$1.2 billion package from UK for green projects in India
India and the UK have also joined hands to mobilise private capital into sustainable infrastructure in India
The UK has announced a $1.2 bn package of public and private investment in green projects and renewable energy in India.
This was among the new steps to tackle climate change and boost investment outlined by Indian Finance Minister Nirmala Sitharaman and UK Chancellor Rishi Sunak at the 11th Economic and Financial Dialogue (EFD) between the UK and India held on Thursday.
The meet also saw the joint launch of the Climate Finance Leadership Initiative (CFLI) India partnership, to mobilise private capital into sustainable infrastructure in India.
These investments will support India’s target of 450GW renewable energy by 2030, the British High Commission in India said in a press release.
The UK-India economic relationship is already strong with bilateral trade of over £18bn in 2020, supporting nearly half-a-million jobs in each other’s economies.
Earlier this year, the UK and Indian Prime Ministers launched the UK-India 2030 Roadmap, to bring the economies and people closer together over the next decade and boost cooperation in areas that matter to both countries.
The countries have also set out an ambitious goal to double trade by 2030, including through negotiating a Free Trade Agreement.
At today’s EFD, the Chancellor and the Finance Minister also agreed to be ambitious when considering services in the upcoming UK-India trade negotiations, which could open up new opportunities for UK financial firms and help more Indian companies to access finance in the City of London, the press release said.
Services account for 71% of UK GDP, and 54% of Indian GDP.
According to India's Ministry of Finance, the Dialogue covered discussions on economic cooperation on multilateral issues, including G20 and COP26.
Both sides deliberated on furthering of Financial Services collaboration with special emphasis on Fin-Tech and GIFT City, annual India-UK Financial Market Dialogue and measures underway to reform financial markets.
Infrastructure development and promotion of sustainable finance and climate finance were also discussed.
Agreements at the Economic and Financial Dialogue
* A $1bn investment from CDC, the UK’s development finance institution in green projects in India between 2022-2026. This builds on CDC’s $1.99 billion existing portfolio of private sector investments in India.
* Joint investments by both governments to support companies working on innovative green tech solutions, and a new $200m private and multilateral investment into the joint UK-India Green Growth Equity Fund which invests in Indian renewable energy.
* The joint launch of CFLI India partnership to mobilise private capital into sustainable infrastructure in India, including clean energy like wind and solar power and other green technologies. The partnership will be led by a group of leading financial institutions responsible for $6.2tn of assets and chaired by Michael Bloomberg, UN Special Envoy on Climate Ambition and Solutions.
* New cooperation under the UK-India Infrastructure Partnership with the UK’s Infrastructure Projects Authority to support India’s ambitious National Infrastructure Pipeline.
* Further strengthening of the UK-India strategic partnership on Gujarat International Finance Tec (GIFT)-City, India’s first International Financial Services Centre, to support GIFT to become a Fintech and sustainable finance hub. Barclays became the third UK bank to commence operations in GIFT City this year, after HSBC and Standard Chartered.
The UK also welcomed India’s recent decision to lift the Foreign Direct Investment cap in the insurance sector from 49% to 74% which will help British firms to take greater ownership of their operations in India.
The Economic and Financial Dialogue (EFD) is a high-level annual dialogue between the UK and India.
It explores ways in which the UK and India can strengthen their economic relationship to boost jobs and investment in both countries, focused on macro-economic and multilateral issues, climate action, financial services cooperation, and trade and investment opportunities, the British High Commission in India pointed out.
Since the first UK-India Economic and Financial Dialogue in 2007, India has contributed more to global GDP than any country outside China and the US – adding nearly $1.5 trillion to the global economy (5.6% of global growth).
In 2020, the UK was India’s largest goods importer across Europe.
The city of London continues to remain an attractive destination for Indian firms looking to raise money overseas – with the London Stock Exchange home to the most rupee-denominated ‘Masala bond’ listings in the world.