Indian Economy and IFCI



Since its inception on 1st July 1948 as a Public Financial Institution, IFCI has made a significant contribution to the modernization of Indian industry, export promotion, import substitution, pollution control, energy conservation and generation through commercially viable and market-friendly initiatives. Some sectors that have directly benefited from IFCI include:

Some sectors that have directly benefited from IFCI include:

  • Agro-based industry (textiles, paper, sugar)
  • Service industry (hotels, hospitals)
  • Basic industry (iron & steel, fertilizers, basic chemicals, cement)
  • Capital & intermediate goods industry (electronics, synthetic fibres, synthetic plastics, miscellaneous chemicals) and Infrastructure (power generation, telecom services)

IFCI's Economic Contribution


IFCI's economic contribution can be measured from the following:

  1. IFCI has played a key role in the development of cooperatives in the sugar and textile sectors, besides acting as a nodal agency in both sectors. 371 cooperative societies in these sectors have been assisted by IFCI.
  2. IFCI has promoted Technical Consultancy Organizations (TCOs), primarily in less developed states to provide necessary services to the promoters of small and medium-sized industries in collaboration with other banks and institutions.
  3. IFCI has also provided assistance to self-employed youth and women entrepreneurs under its Benevolent Reserve Fund (BRF) and the Interest Differential Fund (IDF).
  4. IFCI has founded and developed prominent institutions like:
    • Management Development Institute (MDI) for management training and development
    • ICRA for credit assessment rating
    • Tourism Finance Corporation of India (TFCI) for promotion of the hotel and tourism industry
    • Institute of Leadership Development (ILD) for rehabilitation and training of displaced and retrenched labor force
    • Rashtriya Gramin Vikas Nidhi (RGVN) for promoting, supporting and developing voluntary agencies engaged in uplifting rural and urban poor in east and northeast India.
  5. IFCI, along with other institutions, has also promoted:
    • Stock Holding Corporation of India Ltd. (SHCIL)
    • Discount and Finance House of India Ltd. (DFHI)
    • National Stock Exchange (NSE)
    • OTCEI
    • Securities Trading Corporation of India (STCI)
    • LIC Housing Finance Ltd.
    • GIC Housing Finance Ltd.
    • Biotech Consortium India Ltd. (BCIL)
  6. IFCI has also set up Chairs in reputed educational/management institutions and universities.
  7. A major contribution of IFCI has been in the early assistance provided by it to some of today's leading Indian entrepreneurs who may not have been able to start their enterprises or expand without the initial support from IFCI.

The Government of India converted its OCDs worth Rs. 923 crores into equity in December 2012 and further acquired preference shares of Rs. 60 crores from PSU Banks in April 2015. IFCI has become a Government of India Undertaking with effect from 7th April 2015.

The Govt. of India has placed a Venture Capital Fund of Rs. 200 crore for Scheduled Castes (SC) with IFCI with an aim to promote entrepreneurship among the Scheduled Castes (SC) and to provide concessional finance. IFCI has also committed a contribution of Rs.50 crore as lead investor and Sponsor of the Fund. IFCI Venture Capital Funds Ltd., a subsidiary of IFCI Ltd., is the Investment Manager of the Fund. The Fund has been operationalized during FY 2014-15 and IVCF is continuously making efforts for meeting the stated objective of the scheme.

Further, Government of India has recently designated IFCI as a nodal agency for “Scheme of Credit Enhancement Guarantee for Scheduled Caste (SC) Entrepreneurs” in March, 2015 with an objective to encourage entrepreneurship in lower strata of the societies. Under the Scheme IFCI would provide guarantee to banks against loans to young and start-up entrepreneurs belonging to scheduled castes.