The Indian government has initiated preliminary talks with the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) to amend norms that will pave the way for an India-owned sovereign wealth fund (SWF), sources told CNBC-TV18..
Since the Narendra Modi cabinet began its third term, the Indian government has been focused on the ambitious goal of becoming a $30 trillion economy by 2047. Feedback and suggestions from various stakeholders indicate that the establishment of a sovereign wealth fund could be a key component in achieving this vision.
A sovereign wealth fund could play a pivotal role in financing India’s growth trajectory, particularly in sectors such as infrastructure, critical minerals and energy.
According to Jayant Dasgupta, former ambassador to the WTO, a well-structured sovereign wealth fund could help finance specific infrastructure projects that are mutually beneficial to India and the beneficiary countries.
“I think it can be very useful for India to use a sovereign wealth fund to fund specific infrastructure projects that are of mutual interest to India and the recipient country. There would have to be a demand for some transparency and accountability, because that is something that foreign governments have often raised in relation to sovereign wealth funds. So there are concerns that will have to be addressed,” he said.
Dasgupta also noted that one of the Main advantages of a SWF is the ability to streamline the flow of funds and reduce costs associated with traditional banking channels and credit lines. This could facilitate smoother financial transactions and reduce bureaucratic hurdles, thereby improving India’s overall investment footprint.
The government has also sought feedback from more than 30 public sector companies on their interest and the potential success of the fund.
According to Dasgupta, one of the emerging priorities for India is to secure critical minerals, and agencies such as ONGC Videsh are exploring ways to meet the country’s future requirements.
He suggested that a sovereign wealth fund could play a crucial role in this area by providing a more efficient investment channel compared with traditional banking, which often involves extensive scrutiny and higher costs.
Dasgupta also noted that the fund could support India’s energy needs in the medium and long term, particularly to secure oil and gas supplies for the next two decades. By investing through a sovereign wealth fund, India could not only provide capital to resource-rich but capital-scarce countries, but also offer technological and human resource support, thereby securing a share in the production of vital resources.
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