IFC Plans $10 Billion Investment in India's Booming Economy

India’s economy has repeatedly shown its ability to withstand global shocks, and the recent goods and services tax (GST) overhaul further enhances New Delhi’s attractiveness on ease-of-doing-business metrics, International Finance Corporation (IFC) managing director Makhtar Diop said. Diop, who was recently in India, said the World Bank Group’s private-sector arm intends to raise its annual commitment to India, home to its largest portfolio, to $10 billion by 2030, and is eager to collaborate with states to advance urban transformation.

Q: How do you see IFC’s India portfolio performing? What is the plan going ahead?
A: India is currently IFC’s largest portfolio. Last year, we committed $5.4 billion, including $3.4 billion in mobilisation. This year (FY26, ending June 2026), we are targeting $7 billion. But the goal is to lift it to about $10 billion by 2030. If we increase our commitment by roughly $1 billion each year, we should reach that. This aligns with India’s economic expansion of around 6.4%. An economy of this scale, growing at that pace, requires us to raise both our ambition and our commitment. We will do this through our own resources and by mobilising private capital, and I expect India to remain IFC’s largest portfolio going forward.

Q: What are the key focus areas for IFC in the country?
A: We aim to deepen engagement with states as part of the World Bank Group’s urban transformation agenda. On every visit, I make a point of going beyond the capital and meeting state leaders to understand their needs and how we can support them.

Q: Does IFC usually work with regions, provinces, or subnational entities in other countries as well?
A: When I was at IBRD (the International Bank for Reconstruction and Development), the public arm of the World Bank Group, I covered Brazil, which at that time was the Bank’s largest portfolio. Much of that exposure was subnational. We perform fiscal analyses of states or municipalities, assess their credit ratings, and help strengthen them so they can access markets. In India, we have just announced our first municipal financing with the Greater Visakhapatnam Municipal Corporation. This is the first investment by a development finance institution in a city without a sovereign guarantee. It highlights the World Bank Group’s commitment to helping cities use limited public funds to attract global private investment. What India is pioneering today can inspire cities everywhere to build cleaner, more resilient, and future-ready urban environments.

Q: Which sectors in India do you find particularly promising? And which have given you good returns over the years?
A: The financial sector is important, not only as an industry but as a channel through which we reach other priority areas. Infrastructure and renewables are highly attractive for direct investment. Real estate has also been a solid area. We’ve invested across the clean energy supply chain, and mobility is a major focus. For example, I just signed two investments in e-buses during this visit. We are also investing in batteries and supporting everything that contributes to greener mobility. Beyond that, we are looking at transmission lines. Green energy and greening the economy remain central to our work. Housing is another significant area—IFC was among the first investors in HDFC in 1978. Logistics and highways, which boost productivity and connectivity, are also priorities. IFC is looking to further extend support to the MSME sector, which is central to India’s development agenda and our own IFC 2030 strategy. We work with firms such as Shriram Finance to expand access to credit in underserved low-income areas. IFC also partners with Bajaj Finance to widen access to clean mobility and sustainable consumer goods. Going forward, I want to push further on building EV supply chains and greening batteries. If Indian companies are interested in investing abroad in critical minerals, we can back them as well. So it’s not just about investing in India, but also helping Indian firms access other markets.

Q: In many parts of the world, including India, we are staring at the spectre of a trade war and consequent disruption of supply chains. How do you see this impacting growth and countries such as India?
A: Trade uncertainty has weighed on global growth. The World Bank projects global growth at just 2.3% in 2025—well below historical averages—marking the slowest seven-year stretch since the 1960s. We hope this uncertainty eases. If we look at recent developments, India’s Production Linked Incentive (PLI) scheme was conceived before some of the latest shocks. This indicates that countries are aware of the need to diversify supply chains. Covid was a major shock that exposed vulnerabilities. And the 2008 crisis disrupted finance… I think that was when leaders in many countries began discussing diversification of supply chains.

