The Washington-based International Finance Corporation (IFC) has decided to more than double its investment in India to
$500 million in the current year, from around $214 million in 1997-98. Most of the money will be in the form of equity investments.
This was stated by Christopher J Knight, chief counsel, South Asia Regional Mission, IFC. IFCs thrust areas of investment in the country will be in infrastructure, development of the capital markets, export businesses and agri-business. A recent focus area is the medium and small-scale sector in India, said Knight.
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``Smaller companies find it difficult to raise resources given the depressed state of the capital market and we intend to give them support through both debt and equity, he said.
International Finance Corporation has recently committed around $3 million to a particle board project in south India. Investments in computer hardware, insurance when it is opened up to foreign participation and hospitals would be among the new focus areas of IFC, he said.
The corporation had recently invested in a hospital project being set up by the Duncans group in Calcutta.
``India is viewed as a favourable investment destination and we would like to help in bridging the gap in long term funds availability to finance infrastructure projects in the country, said Rashad Kaldany, director, Asia Department II, IFC.
They were speaking at the signing of an agreement between IFC and Global Trust Bank for the infusion of $ 10 million by the former to beef up the banks tier II capital.
The increased investment in India was also possible on account of easing of guidelines on external commercial borrowings by the government, said Knight.
IFC had a line of credit with the Exim Bank and a line of equity with the Industrial Credit and Investment Corporation of India (ICICI) which expired around a year ago.
The corporation plans to open such lines with other financial institutions and banks, as well as directly participate in the equity of projects being set up, said Knight.
International Finance Corporation had restructured its Asia operations around four years ago and moved towards a decentralised set up. It has since expanded and increased the ratio of local personnel to expatriates at its Indian operations, Knight said.