Investing in Inclusive Development

Through investments and loans in key sectors like infrastructure, agriculture and technology, the U.S. International Development Finance Corporation is helping propel growth and create jobs in India.

By Jason Chiang

September 2021

Investing in Inclusive Development
Microfinance customers in Odisha who have benefited from DFC’s support. Photograph courtesy DFC


On October 5, 2018, the Better Utilization of Investments Leading to Development (BUILD) Act was signed into law. This legislation consolidated U.S. development finance capabilities into a single new federal agency—the U.S. International Development Finance Corporation (DFC), America’s development bank. Since its formation, DFC has invested in key sectors including energy, healthcare, critical infrastructure and technology. With over $33 billion in active commitments across the world, DFC is helping improve lives in emerging economies. DFC has also provided financing for small businesses and women entrepreneurs, creating jobs in emerging markets.

Impact in India

“DFC has historically committed $5.8 billion across 200 projects in India in the form of loans, investment funds and political risk insurance,” says Ajay Rao, DFC’s regional managing director for South Asia. “We see India as developing low-cost solutions for development challenges that face emerging markets. Part of the DFC strategy is to finance Indian companies with their cross-border transactions, as operations or exports expand to the South Asian subcontinent and Southeast Asia.”

Small, early-stage businesses play a crucial role in finding solutions to the challenges that DFC seeks to address. Even though these businesses come up with creative and effective solutions, they often face hurdles in accessing the financing they need to scale their operations. Through its Portfolio for Impact and Innovation initiative, DFC bridges the financing gap for early-stage social enterprises. For instance, in June 2020, DFC invested $10 million in Milk Mantra as part of this initiative. The Odisha-based start-up sources milk from more than 60,000 smallholder farmers and sells dairy products in eastern India. DFC’s support would help Milk Mantra expand its capacity and develop new lines of food products. In addition, DFC’s technical assistance would support Milk Mantra’s implementation of agricultural extension and digital financial services programs that benefit small rural farmers, with a strong focus on reaching female farmers.

In March 2021, the DFC announced a $50 million investment to expand access to loans in priority sectors in India, including women-owned businesses. Across the world, women-owned businesses are chronically underfunded and in India, female entrepreneurs face a financing gap of hundreds of millions of dollars. DFC’s $50 million investment aims to help narrow these financing gaps, expanding loan access to underserved populations to create new jobs and grow local economies. This investment advances DFC’s 2X Women’s Initiative, which has committed more than $4 billion of investment in projects that empower women in developing countries. At least 40 percent of the investment will be disbursed by institutions that cater specifically to women borrowers.

Technology sector: An equity commitment of up to $20 million to a private equity fund managed by Chiratae Advisors Company Limited will support the technology sector through investments in healthtech, fintech, agritech, consumer media, and software as a service companies operating in India.

Women borrowers: $30 million in financing for India Shelter Finance Corporation Ltd. will help fund mortgages, mostly for low-income women borrowers, in multiple Indian states, promoting gender equity and inclusion.

MSMEs: A $10 million loan to AryaDhan Financial Solutions Pvt. Ltd. will provide commodity-backed post-harvest loans to micro-, small and medium-sized enterprises across India, providing additional stability to the agriculture sector and promoting growth.

Long-term mortgages: $50 million in financing to Motilal Oswal Home Finance Ltd. will finance long-term funding for low-income mortgages throughout India, advancing financial inclusion and economic stability in the country.

In September 2021, DFC and the United States Agency for International Development (USAID) jointly announced sponsorship of a $55 million credit guarantee to address the economic impact of the COVID-19 pandemic by supporting loans to farmer producer organizations, agritech companies and companies working on clean energy solutions for the agriculture sector. Called the India Covid Response Program for Agriculture Transition, this eight-year program will reach more than 200,000 smallholder farmers across the country.

Jason Chiang is a freelance writer based in Silver Lake, Los Angeles.


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