The task of modernising India's notoriously bad infrastructure is finding many willing volunteers.

On 10 April, the Indian Infrastructure Finance Company (IIFCL) opened an offshore subsidiary in London. Nothing too startling about this, you might argue. After all, in light of the recent takeovers of Jaguar and Land Rover by Tata Motors and Corus by Tata Steel, it's far from a novelty to see Indian investors arriving on UK shores these days. Nonetheless, those familiar with India's drive to attract foreign capital to its highly ambitious infrastructure investment programme were swift to recognise it as a seminal development.

The IIFCL was launched as an Indian Government agency two years ago to sponsor and provide debt for Indian infrastructure projects. It has since set up a number of strategic relationships with various private equity firms, including 3i (see Privately Speaking, page 44). According to sources close to the organisation, it is keen to get similarly close to others. There are a number of reasons for this including attracting capital (in exchange for unparalleled access to potential projects) and also as a way of identifying which projects are most attractive to the equity providers and, hence, which ones it should be prioritising for its own sponsorship.

A third, arguably less publicised, aspect of the mission, is to provide loans to overseas companies supplying various services and equipment for Indian infrastructure. Around a week after the London opening, the importance of this aspect was underlined when it emerged that IIFCL was a participant in a $2.2 billion (€1.4 billion) facility provided by the Export-Import Bank of the United States (the US' official credit export agency) that will support US exports to Indian projects. Under the facility, IIFCL and seven other financial institutions will provide guarantees to expedite the processing of Ex-Im Bank-backed medium- and long-term financing for Indian buyers of US exports.

“This new facility will help Ex-Im Bank to work with major Indian lenders to provide dollar-denominated financing for US exports to India's current and future infrastructure projects,” said Ex-Im Bank chairman and president James Lambright in a statement.

Clearly, the Indian Government is spreading its net far and wide as it goes in search of the more than $500 billion of financing that India's Ministry of Finance believes is needed to bring the country's infrastructure up to scratch. It's also throwing heavyweights behind the cause as it does so. UK private equity sources say they were impressed by the presence of India's Finance Minister Palaniappan Chidambaram at the IIFCL London inauguration. It was, said one, “a potent symbol”. Furthermore, Indian Prime Minister Manmohan Singh has delivered a number of speeches drawing attention to the necessity of improved infrastructure if India is to maintain the average growth rate of almost 9 percent it has achieved over the last four years.

At the time of going to press, signs were emerging that maintaining such a rapid growth clip will be a tall order. With inflation running away at a 40-month high of 7.41 percent, speculation was raging that some form of monetary tightening was imminent. Some analysts were anticipating a further hike to interest rates already at a six-year high. Economic growth, meanwhile, was expected to slow to 7 percent in the fiscal year to March 2009 – hardly a disaster, but nonetheless a reality check for those who had assumed Indian growth of between 8-9 percent for the next few years.

Not that this is likely to result in infrastructure falling down the Indian Government's priority list. It knows that the full promise of India's economy will never be delivered against a backdrop of power shortages, bad roads, a lack of port capacity and unreliable communication systems.

Aside from anything else, the siren call is clearly being heard. Six days after the IIFCL set up shop in the unofficial capital of European private equity, no less than three Indian infrastructure fund announcements were made on the same day. On April 16th, sister website PrivateEquityOnline.com reported 3i's new $1.2 billion fund; a $2 billion-target fund was launched by the State Bank of India and Australia's Macquarie Bank; and former Coca Cola India head Sanjiv Gupta unveiled a planned $1 billion fund backed by US hedge fund Fursa, Indian infrastructure financing company SREI and Indian holding company Prima Donna.

India's call for help is being heard far and wide.