The India-UK sub-fund under NIIF will initially raise 500 million pound (about Rs 4,150 crore) and also seek to leverage private investments from London for funding infrastructure projects in India, the two countries said today.
The joint statement issued after the bilateral meeting between Prime Minister Narendra Modi and his UK counterpart Theresa May, said the sub-fund would "initially raise around 500 million pound and has the potential to unlock much greater investment flows in the future".
Besides, said the statement, it will seek to leverage private sector investment from the City of London to finance Indian infrastructure projects under the umbrella of the NIIF (National Investment and Infrastructure Fund).
"Both governments will be prepared to make an anchor investment of up to 120 million pound each in the India-UK Sub-Fund subject to agreeing a structure that maximises investor interest," it said.
The government had set up the Rs 40,000-crore NIIF in December last year as an investment vehicle for funding commercially viable greenfield, brownfield and stalled projects. It was envisioned as a mother fund with several sectoral feeder funds.
Last month, Russia also agreed to pump in USD 500 million NIIF.
The statement further said that the two Prime Ministers agreed to accelerate the deepening partnership between the UK and India in financing investment in Indian infrastructure.
Make in India, Digital India, Skill India and Smart Cities provided for UK companies to invest and partner India's growth story, it said.
With regard to rupee-denominated bonds, it said, over USD 1.1 billion (Rs 7,500 crore or 900 million pound) of such instruments have been issued in London since July 2016 establishing London as the leading global centre for offshore rupee finance.
The two Prime Ministers noted the recent issuance in London by the Canadian province of British Columbia, the first foreign sub-national entity to issue rupee-denominated bonds.
They welcomed the intention of National Highways Authority of India (NHAI) and Indian Railway Finance Corporation (IRFC) to issue rupee-denominated bonds in the next few months, said the statement.
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In the coming weeks, other Indian entities including Energy Efficiency Services Limited and the Indian Renewable Energy Development Agency are preparing to issue green bonds including rupee-denominated bonds in London.
Both the countries welcomed the agreement to create the FTSE-SBI India Bonds Index Series, which will support the development of India's growing corporate bond market.
Recalling three city partnerships agreed in London in November 2015, Modi and May noted the progress and agreed to build on these through a more strategic and ambitious urban partnership.
It would bring together governments, businesses, investors and urban experts to build smarter, more inclusive cities that drive shared prosperity, jobs and growth in India and the UK.
As part of the partnership, the two Prime Ministers welcomed new technical assistance for the redevelopment of Varanasi City Railway Station under the Varanasi Smart City Development Plan.
Besides, the UK announced investment of over 160 million pound across 75 start-up enterprises which would create jobs and deliver critical services across several states in India.
Britain announced an additional 20 million pound for a Start-Up India Venture Capital Fund. The Fund will support 30 enterprises and leverage additional 40 million pound capital from other investors including UK venture capital funds.
To drive forward the next phase of bilateral collaboration on the shared strategic priority of secure, affordable and sustainable energy, it said, two Prime Ministers noted an enhanced UK-India energy for growth partnership and welcomed the decision to hold the first India-UK Energy Summit in early 2017.
