India takes off as impact investment lure

India has become the world’s second largest market for impact investing, through which funds deliver benefits to society as well as financial returns, reports the Rockefeller Foundation, the international social improvement organisation.

Last year these investments generated about $100m (£67m, €77m) of capital in India. The figure for the US, the largest market, was $500m.

In a research presentation to the Mumbai-based philanthropic body Dasra, the foundation predicted that impact investing in India will now grow at an annual rate of 30%.
Sachin Rudra, India director at Acumen Fund Advisory Services India, similarly forecast: “Impact investing will continue to be attractive to investors with a lot of money and who are interested in creating a social impact.”

Rudra thought impact investing could eventually become a category on its own, rather like venture capital and private equity.

However, the government would first have to introduce regulations for these financial instruments, said Charly Kleissner, founder of the international impact investor network Toniic. Until then foreign investors in Indian social enterprises must go into equities because they are not allowed to take the debt route.  

Manas Ratha, Dasra’s social impact and portfolio services director, said: “We have trillions of rupees in India in stock markets, fixed deposits etc.

“We are now encouraging wealth managers to take this (impact investing) as a new category of assets to their clients and consider it as a part of portfolio with other financial instruments like stocks, bonds.”

Foreign impact investors are now said to be seeking local partners in India.