London-Based Funds Set to Infuse $10 Billion into Indian Infrastructure Projects

New Delhi, Sep 16 (KNN) In a significant development for India’s infrastructure sector, the City of London is poised to commit USD 10 billion in investments into key Indian projects over the next year.

This landmark initiative aims to channel funds from London-based asset managers into high-profile infrastructure projects, including highways and the National Capital Region’s rapid transport systems.

The infusion of “patient capital” from London is expected to herald a new era of large-scale investment in India’s rapidly expanding infrastructure sector.

Official sources indicate that this move will set a precedent for future investments and provide a crucial boost to the country’s development agenda.

Earlier this month, BVR. Subrahmanyam, CEO of Niti Aayog, led a delegation to London to present the vast investment potential in India.

This visit culminated in the signing of the Financing Bridge agreement between the City of London Corporation and Niti Aayog on September 11, 2023. The agreement aims to leverage a fraction of the trillions of dollars managed by London-based funds to finance Indian projects.

In the initial phase, London-based funds will be encouraged to participate in bidding for 8-10 projects under the National Highways Authority of India (NHAI) and three multimodal hubs planned by the National Capital Region Transport Corporation (NCRTC) in Anand Vihar, Sarai Kale Khan, and Ghaziabad.

These hubs are designed to integrate seamlessly with Indian Railways, Inter-State Bus Terminals (ISBTs), Airports, and the Delhi Metro.

A senior official revealed that the goal is to secure 4-6 marquee projects with significant international player involvement. These projects will serve as demonstration models, showcasing successful financing strategies that could be replicated across other infrastructure initiatives in India.

Historically, India has relied predominantly on domestic funds and government budgets for infrastructure financing. However, global funds, such as the Canada Pension Plan Investment Board (CPPIB), which has already invested approximately USD 30 billion in India, including USD 10 billion in infrastructure, have shown the potential for substantial international capital infusion.

The Indian government aims to attract more global funds to bridge the massive financing gap required for infrastructure development. The government is targeting to open bids for some marquee projects by May-June next year.

They have addressed investor concerns, including land issues and environmental, social, and governance (ESG) considerations, to facilitate smoother investment flows.

Despite London’s status as the world’s second-largest financial services hub, many asset managers have historically been hesitant to invest in India due to information gaps. To address this, a team from the City of London will visit India in November to assess project sites firsthand.

In parallel, the Indian government is engaging with various countries to boost foreign direct investment (FDI), which has seen a decline from USD 42 billion in FY23 to USD 26.5 billion in FY24.

(KNN Bureau)