British International Investment (BII), the UK government’s development finance institution, is deepening its India playbook with a strong focus on climate and inclusion. In an interview, Shilpa Kumar, Managing Director and Head of India at BII, outlined the fund’s strategy, its electric mobility bets, and why India remains its largest exposure globally.
Q: How big is BII’s India exposure and what are your focus areas?
A: We have invested about $4 billion in India, with a current portfolio of $2.5 billion spread across more than 600 companies. Our investments span both equity and debt. We also anchor venture capital, private equity, and growth funds.
Our thesis is simple: sustainable change must be driven by the private sector. We deploy capital into businesses that can scale impact. Currently, our two priority themes are climate and inclusion.
Q: What is BII’s exposure to the auto and mobility space?
A: Renewable energy and electric mobility are two of the largest components of our India portfolio. Both sectors are at an inflection point and ready to scale.
India is our largest electric mobility portfolio globally, with investments of around $220 million. We are not just investing in vehicle manufacturers but across the ecosystem — battery leasing, battery management systems, charging infrastructure and EV financing.
Q: What role has BII played in EV financing?
A: We invested in Turno ( a Bengaluru-based EV startup and fintech platform) to address a key bottleneck in EV adoption — financing risk, especially around battery life, which constitutes a significant portion of vehicle cost.
Traditional lenders were hesitant because of uncertainties around battery performance and residual value. By backing platforms like Turno, we are helping demonstrate how structured financing and battery assurance models can de-risk the sector.
We have also backed NBFCs (Non-banking finance companies) such as Ecofy, which provide consumer-focused green lending. EV financing is an important part of that portfolio.
Q: Why are legacy banks still cautious about EV lending?
A: The hesitation stems from uncertainty. The battery accounts for a large share of EV costs, and lenders want more data on lifecycle performance.
Incumbents are in a wait-and-watch mode. But as more operating data becomes available, we expect greater participation from mainstream capital providers.
Q: What are your investment criteria?
A: If a business is already scaled, we can invest directly. For early-stage innovation, we rely heavily on our VC and growth fund partners.
India has deep entrepreneurial and technology talent. Some ventures will fail — that’s inherent in innovation. Our approach is to back strong teams with scalable models aligned to climate and inclusion outcomes.
Q: What led BII to invest in Mahindra Electric Automotive?
A: It was part of our broader objective to diversify across vehicle segments. We did not have exposure to passenger EVs at the time.
Working with a large corporate allows us to drive impact not just on climate but also on sustainability and gender inclusion. One area of engagement has been increasing the proportion of women in the workforce through structured training and skilling initiatives.
Q: What stake does BII hold in Mahindra Electric Automotive?
A: It is a single-digit minority stake.
Q: Has the valuation of that stake changed?
A: There has been no recent fundraising at the parent level, so it’s too early to comment on valuation changes. However, execution has been on track and there has been strong traction in the passenger vehicle EV segment.
Q: What is your holding period?
A: We operate within a typical private equity timeframe. We invest when our thesis is strong and look for liquidity when the business matures and delivers both impact and financial returns. We remain opportunistic about exits.
Q: Where does India rank globally for BII?
A: India represents our largest single-country exposure globally.
The scale of climate opportunity here is significant. At the same time, our private-sector-led model works best where entrepreneurs can absorb capital and deliver both returns and measurable impact. India fits that profile exceptionally well. We are also active across Africa and Asia.
Q: What can we expect from your upcoming strategy?
A: We operate on multi-year strategy cycles and will announce our next horizon in the June quarter.
India currently attracts $600–700 million annually from BII. Going forward, supply chain resilience will be an important theme — particularly in batteries, EV components, and renewable energy manufacturing, including backward integration from modules to cells.
Q: How has the Indian government’s policy approach influenced your investments?
A: Climate has been a consistent policy priority. We see a constructive engagement model where feedback is taken seriously and policy is refined accordingly.
Geopolitical disruptions highlighted supply chain vulnerabilities, but they also accelerated reforms. Through tax incentives and industrial policies, the government is encouraging capital formation in domestic supply chains. This intent was evident in the latest budget as well.
The operating environment for impact capital in India remains highly positive.
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