Q: India has just unveiled a GST recast. What more needs to be done to shield the economy from geo-economic uncertainties?
A: The Indian economy is inherently resilient. The DNA of the local private sector exudes confidence that “we can handle anything.” Going forward, I believe continuing to simplify how business is conducted should remain a priority. UPI is a good example, and moving toward a dual GST rate is another step in the right direction. Strengthening subnational entities is also crucial in a country of India’s size.

Q: Multilateral institutions have long played a strong role in the global system. But now we see countries turning more to bilateral arrangements and expressing frustration with multilateral bodies. How do you view this shift?
A: Personally, I think we are in a period where equilibrium has not yet been found. The shocks we face today are varied, often uncorrelated, and come from many directions. For example, five years ago few could have imagined what is now unfolding in Ukraine, Gaza, Sudan. Any one of these crises would have been destabilising on its own in earlier times. Now they are happening simultaneously. You have a multiplicity of vectors. So the type of shocks and sources of uncertainty are diverse. This makes it hard to think about the world in terms of a steady state. That’s why patience is needed. But it also means institutions like ours must constantly reassess their role and relevance. We have to ask: are we meeting people’s expectations? Are we adapting to trends such as localising labour-intensive parts of supply chains? The free-trade model created wealth but also raised distributional issues in some countries.

Q: Have these global developments led to any change in IFC’s investment strategy?
A: Supply chain resilience is a major concern. Everyone is thinking about sub-regional or local supply chains. Energy, safety and security are driving supply-chain decisions. Countries want to secure their supply chains, particularly for energy, and to do so sustainably. Energy security and green energy will shape many investment choices. We also evaluate every investment through the lens of job creation. With migration pressures and political sensitivities, it is essential to generate jobs locally, especially in non-tradable sectors. This will become an increasingly important part of IFC’s mandate.

Q: Politically, we are in a space where we are seeing politicians winning elections on the ticket that globalisation is bad. Is that something that concerns you? Do you see this as a long-term risk to the global economy?
A: I think you’re right to flag this. What we are seeing may be a correction phase as things shift before returning to equilibrium. I’m not sure this pivot is sustainable. It will depend heavily on each country’s circumstances, history, and the economic challenges it faces.

Q: Have there been any changes in IFC’s investment strategy after the MDB reforms?
A: Ajay Banga (World Bank President), who joined us from MasterCard, brought useful input from the capital markets about how our institution is perceived. Many of the changes he has urged are linked to his experience. We are simplifying processes from the client’s perspective and working to better leverage the World Bank Group’s different arms—IBRD, IFC, MIGA, and ICSID (the conflict resolution entity). The idea is not to offer solutions only from the private-sector side, but to assemble comprehensive packages that combine the strengths of the Group’s institutions. On the back-office side, we are also integrating functions like treasury and bond issuance. Specifically at IFC, we have been revising our strategy and concentrating on several elements. First, equity: in many developing countries, firms are over-leveraged—they carry debt but lack equity. Providing equity can be transformational. Second, policy predictability: what private investors want most is stability and clarity in policy. Through the Private Sector Investment Lab (set up by Ajay Banga to identify and address investment barriers in emerging and developing markets, in collaboration with global CEOs to pinpoint challenges such as regulatory uncertainty, political risk, and lack of bankable projects) and our country private sector diagnostics, we are systematically identifying the reforms that matter most to investors and integrating these into our strategies. Third, addressing maturity and currency mismatches: private firms in developing economies often face short maturities and currency risk, both of which undermine competitiveness. We are extending maturities—recently up to 22–23 years, which was uncommon before—and scaling up local-currency financing (40% of our total financing in FY25). Fourth, support for MSMEs: expanding access to finance for micro, small, and medium enterprises is central. We are working with commercial banks and non-banking financial institutions, using credit lines and other instruments to broaden this support. Fifth, guarantees: in the past, guarantees were fragmented across IFC, IBRD, and MIGA. We are moving toward a one-stop-shop model, with MIGA taking the lead, while standardising and innovating to make guarantees more effective.