Government of India bonds to be issued specifically for funding big ticket infrastructure projects have attracted the interest of the world's largest sovereign wealth fund, the Abu Dhabi Investment Authority, which has a corpus of over $600 billion.
“The Abu Dhabi Investment Authority has shown interest to invest in the government of India (infra) bonds,” a senior commerce ministry official, who is part of the high-level task force on investment with UAE, told Hindustan Times.
Finance minister P Chidambaram, as part of his forthcoming budget proposals, is expected to announce this special category of bonds.
“Returns on infrastructure in India are among the highest in the world and we have already received a proposal from the Abu Dhabi’s SWF, which is keen to invest in emerging economies such as India, China and Brazil,” the official said.
An announcement on the exact quantum of investments by Abu Dhabi Investment is expected to be made during commerce minister Anand Sharma’s three-day visit to UAE, the official said.
The possibility of setting up a wholly-owned subsidiary or a joint venture with an Indian financial institution such as IDFC or IL&FS for long-term infrastructure investment is also being explored.
Channelising investments from global SWFs is part of the finance ministry’s plan to boost foreign direct investment (FDI) in Indian infrastructure.
A sub-group comprising of senior officials from the RBI, finance ministry, private companies, SEBI, IRDA and top financial institutions had in a recent report to the government recommended tapping global SWFs, private equity investors and strategic international investors to meet the high investment targets of the 12th Five Year Plan.
India has a targeted investment of close to $1 trillion (R54 lakh crore) in infrastructure during the 12th Plan period (2012-17). Abu Dhabi Investment is one of the world's largest sovereign wealth funds.