UK and India Forge New Path with Infrastructure Financing Pact

A pioneering India-UK financing agreement was signed in London on Wednesday to boost sustainable international investments in New Delhi's infrastructure projects. This initiative, known as the UK-India Infrastructure Financing Bridge (UKIIFB), will benefit national highways, rapid transport, and renewable energy schemes.

Representative image

The UKIIFB, agreed upon during the UK Economic and Financial Dialogue (EFD) last September, is now operational for an initial two-year period. It involves the City of London Corporation and the National Institution for Transforming India (NITI Aayog). A Steering Committee comprising representatives from government departments, construction giants, engineering firms, and legal entities from both countries has been established to advance these mega infrastructure projects.

India's Economic Growth

During the signing ceremony, B.V.R. Subrahmanyam, CEO of NITI Aayog, remarked, "This is a game-changer that not only accelerates India's economic ascent but also strengthens its position on the global stage." He emphasised India's role as a significant investment destination, contributing 15-20 per cent of the world's incremental growth in absolute terms. With this new initiative, London gains a first-mover advantage in this space.

Subrahmanyam further explained that the potential is immense. The plan is to select one or two marquee projects and structure them around global building and design standards. This approach aims to address perceived risks and reduce capital costs, making these projects attractive to investors. "The bridge itself is not about getting into the bidding process. It's about bringing it to a stage where projects are then amenable to international finance," he added.

Initial Projects Identified

Among the first tranche of projects identified are the Delhi-Meerut Regional Rapid Transit System, highway sector initiatives, and green hydrogen and renewable energy projects. Chris Hayward, Policy Chairman of the City of London Corporation, stated, "We have identified eight initial projects. Now we have formally committed to each other today, we can start to drive forward, hopefully at pace because there's a lot to be done and there's a big agenda."

Hayward highlighted the UK's expertise in professional services, finance, and scaling major projects as a natural fit for meeting India's growing infrastructure needs. He also pointed out that London's leadership in green finance could facilitate India's ambitious sustainable projects aimed at achieving net-zero emissions.

Steering Committee's Role

The UKIIFB Steering Committee will focus on accelerating international private sector investment into Indian sustainable infrastructure. It will provide policymakers with recommendations on overcoming barriers to such investments and develop best practices for making these projects attractive to international investors. The goal is to bring these projects closer to being investment-ready.

Indian High Commissioner to the UK Vikram Doraiswami commented on the bilateral economic relationship: "The UKIIFB is a striking testament to the complementarity of our bilateral economic relationship." He noted that this initiative leverages the UK's sophisticated financial sector and India's capacity for generating sustainable returns. This partnership aims to offer mutual growth benefits in the long term.

Industry Reactions

Representatives from various organisations expressed their support for the initiative. Simon Harris from Mott MacDonald described it as an "excellent opportunity" for investors to collaborate with India's project developers. Sowmya Parthasarathy from Arup called it a "pivotal moment" in the bilateral partnership.

Mark Courtneidge of Aon UK and Anurag Gupta of Sequoia Investment Management Company highlighted how this initiative would enhance risk management expertise. The Steering Committee includes members 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.

This agreement marks a significant step towards strengthening India-UK relations through collaborative efforts in sustainable infrastructure development.