NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, November 17, 2016

McKinsey & Co. says impact investing in India has the potential to grow from $1 billion worth of investments in 2015 to $6-8 billion by 2025.

“India is one of the world’s biggest markets for impact investing, given the nation’s many pressing social needs and an abundance of global capital. Assuming a growth of 20-24% based on global rates and strong growth of underlying sectors, we estimate that India’s impact investing sector could absorb $6-8 billion of capital annually by 2025, provided some critical barriers are addressed by the industry and the government,” said Toshan Tamhane, senior partner at the global consulting firm.

According to McKinsey, the Indian impact investment space has seen $4.1 billion worth of cumulative investments in the past six years. The pace of investment is growing at 15% annually, it said.

“At least 60-80 million lives were touched last year across socially relevant sectors such as financial inclusion, agriculture, healthcare and education,” the firm added.

In 67% of social enterprises, focused social impact funds led the first investments, demonstrating the vital importance of impact investors in helping socially relevant enterprises grow and prosper. Impact investors accounted for 60-70% of investments in deals with a ticket size less than $5 million.