IFC Commits $60m to Visakhapatnam in Municipal Financing Deal

In a first-of-its-kind initiative in India, the International Finance Corporation (IFC), a member of the World Bank Group, has committed up to $60 million to the Greater Visakhapatnam Municipal Corporation (GVMC) through rupee-based Non-Convertible Debentures (NCDs). This marks IFC’s maiden municipal financing in India, and the first time a development finance institution has invested in an Indian city without a sovereign guarantee.

A Milestone for Urban Financing in India

Visakhapatnam, Andhra Pradesh’s largest city and one of the country’s fastest-growing urban centers, has become the testing ground for innovative models of sustainable financing. The investment is particularly focused on the Madhurawada Sewerage System, a comprehensive sanitation project designed to provide reliable and modern services to a rapidly expanding region.

The Madhurawada system includes:

• A sewage collection network,

• Pumping and lift stations, and

• A state-of-the-art wastewater treatment plant.

Once completed, the system will significantly improve sanitation, reduce health risks, and curb pollution from untreated wastewater—a major challenge in urban areas experiencing fast population growth.

Transforming Sanitation and Urban Growth

Sri S. Suresh Kumar, IAS, Principal Secretary of the Municipal Administration & Urban Development Department, called the project transformational:

“This collaboration with IFC is a transformative step not just for Visakhapatnam but for urban India as a whole. It signals to the world that Indian cities, when financially disciplined and administratively progressive, can attract global investments without sovereign guarantees.”

He emphasized that the project represents a forward-looking model of sustainable urban growth, one that other cities across India may emulate as they seek to modernize with global standards of financing and governance.

IFC’s Vision for Urban Transformation

Makhtar Diop, IFC’s Managing Director, underscored the broader implications of the investment:

“In a first for IFC and an Indian city, a municipality is mobilizing private capital from a development finance institution without a sovereign guarantee to deliver essential services—from wastewater and sanitation to transport and solid waste management—affordably and sustainably.”

Diop added that the project will help protect the city’s coastline, create new jobs, and set a benchmark for resilient, low-carbon urban development.

Financing Urban India’s Future

India’s urban growth story highlights the urgency of resilient infrastructure:

• By 2030, Indian cities are projected to generate 70% of new jobs.

• The country will require an estimated $2.4 trillion by 2050 to build low-carbon, climate-resilient infrastructure.

• Mobilizing commercial capital is seen as essential to bridging this massive funding gap.

The Visakhapatnam investment aligns with the Government of India’s Urban Challenge Fund (UCF), which aims to mobilize $2.35 billion annually in private and commercial capital for the next decade.

Backed by Global Partnerships

The initiative is also part of the World Bank Group’s broader effort to expand fiscal space for cities by leveraging limited public funds to attract private capital. India is one of five pilot countries in this program and is already demonstrating leadership with the GVMC financing.

The project has received upstream engagement funding from the European Union under the Accelerating Climate-Smart & Inclusive Infrastructure in South Asia (ACSIIS) program, which supports climate-resilient development across six countries in the region.

IFC’s Advisory Role

Beyond financing, IFC has supported GVMC with advisory services through its Utilities for Climate (U4C) platform, offering guidance on:

• Wastewater treatment technologies,

• Phased project development, and

• Operational design improvements.

IFC’s global track record includes collaboration with 47 governments and cities, mobilizing nearly $4.5 billion (including $1.8 billion in co-financing) to expand access to electricity, water, and sanitation, while driving job creation and local economic growth.

A Precedent for Indian Cities

This financing model is expected to pave the way for other Indian municipalities to attract private investment, reduce dependence on sovereign guarantees, and demonstrate fiscal discipline. Visakhapatnam’s pioneering step could serve as a blueprint for future-ready cities across India and South Asia.