Finance minister Arun Jaitley is confident that investment flows from Canada will increase in the near future as India offers investors an “attractive regime”.
Jaitley met his Canadian counterpart Bill Morneau and the country’s minister of international trade Chrystia Freeland on Monday, and also held a series of meetings with major investors, including the Canadian Pension Plan (CPP) Investment Board.
New Delhi needs immediate investments of at least $1 trillion to build roads, ports, airports and power stations as it seeks to expand its economy and raise living standards. The government hopes private companies will contribute half the amount.
But so far it has struggled to raise enough private money, with at least $10 billion worth of road projects stuck because of difficulty in obtaining land. Many power projects remain unfinished owing to regulatory delays.
Canada is only the latest stop on Jaitley’s campaign to raise investments from global cash cows.
After the meetings in Toronto, Jaitley was upbeat about the prospects of Canadian investors upping their stake in India: “They all look at policy, they look at prospects, they look at the risks involved, and then collectively they weigh that and then they see comparable economies, as to what are the other options they have. And from all counts, India rates fairly high on their priorities.”
The CPP Fund, for instance, controls nearly US $225 billion and it hosted a meeting for the finance minister. He pointed out that in the past 24 months or so, Canadian investors, including pension funds, have invested nearly $12 billion in India.
“These funds have a lot of investible surplus and therefore, they have to look at a wider canvas of targets where they want to invest, particularly because of the kind of returns they get in our part of the world, are much higher than what they will get here,” Jaitley said during an interaction.
Such wooing may have worked: CPP Investment Board already has an exposure of $2 billion in India while Caisse de dépôt et placement du Québec (CDPQ) announced on Monday it will target investments in the range of $600 million to $700 million over four years, in partnership with Edelweiss Group, to “invest in stressed assets and private debt opportunities in India”.
After the two finance ministers met, Morneau said, “I am pleased to build on Canada’s longstanding relationship with India by exploring ways to deepen our economic and financial ties. It is important that Canada continues to engage with the world to create more opportunities and prosperity for the middle class.”
Following the meetings with the ministers, Jaitley said that though trade had “picked up significantly” between the two countries, both sides were “very keen to finalise the investment arrangement”, referring to the pending Foreign Investment Promotion and Protection Agreement.
Over the years, big banks in India have become increasingly unwilling to lend money to finance infrastructure projects. This has led governments to turn to pension and sovereign wealth funds, an it has pitched the National Investment and Infrastructure Fund as a perfect asset match for the long-term liabilities of a pension fund. The NIIF is an investment vehicle to fund green-field, brown-field and stalled projects.