The International Finance Corporation (IFC), the World Bank's investment arm, is increasing its capital commitments to India's private equity market to support global investors establishing India-focused funds. This move aims to strengthen the investment ecosystem and channel more high-quality global capital into the country.
Neha Grover, Regional Lead for South Asia Funds Group at IFC, announced this initiative at the IVCA Buyouts Summit in Mumbai on Tuesday. According to Grover, fresh capital has already been allocated to one India-dedicated investment vehicle backed by a global investor, and a second investment is nearing completion. However, the names of these funds were not disclosed.
The IFC's fund investment activity in India has significantly expanded in recent years. About six years ago, the institution typically made one or two fund investments annually; now, that number has risen to an average of three to five investments each year, reflecting growing confidence in India's private equity landscape.
In 2025, the IFC invested $30 million in L Catterton's $600 million India-focused fund and earmarked an additional $30 million for co-investments. The IFC is also investing in Carlyle Group Inc.'s first $300 million India side fund.
This increased commitment aligns with the IFC's broader strategy to double its investments in India to $10 billion by 2030. This plan emphasizes key sectors such as urbanization, green energy, and support for Micro, Small, and Medium Enterprises (MSMEs). In fiscal year 2025, the IFC committed $5.4 billion to India, including $3.4 billion in mobilization.
India is the largest investment destination in the IFC's portfolio. The country's strong economic fundamentals, new trade pacts, and improved ease of doing business are expected to propel further Foreign Direct Investment (FDI) growth in 2026. Despite global uncertainties, India attracted over USD 80.5 billion in FDI in 2024-25, with significant commitments from the European Free Trade Association (EFTA) and New Zealand bolstering future prospects. The India–EFTA Trade and Economic Partnership Agreement (TEPA), effective from October 1, 2025, includes a commitment of up to US$100 billion in investment and the creation of one million direct jobs over 15 years.
The Indian government is proactively reviewing and updating its FDI policies to ensure India remains an attractive and investor-friendly destination. Technology-led services, particularly those focused on artificial intelligence, data analytics, cloud infrastructure, and Global Capability Centres, are expected to remain primary drivers for foreign capital. Key sectors attracting FDI in India include services, computer software and hardware, telecommunications, trading, construction development, automobiles, chemicals, and pharmaceuticals.
The World Bank Group and the Indian government have also announced a new Country Partnership Framework (CPF) to accelerate India's growth and support its vision of becoming a developed country by 2047. This framework envisions USD 8-10 billion in annual financing over the next five years to create jobs and mobilize private sector capital. This strategic partnership prioritizes private sector-led job creation through investments in infrastructure, human capital, and a business-friendly environment.