Current urban infrastructure investment remains below the roughly $60 billion a year needed, Dasgupta said, calling for stronger sub-national creditworthiness, fiscal discipline and governance reforms to unlock private and institutional capital. He said enabling sub-national financing opportunities would be the single most important reform to attract long-term private investment into India. Edited excerpts:
What policy reform India needs to significantly improve the ability to attract long-term private investment?
My priority would be enabling sub-national financing opportunities. India’s urban infrastructure financing requirement is estimated at $840 billion through 2036, or around $60 billion annually, while current investment remains significantly below these levels. The Urban Challenge Fund reflects a shift towards market-oriented urban financing.
This requires improved sub-national creditworthiness, fiscal discipline and governance reforms, along with asset monetisation platforms and deeper market access through innovative instruments. National models can be cascaded down. ADB is supporting this approach by partnering with cities and states to develop investable project pipelines and strengthen capital investment planning.
Do you think private capital investment in India remains sluggish despite government incentives? What role can ADB play to support?
I would not characterise private investment as exactly sluggish: Foreign Direct Investment (FDI) inflows in the first quarter of 2026 hit a record $30.70 billion. The challenge is not a shortage of capital, but ensuring a sufficient pipeline of bankable projects with predictable risk allocation and credible revenue streams.
ADB works across the investment cycle, from project identification and preparation to structuring, financing and implementation. ADB arranged and structured an approximately $462 million long-tenor finance package for the ReNew Peak Power Project, the first ADB-financed round-the-clock renewable energy project with battery storage, demonstrating how ADB can mobilise private capital at scale.
What reforms are needed to make India’s Public-Private Partnership (PPP) ecosystem attractive for long-term investors?
India has already built a mature PPP market. The three-year PPP pipeline lists 852 projects worth approximately $190 billion until 2028.
India needs a stable and predictable policy environment, efficient dispute resolution, greater pipeline visibility, and transaction consistency. Urban local bodies and implementing agencies also need stronger financial capacity. A PPP risk mitigation facility could help, while ADB can support project preparation, asset monetisation and PPP development.
What would help attract larger pools of long-term capital from institutional investors?
India has demonstrated that Infrastructure Investment Trusts (InvITs) and Infrastructure Debt Funds can attract institutional capital.
ADB’s Partial Credit Enhancement Facility with National Bank for Financing Infrastructure and Development (NaBFID) can improve infrastructure bond ratings, expand the investor base and lower financing costs. Reforms to strengthen credit enhancement and deepen bond markets can unlock larger pools of long-term capital.
What are the major barriers to mobilising commercial capital for India’s clean energy transition?
The clean energy transition does not face a shortage of capital. It needs a sector-specific approach to dismantling barriers. Solar parks and auctions by Solar Energy Corporation of India (SECI) show that well-structured risk allocation can attract private investment, but scaling requires investment in transmission infrastructure and battery energy storage.
For green hydrogen, green ammonia and industrial decarbonisation, the challenge is often less financing and more market development where offtake arrangement to ensure firm demand and policy support are needed.
ADB supports project bankability and market development through policy development, project preparation, financing, guarantees, risk-sharing and blended finance.
Which financing instruments have the greatest potential in India?
Instruments that transfer or share risk can mobilise significantly more private capital than direct financing alone. In 2025, ADB mobilised around $2.1 billion of finance for private investment in India, which included nearly $1 billion of its own financing and more than another $1 billion actively mobilised for these projects.
A recent $500 million partnership with India Infrastructure Finance Company Limited (IIFCL) is helping expand long-term sustainable infrastructure financing and attract private and institutional investment. ADB is also working with NaBFID on a Credit Enhancement Facility to support infrastructure bonds.
ADB has also announced a $10 billion urban transformation initiative combining sovereign lending, private-sector financing and third-party capital.
What more needs to be done to attract private investment into Micro, Small, and Medium Enterprises (MSMEs) financing?
Progress on digital public infrastructure, Goods and Services Tax (GST) implementation, and digital payments has accelerated formalisation and enabled credit expansion under Reserve Bank of India’s (RBI’s) supportive mandate. The effort now should be to ensure the momentum continues. As businesses grow, they are increasingly expected to attract equity capital, which is also the core rationale behind the Government of India’s proposed $1.0 billion SME Growth Fund.
