IFC Ramps Up Investment in India to Drive Financial Inclusion, Create Jobs, and Unlock Climate Finance

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IFC Ramps Up Investment in India to Drive Financial Inclusion, Create Jobs, and Unlock Climate Finance

New Delhi, India, April 30, 2024-Climate and housing projects, small and medium-sized businesses, and women in India are benefiting from IFC's record year of work with the private sector. Thirty-two IFC-funded projects in India aim to spur jobs, boost private sector productivity, and drive financial inclusion while supporting the nation's ambitious climate goals for sustainable growth.

India has the largest volume of investments globally for IFC, with a portfolio of over $8 billion of which approximately 36% is in equity investments. IFC's long-term financing, including mobilization, more than doubled from $1.3 billion in FY22[1] to $3 billion in FY23. The total of IFC's commitments and board-approved funding so far in FY24 has already surged to $3.8 billion (as of April 30, 2024), reflecting a robust trajectory.

"IFC's partnership with India's private sector has seen remarkable growth over the past two years, fueling development impact across critical areas, especially housing, climate, and micro, small, and medium enterprises (MSMEs), while championing inclusion and gender equality," said Riccardo Puliti, IFC's Regional Vice President for Asia and the Pacific, who is visiting India this week. "As the climate crisis intensifies amid new conflicts and fragility, this is a crucial year to cement our focus on India, supporting the private sector to drive impact and foster global and regional integration."

Addressing India's significant housing shortage (an estimated 275 million people need access to adequate housing), IFC's initiatives in FY24 will enable clients-Cholamandalam Investment and Finance Company, IIFL Home Finance Limited, and Vastu Housing Finance Corporation, among others-to finance over 270,000 affordable housing loans, of which 86,000 are for women.

Further, in line with India's substantial climate financing needs (cumulative investment requirement by 2070 is $10.1 trillion), IFC's funding in FY24-including in manufacturing, agribusiness and services, and infrastructure-is poised to slash greenhouse-gas emissions (GHG) by over 12 million tons annually. IFC's financing will also help financial institutions provide nearly 29,000 climate loans in critical sectors, including industrial decarbonization, renewable energy, electric vehicles, and green buildings.

Accordingly, IFC's funding to Grasim Industries Limited will help it accelerate its corporate-wide decarbonization measures, incentivizing a reduction in fossil fuel energy usage and an increase in recycled water consumption. IFC's equity investment in Federal Bank Limited will help the bank boost climate and MSME lending. Through its equity investment in the Global Environment Fund South Asia Growth Fund III, IFC aims to help increase access to private equity capital for climate investments and value creation for mid-cap companies in India's climate space.

As part of its advisory work, IFC is supporting partners to boost renewable energy in India. A 1,400 MW solar project with Rewa Ultra Mega Solar Limited and partners in Madhya Pradesh will be blended with wind and storage to supply Firm and Dispatchable Renewable Energy, resulting in an expected annual reduction of CO2 of about 3 million tons.

IFC is focusing on developing a blue finance marketin India to help finance eligible blue assets related to water and wastewater management, plastic recycling, and others, building momentum for private sector investments in this new asset class. Climate finance represents 41% of IFC India's own account investment in FY24.

"With a presence of over 65 years in India, IFC is well positioned to tap the huge potential of the nation's private sector. We are committed to accelerating efforts and driving growth where it is needed most. Our goal is to support a low-carbon roadmap to advance inclusion and promote innovation, boosting India's future resilience," said Imad Fakhoury, IFC's Regional Director for South Asia.

There is an estimated MSME financing gap of $333 billion in India, with micro and small enterprises accounting for 95 percent of that gap. IFC's FY24 investments are amplifying access to credit and expected to enable clients to extend 30 million MSME and micro loans.Supported byIFC financing, Shriram Finance Limited-which recently completed the first cross border asset backed securitization by an Indian non-bank financial institution-along with Northern Arc and others are empowering individuals and women entrepreneurs in India's underserved markets.

A pivotal outcome of IFC's work in India is the creation of economic opportunities. FY24 investments are expected to result in between 215,000 and 300,000 direct and indirect jobs.

Given the low participation rates of the female labor force in India, IFC's projects in FY24 are also expected to enable clients to extend 20 million loans to women entrepreneurs, catalyzing business growth and allowing them to purchase assets. For example, with IFC's funding, Tata Capital will be able to offer more micro and MSME loans to women, driving financial inclusion and creating jobs.

IFC's subscription to non-convertible debentures issued by Aditya Birla Fashion will also benefit suppliers to the retail supply chain, most of which are women-owned.

"IFC remains steadfast in its commitment to fostering an ecosystem in India that empowers businesses to thrive, while simultaneously driving job creation, facilitating climate transition, and delivering high-quality services and products to meet the country's evolving needs," said Wendy Werner, IFC India Country Head.

IFC invests in private equity funds and venture capital to support India's innovative start-ups and scale-ups that disrupt sectors, create employment, improve services, and address inclusion through digital platforms. Though its investments in private equity funds including Aavishkaar VI, Lighthouse IV, and Multiples IV, IFC is underlining the viability and scalability of a fund model that targets underserved markets thus attracting more investor interest while also supporting women-led businesses.

About IFC

IFC - a member of the World Bank Group - is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2023, IFC committed a record $43.7 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org

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[1] IFC's financial year runs from July 1 to June 30. FY22 represents the period from July 1, 2021, to June 30, 2022.

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