding and moving towards a regional and global presence or restructuring and modernising to become internationally competitive. IFC will also invest selectively in new knowledge based industries when it has a clear role and there is substantial potential for development impact. Funds will also be allocated for selective investments in health and education, particularly leveraging new IT-based technologies," added Prakash.
Historically, around 36 per cent IFC's contribution to India has been channelled to the power sector followed by the capital market at 30 per cent, the telecom sector at 13 per cent.
"IFC has exposure in companies like BSES, Tata Power, CESC and Ahmedabad Electric in the power sector, while in the telecom sector IF has invested in companies like Bharti and RCHL. In the transport sector, IFC financed Jet Airways, and GESCO, while in the financial sector it has backed companies like SREI, IDFC and ILFS among others," Prakash pointed out.
