The International Finance Corporation (IFC), the World Bank's investment arm, plans to raise $1bn (£630m) by selling Indian rupee-linked bonds.
IFC will use the proceeds to finance "private sector investment in India".
It said the bonds, which will be sold outside India, will strengthen the country's capital markets and attract greater foreign investment.
Foreign investors have been sceptical of entering India amid uncertainty over policies and a slowdown in growth.
Analysts said the IFC bonds were likely to help attract investors who have been looking to enter India but needed assurance.
"This lends the weight of the credit rating of the World Bank to the potential investment," Vishnu Varathan, a senior economist with Mizuho bank told the BBC.
"By co-working with the World Bank you get some of the credit risks involved with India off the table."
