UK, India sign new infrastructure financing deal in London
A unique financing agreement between India and the United Kingdom was signed in London on Wednesday to facilitate and unlock sustainable international investment in ambitious infrastructure projects in New Delhi. A range of national highways, rapid transit and renewable energy projects will benefit from this.
The UK-India Infrastructure Financing 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 finance ministry, construction giants, engineering and law firms operating in both countries has also been unveiled to take forward the goals of making mega infrastructure projects bid-ready.
This is a game-changer that will not only accelerate India’s economic rise but also strengthen its position on the global stage. It is not just connecting the two countries; it connects India to its aspirations of becoming a global superpower,” BVR Subrahmanyam, CEO, NITI Aayog, said at the signing ceremony.
He stressed India’s position as a major investment destination for the world. 15-20 percent of global growth in absolute terms comes from the country. London will now have a head start in that area with this new initiative.
The potential is huge. The idea is to take one or two key projects, structure them around construction and design standards that are global in nature and address perceived risks so that the cost of capital is reduced, making the projects attractive for investors to invest in. The bridge itself is not about entering the bidding process. It is about taking it to a stage where projects are then amenable to international financing, Subrahmanyam explained.
The Delhi-Meerut regional rapid transit system, projects in the highway sector and green hydrogen and renewable energy are among the projects selected for the first tranche during the preparatory works carried out over the past year.
We have identified eight initial projects. Now that we have formally committed to each other today, we can start to move forward, hopefully at a rapid pace, because there is a lot to do and a big agenda, said Chris Hayward, Policy Chairman of the City of London Corporation.
The UK’s expertise in professional services, finance and scaling up large projects makes it a natural partner to meet India’s growing infrastructure needs, reflecting the City of London’s position as a global city. Furthermore, our leadership and talent in green finance can facilitate the development of India’s ambitious sustainable projects that deliver climate solutions in the push towards net zero, he said.
The UKIIFB Steering Committee will focus on accelerating the mobilisation of international private sector investment in sustainable Indian infrastructure. It will also provide policymakers with recommendations on how to address barriers to international private sector investment in sustainable Indian infrastructure. It will also develop knowledge and best practices on sustainable infrastructure projects and how to better position them as investment-worthy and attractive to international investors, so that these projects effectively enter the final phase.
The UKIIFB is a striking demonstration of the complementarity of our bilateral economic relationship. It is a way for India and the UK to use the respective strengths of their systems, the UK’s advanced and well-resourced financial sector and India’s world-leading capacity to generate sustainable and valuable long-term returns, to offer each other the benefit of long-term growth-based partnerships, Indian High Commissioner to the UK Vikram Doraiswami said.
As India’s NITI Aayog and the City of London implement the UKIIFB and jointly design major infrastructure project proposals in a manner that benefits private capital inflows, India and the UK will broaden and deepen their relationship by contributing to each other’s continued and sustainable growth, he added.
The UKIIFB Steering Committee comprises 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 hailed the opportunity for investors to partner with Indian developers to accelerate the development of investment-grade and sustainable infrastructure, Arup’s Sowmya Parthasarathy welcomed 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 through the initiative.
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First publication: 04 Sep 2024 | 23:37 IST