The World Bank’s private sector lending arm International Finance Corp (IFC) said it would invest ¤135 million in Volkswagen India’s plant in Pune to help generate jobs.
“IFC has agreed to invest $135 million in Volkswagen India Pvt Ltd to help the company set up an integrated car manufacturing plant in Pune, India, that will help create jobs locally,” it said in a statement.
The construction of the Indian manufacturing unit of Europe’s largest car maker, Volkswagen AG started in 2007 and the parent German auto maker has already invested about $245 million in the project. The plant will have an initial capacity of 110,000 units a year, and Volkswagen India will target the local small- to compact-car segments, IFC said.
“This investment demonstrates the important counter-cyclical role IFC plays in supporting a vital project with significant job-creating potential during challenging times,” said Dimitris Tsitsiragos, IFC director for global manufacturing and services.
The European Investment Bank and German development bank KfW are considering investing to meet the project’s remaining financing needs, the World Bank Group member said.
IFC said $60 million will be paid from its own account and a syndicated loan of $75 million will be arranged from Societe Generale, Bank of Mitsubishi, DBS Bank and Fortis Bank.
“The investment will also support the development of India’s car manufacturing sector and sends a strong signal to other investors in the country,” Tsitsiragos added.