The United Kingdom has entered into a strategic partnership to develop India’s fledgling international financial services centre GIFT City, and agreed to set up a new Fund of Funds to be managed by the State Bank of India group in order to route U.K.’s future capital investments into India.
India and U.K. also signed off on a new infrastructure finance and policy partnership to help India execute its National Infrastructure Pipeline that envisages investments worth $1.4 trillion, at the tenth Economic and Financial Dialogue (EFD) between the two countries steered by U.K. Chancellor Rishi Sunak and Finance Minister Nirmala Sitharaman on Wednesday.
“As we seek to recover from the profound impact of COVID-19, we can only do so in partnership and co-operation,” Mr. Sunak said. “Our two countries can work together to be a force for good, building back better, tackling climate change and creating jobs and prosperity. That’s been our focus today,” he added said soon after the conclusion of the dialogue, which was launched in 2007 and last held in 2017.
Stressing that a bilateral partnership driven by ‘U.K.’s deep capital markets and India’s extraordinary economic dynamism’ can help show the way ahead for a global recovery, Mr. Sunak said: “We have been able to announce a series of ambitious initiatives across trade, infrastructure, sustainable finance and research. This includes a new strategic partnership to develop the GIFT city, a tremendous opportunity to drive international capital flow from the city of London to India.”
Bilateral trade between India and the U.K. stood at £24 billion in 2019 and India is now the second-largest project investment source for the U.K.
“We establish a new U.K.-India strategic collaboration to accelerate the development of GIFT City (Gujarat International Finance Tec-City), India’s first International Financial Services Centre, and promote greater links between GIFT City and the U.K. financial services ecosystem by bringing together both governments, regulators and business to share experiences and expertise,” said the joint statement signed by both the leaders.
Under the infrastructure partnership, the UK will support India’s infrastructure pipeline by sharing experience, knowledge exchange and technical assistance to support India’s National Infrastructure Pipeline, including setting up a Project Preparation Support Facility-cum-Centre of Excellence for PPP Projects.
To mobilise private capital for green investment, a new U.K.-India Sustainable Finance Forum is also being established.
Welcoming India’s move to allow 100% tax exemptions for sovereign wealth funds investing in infrastructure, the U.K. Chancellor termed it a positive for their government’s development capital investments in India and the CDC Group, which has £1.23 billion invested in more than 300 Indian companies.
“We are pleased to note the establishment of the U.K. India Development Cooperation Fund (UKIDCF) — a Fund of Funds to be managed by the State Bank of India Group and serve as the financial and accounting platform for the U.K. Government’s future development capital investments in India,” the statement said.
COVID-19 battle
To help combat the pandemic, U.K. and India announced a joint investment of £8 million for research to understand and address the factors leading to the severity of the coronavirus in South Asian populations in U.K. and in India.
Separately, the U.K. Department of Health and Social Care will contribute to India’s coronavirus Joint Response Plan (JRP) and antimicrobial resistance via the World Health Organization with an initial amount of £600,000, as per the joint statement.
“Concurrently, our governments are working to support ongoing collaboration on vaccine research and design, manufacturing and distribution to ensure global equitable and affordable access,” the statement said.