The Economic Secretary to the Treasury, Harriett Baldwin, embarked on a four-day tour of India, accompanied by Alok Sharma, the Prime Minister’s Infrastructure Envoy to India on Monday 15 February. The tour is a key part of the government’s long-term plan to establish closer ties and deepen financial cooperation between Britain and India, the world’s fastest-growing major economy.
While on the visit the City Minister will meet with key public sector and business leaders, including the Reserve Bank of India Governor Raghuram Rajan, and Indian Minister of State for Finance Jayant Sinha, to push forward cooperation on building offshore rupee markets in London through the issuance of masala bonds.
Speaking about the collaboration, Ms Baldwin reportedly said, “Formal collaboration between the UK and the Indian government to build on the work that has already been done in terms of how we can put together the skills from the UK professional service sector, the experience that we have in terms of infrastructure investment in terms of public private partnership, in terms of project financing and formalise that in terms of working relationship.
“It (the agreement with India) would cover the raising (funds) which we can be of most assistance. So, I am sure that the things along this line are very much positively discussed ahead of finalising... it will be a government to government agreement.”
Both UK and India have reportedly agreed to explore ways to encourage increased investment in infrastructure with the aim of developing an India-UK partnership fund under the umbrella of India's flagship infrastructure investment initiative, the National Investment and Infrastructure Fund (NIIF).
Ms Baldwin further added: “Developing closer economic and financial ties between India and Britain is key to boosting exports and investment, and creating growth in both of our economies.
“That’s why I’m delighted to visit India to bolster our cooperation across key markets. With a population of over a billion people and the fastest growing major economy in the world, the opportunities for UK financial firms to partner with and export to India are unlimited.
“The visit builds on the significant progress that has been made in deepening economic and financial ties between the UK and India in recent years.
“In January 2016 the Chancellor George Osborne announced a package of agreements between the UK and India, focusing on financial services, infrastructure and technology, and Prime Minister Modi announced that the first ever Indian ‘masala’ bond will be issued in London by the Indian Railway Finance Corporation, with the proceeds used to upgrade India’s rail network.
While in India the City Minister will also host a roundtable of India’s leading FinTech entrepreneurs and financial regulators, to showcase the steps the UK has taken to cultivate a world-leading FinTech hub and develop closer ties with India’s top class IT sector.
At a roundtable organised by IIFCL in India, the Secretary said, “We will be signing MoU in terms of collaboration between the UK and the Indian government at the G-20 Finance Ministers meeting which is to be held at the end of this month.”
The G-20 Finance Ministers and central bank governors meeting is scheduled to be held on February 26-27 in Shanghai.
Speaking about India Infrastructure Finance Company Limited (IIFCL), Deputy Managing Director Sanjeev Kaushik reportedly said the company has been appointed as investment manager for NIIF for the interim period.
IIFCL was the first issuer of masala bonds, he said, adding, "we are still in fact in dialogue with the ADB and World Bank if they could help us do that and then customise it for us."
Masala bonds are instruments which are rupee-denominated and sold only to offshore buyers.
