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India looking to set up feeder fund for infra debt funds: P Chidambaram

Finance Minister P Chidambaram has said India is exploring the possibility of setting up a London-listed 'feeder fund' for Infrastructure Debt Funds (IDFs).

BT Online Bureau   London     Last Updated: May 17, 2013  | 18:10 IST

Finance Minister P Chidambaram has said India is exploring the possibility of setting up a London-listed 'feeder fund' for Infrastructure Debt Funds (IDFs), and work with the UK on increasing institutional investments in the sector.

A feeder fund makes most of its investments through a 'master fund'. It can obtain better trading and operating costs through the master-feeder structure because of economies of scale.

"Both countries agreed to pursue joint work on the common aim of exploring ways to encourage increased institutional investment in infrastructure... This will include exploring the possibility of establishment of a London listed 'feeder fund' for Indian Infrastructure Debt Funds (IDFs)," Chidambaram said in a joint statement, issued with his British counterpart George Osborne, after the 6th annual India-UK Economic and Financial Dialogue ended in London on Thursday.

The statement said India will actively consider the UK's offer of partnership over the Bengaluru-Mumbai Economic Corridor (BMEC), and co-financing of a feasibility study.

India has set a target of investing $1 trillion by 2017 to bolster its infrastructure.

Besides infrastructure, Chidambaram's meeting with Osborne focused on a range of issues including financial sector reforms, the importance of increasing FDI in Indian insurance sector and support for SMEs with plans to "work together to promote trade and investment between the SME sectors of the two countries".

"We agreed on the importance of passing the Indian Insurance Amendment Bill in order to enhance the Foreign Direct Investment limit in insurance companies from 26 per cent to 49 per cent and enable international reinsurers to establish in India," the ministers said.

The two leaders also discussed the importance of the "timely conclusion of an ambitious EU-India Free Trade Agreement".

Chidambaram left for Paris on Friday as part of his three-nation tour, which concludes with talks in Qatar on Saturday.

With inputs from PTI

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