India woos Sovereign Wealth Funds from UAE

Dubai - Adia team heads to New Delhi, to invest in NIIF aiming for good returns.

Indian Finance Minister Arun Jaitley on Tuesday invited sovereign wealth funds of the UAE to invest in National Infrastructure and Investment Fund (NIIF), saying it will provide good return.
NIIF will attract good return on the investment made by the Sovereign Wealth Funds, the Finance Ministry said in a statement.
"It's a great opportunity for UAE Sovereign Wealth Funds and Pension Funds to make best use of it and make big investment in India," it said.
Abu Dhabi Investment Authority, or Adia, has shown keen interest in making investment on NIIF.
During the visit of Indian Prime Minister Narendra Modi to the UAE in August, both countries had agreed to set up UAE-India Infrastructure Investment Fund, with the aim of reaching a target of $75 billion to support investment in India's plans for rapid expansion of next generation infrastructure, especially in railways, ports, roads, airports and industrial corridors and parks.
On Tuesday, Jaitley had a meeting with Shaikh Hamed bin Zayed Al Nahyan, Adia managing director and chairman of Abu Dhabi Crown Prince Court, where investment in various sectors including infrastructure were discussed.
"Today's meeting is a further example of the concerted and wide-ranging efforts undertaken by the UAE and India in recent years to promote and enhance bilateral trade between our countries. We look forward to continuing this constructive dialogue and further deepening our ties in ways that are of mutual benefit," Shaikh Hamed said.
During the meeting, Jaitley also gave a detailed account of various initiatives taken by the present government in the last one-and-a-half year for enhancing foreign direct investment (FDI) in the country. He specifically mentioned about various FDI reforms taken recently by the government for attracting foreign investment in sectors like railways, defence, services and manufacturing, among others.
As a result, FDI has increased by 40 per cent during the current year as compared to the previous year. The recently created Rs 200 billion NIIF will be professionally managed and mainly invest in commercially viable infrastructure projects.
Early on Tuesday, Jaitley, who is on a two-day visit to the UAE to woo investors to Asia's third-largest economy. said he expected the sovereign wealth fund of the UAE should start investing in India soon. The first investment in India could be into India's national infrastructure fund, Jaitley said, adding that the government would put legal structures and tax predictability in place to attract sovereign wealth funds.
On the impact of low oil prices, Jaitley said it had created a favourable environment for the Indian economy as it helped to absorb the loss faced by state-run marketers and kept inflation under control.
He said low oil prices also enabled the government to rationalise subsidies.
"It has enabled us to absorb the loss that our own oil companies were facing because of future purchases. It has also kept inflation under control, which, in turn, has helped the Reserve Bank to ease up the rates. It has also enabled us to increase the cess around fuel which has been diverted for infrastructure creation," he said.
He also said low oil prices also means effectively transfer of wealth from the producing nations to the consuming nations. Jaitley said the Indian government would prefer to use buoyant tax receipts to fund extra infrastructure spending than to slash its borrowing target for the current fiscal year that runs to March 2016.
He said he would stick to his fiscal deficit target of 3.9 per cent this year and the priority will be to spend whatever resources the government has within the fiscal deficit target.
On the proposed nationwide goods and services tax, he said the government is ready to discuss all issues with the opposition to pass a key amendment in the forthcoming winter session of parliament that would pave the way for the GST.
It is not, however, willing to abandon the basic objectives of the tax, which would for the first time turn India into a common market and by some estimates add as much as two per cent points to gross domestic product. "Without compromising on the architecture itself, and keeping a general consensus between the states and the centre in mind, I think a discussion is reasonably possible," he said.
As far as investment opportunities are concerned, the Minister said, "It is one thing to say that the investment must come but it doesn't merely come in by enlarging the door for entry." "Investment comes in when investors feel confident about the state of the economy and when they feel confident that their investment is safe and will bring adequate returns," he said.
India is the fastest-growing major economy in the world, outpacing even China. Jaitley said he hoped growth would exceed 7.3 percent in the fiscal year to March, and had the potential to reach rates of 8-10 percent.
In his budget, Jaitley estimated growth of 8.1 to 8.5 per cent in the current fiscal year. The World Bank has, meanwhile, forecast growth of 7.5 percent. The government seeks faster growth to create work for the one million young Indians who enter the workforce every month. With corporate and bank balance sheets strained, the government would prefer to channel buoyant tax receipts into infrastructure spending rather than slash its deficit target.
Jaitley declined to be drawn on the fiscal deficit target that the government would set at its next budget. In addition to the GST, the government plans to push ahead in the winter session of parliament with reforms to bankruptcy law, changes to foreign direct investment rules and a faster disputes resolution mechanism for public contracts. Last week, the government eased foreign direct investment rules for 15 sectors.
- issacjohn@khaleejtimes.com

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