"The development of adequate infrastructure is a critical prerequisite for sustaining the growth momentum," the finance ministry's annual economic survey for 2007/08 said.
The survey, released a day before the 2008/09 budget, said India expected 30 percent of the total infrastructure spending to come from private firms, with the federal government investing a further 37.2 percent and states the remaining 32.8 percent.
The economy has grown at an average 8.8 percent over the past four years and is forecast to expand by 8.7 percent this fiscal year which ends on March 31.
"The opportunities for private investment in infrastructure projects are immense ... The time is ripe for the foreign strategic investors to begin taking greater interest in project development and management activity in India," the survey said.
The central bank had given its initial approval for $5 billion from India's foreign exchange reserves to be invested in a special purpose vehicle of the India Infrastructure Finance Company Ltd.
The funds can be loaned to private firms importing equipment for infrastructure projects.
Multilateral agencies such as the Asian Development Bank had been permitted to carry out currency swaps and raise debt in the local currency to provide long term funds to infrastructure projects, it said.