A first-of-its-kind India-UK financial agreement was signed in London on Wednesday to facilitate and unlock sustainable international investment in New Delhi’s ambitious infrastructure projects, which will benefit a range of national highways, rapid transport and renewable energy schemes.
The UK-India Infrastructure Finance Bridge (UKIIFB), agreed during the UK Economic and Financial Dialogue (EFD) in September last year, is now operational for an initial period of two years between the City of London Corporation and the National Institution for Transforming India (NITI Aayog). A Steering Committee comprising representatives from the government’s Treasury Department, construction giants, engineering companies and legal firms operating in both countries has also been launched to drive the objectives of making mega infrastructure projects tender-ready.
“This is a step-change that not only accelerates India’s economic rise but also strengthens its position on the global stage. It does not merely connect the two nations; it connects India with its aspirations of becoming a global power,” NITI Aayog CEO BVR Subrahmanyam said at the signing ceremony.
He highlighted India’s position as a major investment destination for the world, with 15-20 per cent of global incremental growth in absolute terms coming from the country, and London will now enjoy a first-mover advantage in that space with this new initiative.
The potential is huge. The idea is to pick one or two marquee projects, structure them around construction and design standards that are global in nature and address the perceived risks in a way that reduces the cost of capital, making the projects attractive to investors. The bridge itself is not about entering the bidding process, but about taking it to a stage where the projects are eligible for international financing, Subrahmanyam explained.
The Delhi-Meerut Regional Rapid Transit System, projects in the road sector and green hydrogen and renewable space are among those selected for the first tranche during the ongoing preparatory work over the past year.
“We have identified eight initial projects. Now that we have formally engaged with each other today, we can start to move forward, hopefully at a good pace, because there is a lot to do and there is a broad agenda,” said Chris Hayward, policy chairman for the City of London Corporation.
“The UK’s expertise in professional services, finance and major project scaling makes it a natural partner to meet India’s growing infrastructure needs, demonstrating the City of London’s position as a global city. In addition, our leadership and talent in green finance can facilitate the development of India’s ambitious sustainable projects that provide climate solutions on the path to net zero,” he said.
The UKIIFB Steering Committee will begin to seek to accelerate the mobilisation of international private sector investment in India’s sustainable infrastructure; provide policymakers with recommendations on how to address barriers to international private sector investment in India’s sustainable infrastructure; and develop knowledge and best practices on sustainable infrastructure projects and how these can be better positioned as investable and attractive to international investors, thereby effectively bringing these projects to the last mile.
The UKIIFB is a striking testament to the complementarity of our bilateral economic relationship. It is a means for India and the UK to use the respective strengths of their systems – the UK’s sophisticated and well-resourced financial sector and India’s world-leading ability to generate sustainable, high-value returns over the long term – to offer each other the benefit of long-term growth-based partnerships, said India’s High Commissioner to the UK Vikram Doraiswami.
As India’s NITI Aayog and the City of London implement the UKIIFB and thereby jointly design proposals for large infrastructure projects in a manner that benefits private capital inflows, India and the UK will expand and deepen their relationship contributing to each other’s long-lasting and sustainable growth, he added.
The UKIIFB Steering Committee includes representatives from Aon, Arup, Mott MacDonald, Clifford Chance, Sequoia Investment Management Company, Department of Economic Affairs, Larsen & Toubro, Sorin Investment Fund, Economic Laws Practice and AECOM India Private Limited.
While Mott MacDonald’s Simon Harris welcomed the exciting opportunity for investors to collaborate with Indian project developers to accelerate the development of sustainable and investable infrastructure, Arup’s Sowmya Parthasarathy hailed it as a pivotal moment in the bilateral partnership.
Mark Courtneidge of Aon UK and Anurag Gupta of Sequoia Investment Management Company highlighted the risk management expertise that will be enhanced as a result of the initiative.
(Only the headline and image of this report may have been reworked by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First published: September 4, 2024 | 11:37 PM IS
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