NEW DELHI: To accelerate infrastructure financing and support India’s transition to a net-zero economy, the Centre is preparing a comprehensive strategy to attract long-term global investors such as pension funds and sovereign wealth funds to infrastructure sectors, including highways, railways, ports and airports.
The move comes as India faces massive financing needs for its climate and infrastructure goals. A recent Niti Aayog report estimates that the country will require investments worth $22.7 trillion by 2070 to achieve its net-zero target. Of this, nearly $6.5 trillion is expected to remain unfunded, highlighting the need for deep domestic financial reforms and greater integration with global pools of long-term capital.
As part of the strategy, the government is stepping up outreach to major pension funds in Australia, Japan, Canada and the European Union (EU), while also engaging sovereign wealth funds from the United Arab Emirates, Saudi Arabia and Norway, sources told FE. Officials believe these investors, known for providing patient capital with long investment horizons, are well suited to finance large infrastructure projects.
India’s experience with Japan is being viewed as a model for future partnerships. Japanese investment is currently anchored through the $600-million India-Japan Fund, the first bilateral fund under the National Investment and Infrastructure Fund (NIIF). The fund, backed by the Japan Bank for International Cooperation (JBIC) with a 51% stake and the Government of India holding the remaining 49%, focuses on environmental sustainability, renewable energy, the circular economy and low-carbon development. The Centre now hopes to create similar investment platforms with other countries.
Apart from providing fresh capital, officials believe such investments can also support the government’s asset monetisation programme by attracting long-term institutional investors into mature infrastructure assets.
To make India a more attractive destination, the government is working on addressing regulatory bottlenecks, improving investor awareness about available opportunities and identifying policy hurdles that discourage foreign participation, sources said. A dedicated coordination mechanism or single-window working group is also being considered to engage with global investors and facilitate project execution.
The government also plans to actively pitch infrastructure opportunities, including highway asset monetisation projects, to global investors in financial centres such as London.
Similar investment outreach mechanisms are also being explored with Japan.
In a recent policy change aimed at widening investor participation, the Ministry of Road Transport and Highways amended the Request for Proposal (RFP) norms for Build-Operate-Transfer (BOT) highway projects.
The revised rules now allow sovereign wealth funds, pension funds, infrastructure funds, private equity funds, alternative investment funds (AIFs) and other foreign investment funds to bid directly, either independently or through consortiums. Previously, these investors were largely confined to operational Toll-Operate-Transfer (TOT) highway assets.
Source: The Financial Express
