India is projected to see impact investments worth up to USD 40 billion by 2025 as the country is in a “sweet spot” with high potential to deliver solutions for various problems, according to global grouping GIIN.
Based in New York, the Global Impact Investing Network (GIIN) is a not-for-profit group that works to promote impact investments and has around 230 members.
Generally, impact investments refer to those made with the aim of having a social and environmental impact along with the investors getting financial returns.
GIINs Advisor for South Asia, Anil Sinha said, there has been tremendous development in India around impact investing activities in the last five years and the country is in a sweet spot.
“In India, about USD 4 billion has been invested as part of impact investments in about five years. On an average annual basis, it is around USD 1 billion,” Sinha told in an interview.
India is a place where poverty is high but the potential to deliver solutions is also very high, Sinha said, adding the country can be a global innovation hub for models that can address issues at the base of the pyramid. “We hope there will be 25 per cent annual growth rate as it (impact investments) grow and it might grow from USD 4 billion to USD 35-40 billion in India by 2025,” he said.
At current exchange rates, it translates to a range between Rs 2,24,000 and Rs 2,56,000 crore.
Globally, total assets under management by impact investors is estimated to be about USD 70 billion, according to Sinha.
The financial returns on impact investments is estimated to be around 10 per cent annually.
Sinha, a private sector finance specialist who has served in various roles at the International Finance Corporation (IFC), said impact investments are evolving and their global growth rate is around 25 per cent.
He noted that financial inclusion and energy have been dominant areas in the USD 4 billion impact investment portfolio in India.
GIIN, as a promoter of impact investing activities, is looking to attract more Indian companies to be impact investors.
“We are certainly playing a role in defining the role of impact investing and social enterprises. We need to have our own definition of social enterprises,” Sinha said.