World Bank's private lending arm IFC on Monday said its exposure in India is expected to go up to $500 million annually in the next five years from the present $300 million.
"India is the third largest in terms of IFC's annual commitment. We hope to increase it substantially in 5 years," International Finance Corporation's chief economist Michael U Klien said on the sidelines of a seminar in New Delhi.
He said the exposure would include both equity investments -- debt and guarantees -- to Indian companies.
"We are strategically looking at infrastructure," Klien said, adding the multilateral funding agency was also keen to pick up equity in retail, IT, telecom and manufacturing companies having world-class business models.
IFC's decision to hike its exposure in India assumes importance as its parent World Bank has already committed to double its assistance to $3 billion annually in the next three years.
While World Bank lends to government, IFC focuses on private companies.
"We are looking to invest in Indian companies, which are going abroad," Klien said adding IFC will help corporates comply with corporate governance, environmental and social issues when they go to other developing countries.
IFC is also planning to go to other cities especially in the South rather than restrict itself to Mumbai and Delhi. Although Klien declined to give names of companies that IFC was eyeing, he said, "the market is booming and equity valuation is high. We have to be careful."
IFC has given loans to Birla Home Finance, CMS Computers, Crompton Greaves, Max Healthcare, Powerlinks Transmission, RAK Ceremics, Sundaram Finance and United Phosphorous during 2003-04.
It has picked up equity in CMS Computers and NewPath Ventures.
IFC has invested in quasi-equity instruments of Ballarpur Industries, Birla Home and DQ Entertainment.
HDFC has also obtained loan syndication worth $100 million from IFC last year.
While stressing on infrastructure sector, Klien said there was a need to impose user charges especially in electricity and water to make the projects viable.
He did not subscribe to the fact that Reserve Bank of India should invest its forex reserves in infrastructure projects instead of investing in treasury bills.
"If someone wants to raise resources, they can get dollars as and when the investment takes place," he said, while welcoming the Special Purpose Vehicle proposed in the Budget for raising Rs 10,000 crore (Rs 100 billion) for infrastructure.