The 12th edition of the India-UK Economic and Financial Dialogue discussed ways to unlock finance capital for sustainable projects and infrastructure funding besides collaborating on financial innovation and further development of the GIFT City IFSC. Both countries also explored ways of investing in each other’s banking sectors and practical benefits to facilitate business in each other’s jurisdiction.
The 12th Round of Ministerial India-UK Economic and Financial Dialogue was held in New Delhi on September 11. The Indian delegation was led by Nirmala Sitharaman, Union Minister for Finance and Corporate Affairs, and the UK delegation was led by Jeremy Hunt, Chancellor of the Exchequer.
The planned actions in the India-UK workplan include facilitating pension fund delegation visits to each country, sharing knowledge about recent and planned regulatory reforms in their insurance and pension sectors, and supporting the development of GIFT City as a reinsurance hub.
The Dialogue saw the launch of the Infrastructure Financing Bridge to support India’s huge ambitions for infrastructure development and monetization.
More international funding for Indian capital projects could come through with the financing bridge. We want to see real money flow into Indian infrastructure and want to remove practical barriers. We also want to ensure protection for investors putting money into Indian projects. – UK Chancellor of the Exchequer Jeremy Hunt speaking to CNBC-TV18
Both sides also confirmed their commitment to the FTA and BIT negotiations to promote bilateral trade and investment.
Key takeaways: 12th India-UK Economic and Financial Dialogue Joint Statement
Further, the UK welcomed India’s recent decision to permit Indian businesses to list their equity shares on global exchanges within the GIFT City IFSC framework. The move is set to enhance accessibility for UK-based entities seeking to invest in Indian companies.
The UK also expressed its enthusiasm in the Joint Statement for India’s ongoing exploration of the potential for domestic firms to directly list their securities on the London Stock Exchange and other international markets in the future.
Currently, Indian firms are unable to directly list on international stock exchanges. However, they can participate in foreign equity markets through depository receipts, like Global Depository Receipts (GDRs) or American Depository Receipts (ADRs). Additionally, they have the option to list their debt securities, such as foreign currency convertible bonds and masala bonds, on foreign exchanges.
- Cooperation in the insurance sector
In the Joint Statement, it was mentioned that cooperation between Indian and UK insurance and pension funds sectors would be supported.
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It was mutually recognized that a robust pensions sector is pivotal in ensuring secure retirement incomes and fostering economic growth through productive investments. This includes investments in green infrastructure as part of a shared commitment to decarbonize their economies. Additionally, the insurance sector serves a crucial role in mitigating insurable risks and promoting trade.
The UK delegation agreed to sharing British expertise to support the GIFT City’s efforts to develop as a reinsurance hub. In this regard, the UK side welcomed the initiative taken by the IFSCA under its regulations, permitting IFSCA Insurance Offices (IIOs) to invest in foreign jurisdictions including the UK.
- Climate finance and sustainability
In 2022, the UK’s Development Finance Institution, British International Investment (BII), committed more than US$300 million to climate finance initiatives in India. These initiatives encompassed areas such as solar solutions, electric vehicles, and sustainable agriculture. BII will actively seek out climate finance opportunities in India that align with the goals of sustainable and inclusive economic development.
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The UK-India Green Growth Equity Fund was acknowledged by both delegations as a success story and the largest fund of its kind within emerging markets. The fund’s performance indicated the effectiveness of public-private partnerships in mobilizing financial resources at scale.
Building upon the achievements of the Green Growth Equity Fund and leveraging a decade of collaboration through the UK India Development Capital Investment partnership, both countries committed to new investment opportunities in areas that aligned with their shared priorities.
The UK has signed a guarantee with the World Bank to facilitate the latter lending US$1 billion to the Government of India to strengthen the enabling policy framework to promote clean energy investments by (a) promoting green hydrogen; (b) scaling up renewable energy; and (c) enhancing climate finance for clean energy investments.
- FinTech and crypto assets
Both India and the UK have acknowledged areas of cooperation and deeper bilateral FinTech investment, regarding which a subsequent meeting will be held. Based on the 3rd India-UK FinTech Joint Working Group (FJWG) held in 2022, priority recommendations were made in the IUKFP report, ’Harnessing the power of Fintech and Data’, that was launched at the Financial Markets Dialogue in April this year in London.
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Another aspect highlighted was support for financial innovation and developing financial services products. The Insurance Regulatory and Development Authority of India (IRDAI) and India’s Pension Fund Regulatory and Development Authority (PFRDA) are now admitted to the UK financial regulator FCA-led Global Financial Innovation Network (GFiN).
The GFiN was created to provide a more efficient way for innovative firms to interact with regulators, helping them navigate between countries as they look to scale and test new ideas.
The UK-India Infrastructure Partnership has worked towards raising investment via the City of London to support India’s National Infrastructure Pipeline.
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To follow through on this cooperation, the UK-India Infrastructure Financing Bridge has been launched, which is a collaborative initiative between NITI Aayog and the City of London Corporation.
Under this initiative, expertise from both countries will be leveraged to structure major infrastructure projects and unlock infrastructure investment. The UK has also agreed to provide technical expertise to India’s Infrastructure Finance Secretariat as part of the UK-India Economic Cooperation Programme.
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