Washington, April 26 : INTERNATIONAL Finance Corporation (IFC), the private enterprise arm of the World Bank, expects to approve over $400 million of investments in India this year - the largest amount ever approved for the country.

Neil Gregory, head of the strategy and coordination unit of IFC South Asia Department, told reporters on Thursday that the IFC “expects to approve over $400 million of new investments in India this financial year which would make India the largest recipient of IFC finance this financial year.”

“Our programme,” he said, “is focused on financial market development, restructuring and modernisation of manufacturing and service industries, and infrastructure. We have placed great emphasis on financial innovation to help Indian companies mobilise finance, including the first Structured Debt Obligations and Foreign Currency Convertible Bonds.”

In a background note, IFC says that India is central to IFC’s work in reducing poverty through private sector development.

“Yet, for many years, our activities in India have been held back by the limited role which the private sector has been allowed to play in the economy.

“But this is changing. India is moving away from a closed, public sector-dominated economy, towards an open, private sector-led economy.

The success of the IT sector in recent years has stimulated more rapid change, by demonstrating the potential of export-led, lightly regulated business,” it said.

The reform process, says IFC, has gone far enough to attain a certain momentum, but is far from complete. “As a result, India remains relatively closed to foreign investment and has not yet attracted the level of investor interest that we have seen in other emerging markets.

This creates a strong role for IFC to help competitive Indian companies mobilise finance for investment; to increase the capacity of domestic financial markets to finance private investment; to demonstrate the attractiveness of investing in India; and to bring global good practices in areas such as environmental management and corporate governance, so that Indian businesses wll be ready to compete globally as the economy opens up.”

As a result, says the fact sheet, IFC’s business in Indiais growing rapidly, with approvals increasing by half over the past two years.

“This year,” it says, “we expect India to be our largest country for new business, with around $400 million of approvals.

In the past, says the fact sheet, IFC’s business has also been held back by the limited ability of Indian companies to support foreign currency lending.

IFC is, therefore, putting in lace swap arrangements with Indian financial institutions that will enable IFC to offer local currency loans, greatly increasing IFC’s ability to invest in priority sectors such as infrastructure and the social sectors, which do not generate foreign currency revenues for debt service.

“As a result, we both see an increased role for IFC, and we are better positioned to play that role.”

The fact sheet said that the IFC expects financial market investments to be its largest sector, followed by investments in manufacturing and service companies. Its third area of focus continues to be infrastructure, “but we are cautious about predicting large investment volumes in this sector, since it very much depends upon the pace of sector reform.”

IFC Investments in this year’s programme include: Samruddhi, a commercial microfinance provider ($1 million); Vysya Bank ($7.3 million); An SME financing facility in cooperation with Global TrusT Bank ($20 million); NIIT/Citibank Student Loan programme ($9.2 million); Ballurpur Industries, ($27 million); Internet Express ($5 million), eGurucool ($0.3 million) and Spryance.com ($2 million), companies using the internet to deliver innovative services and JetAir ($15 mllion). (PTI)