Millennium Post

India mulls UK-listed feeder fund to lure infra investment

India is exploring the possibility of setting up a London-listed 'feeder fund' for Infrastructure Debt Funds (IDFs), and is looking to work with the UK on increasing institutional investments in the sector, said Finance Minister P Chidambaram.

'Both countries agreed to pursue joint work on the common aim of exploring ways to encourage increased institutional investment in infrastructure,' Chidambaram said in a joint statement issued with his British counterpart, George Osborne.

'This will include exploring the possibility of establishment of a London listed 'feeder fund' for Indian Infrastructure Debt Funds (IDFs),' he said after the 6th annual India-UK Economic and Financial Dialogue that ended here on Thursday.

A feeder fund makes most of its investments through a 'master fund'. It can obtain better trading and operating costs through the master-feeder structure because of economies of scale. India has set a target of investing $1 trillion by 2017 to bolster its infrastructure.

The statement said that India will actively consider the UK's offer of partnership over the Bengaluru-Mumbai Economic Corridor (BMEC), and co-financing of a feasibility study.

Besides infrastructure, Chidambaram's meeting with Osborne focused on a range of issues including financial sector reforms, the importance of increasing Foreign Direct Investment  in Indian insurance sector and support for Small Manufacturing Enterpreises with plans to 'work together to promote trade and investment between the SME sectors of the two countries'.

'We agreed on the importance of passing the Indian Insurance Amendment Bill in order to enhance the Foreign Direct Investment limit in insurance companies from 26 per cent to 49 per cent and enable international reinsurers to establish in India,' the ministers said.

The two leaders also discussed the importance of the 'timely conclusion of an ambitious EU-India Free Trade Agreement'.

Chidambaram left for Paris on Friday as part of his three-nation tour to atrract  foreign investment, concludes with talks in Qatar on Saturday.


Finance Minister P Chidambaram has said that India offers 'unlimited' opportunities for investment in infrastructure sector as the country needs more roads, airports and seaports.

'What I am telling the investors and government  here is that there is a huge opportunity in India, especially in infrastructure,' Chidambaram told NDTV.

'There is no other country in the world which requires so many thousand kilometres of road, so many airports, so many seaports, so much more capacity of steel, mining, power. So I think the opportunities are unlimited,' he said.

Referring to rate of price rise, he said, 'inflation has come down sharply in the last two months and I think numbers for April is doing better. In fact, we are talking about core inflation having reached a zero level.'

Inflation, based on the Wholesale Price Index, fell to 41-month low of 4.89 per cent in April on account of decline in prices of food items, including fruits and vegetables. It stood at 5.96 per cent in March. In April, 2012, it was 7.50 per cent. Manufacturing inflation or core inflation stood at 3.41 per cent in April. India requires investment to the tune of $1 trillion in the 12th Five Year Plan ending March 2017 for development of various infrastructure projects.

The share of infrastructure investment in Gross Domestic Product is planned to be increased to more than 10 per cent by the end of the 12th Plan.

Indian government has recently set up a Cabinet Committee on Investment (CCI) for speedy clearance of large infrastructure projects.

CCI has already cleared investments to the tune of $27 billion during this year.
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