DEG Targets €900 Million India Portfolio as Growth Outlook Strengthens

DEG, the development finance arm of German state-owned lender KfW, plans to expand its India portfolio to €900 million ($1.07 billion) over the next few years, citing the country’s strong growth prospects and stable macroeconomic environment. India is already among DEG’s top three investment destinations, with current exposure at about €540 million in equity and debt, representing roughly 5% of its €12 billion global portfolio. The institution aims to raise India’s share to 7% within the next three to four years, according to Kunal Makkar, DEG’s Director for India.

The expansion comes as India’s economy shows resilience amid global headwinds, including punitive U.S. tariffs, with growth projected at 7.4% for the fiscal year ending March 31—well above earlier government estimates. DEG sees additional momentum following a recent trade agreement between India and the European Union, along with stable inflation and growth dynamics. The lender plans to balance future investments evenly between debt and equity, moving away from its current mix of about 65% equity and 35% debt.

DEG is focusing on private sector companies in infrastructure, renewable energy, financial institutions—especially non-banking financial companies—as well as manufacturing and agriculture. While it cannot yet provide rupee-denominated loans, the institution is exploring opportunities to fund Indian firms in offshore or dollar bond markets. Average investments have been around €25 million, but DEG is open to larger deals of €50–75 million, including syndicated transactions and structured debt funds. Return expectations include high-teen percentages for equity, 11%–13% in euro terms for mezzanine financing, and 2%–3% above SOFR for debt instruments.

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