The government approved a memorandum of understanding (MoU) between India and the United Arab Emirates (UAE) to jointly explore opportunities to mobilise up to $75 billion long-term investment in the National Investment Infrastructure Fund (NIIF), the Hindu reported.
The NIIF, the Rs 40,000-crore fund set up in December 2015, is government of India's investment vehicle for funding commercially viable projects -- greenfield, brownfield and stalled. "As a solution to the elusive equity capital to the infrastructure sector global sovereign funds are expected to take the NIIF route to invest in India including Abu Dhabi's Investment Authority," reported the Financial Express.
The Union Cabinet gave its ex-post facto approval for the MoU signed between the two countries February 11 when the crown prince of Abu Dhabi Sheikh Mohammed Bin Zayed Al Nahyan's had visited India.
"The joint statement during the visit of Prime Minister to the UAE in August 2015, mentioned the establishment of UAE-India Infrastructure Investment Fund, with the aim of reaching a target of $75 billion to support investment in India's plans for rapid expansion of next generation infrastructure, especially in railways, ports, roads, airports and industrial corridors and parks," said Ravi Shankar Prasad, the Union minister of communication and technology, addressing the media after the cabinet meeting.
The minister, according to a report by Press Trust of India, expects the MoU would help a transparent, high-level framework and collaboration platform for both India and the UAE to work towards full-potential participation by UAE's investment institutions in India's infrastructure or institution, including the NIIF.
Representatives of both countries are expected to form a joint working group to work out the modalities of terms, principles and criteria together, and taking forward the cooperation spelt out in the MoU, said the Minister.
In the NIIF, the Centre will invest Rs 20,000 crore and "hold up to 49 percent equity while the remaining stake would be offered to foreign and domestic strategic anchor partners," reported the FE. As a fund of funds, the NIIF is expected to help infrastructure projects to be successfully executed. It added that by leveraging on it, it could further raise funds as debt up to 10 times (Rs 4 lakh crore) over a time period, ensuring steady long term funding to large infra projects at a reasonable cost.