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Russia to invest $500mn in $1-bn Indian infrastructure fund

15 October 2016

Russia has agreed to pump in $500 million into a $1-billion joint fund with India's newly formed National Infrastructure Investment Fund (NIIF), that will invest in Indian infrastructure segmenr. Prime Minister Narendra Modi and Russian President Vladimir Putin are expected to sign the agreement to start the joint fund on the sidelines of the BRICS summit in Goa.

The joint fund, to be called 'Russian Indian Investment Fund', will make investments in infrastructure projects with Russian component, initially in energy, petrochemicals, transport infrastructure projects where Russian companies can also have a presence in India.

The Russian Direct Investment Fund (RDIF) will invest $500 million into the joint fund, which will support "attractive investment opportunities and growth of Russian business activity in India," RDIF chief executive Kirill Dmitriev said.

"The money will be invested in infrastructure projects with Russian component. We will look at energy, petrochemicals, transport infrastructure and different projects where our companies can also have a foot in India," PTI quoted him as saying over the phone.

According to Dmitriev, the $500 million investment can only be considered as an agreement of intent and that actual investments could be several times more as Russian businesses look for investment opportunities in India an across the region.

"There would be more money from Russian banks, Russian companies and other partners of the RDIF," he explained and pegged the actual investment from Russia, including those by companies, can go up to $8 billion through an arrangement like this.

He said, Russian businesses tend to invest a lot more when the RDIF signs agreements like these with any other country or institution.

Also, he said, RDIF is open to investing in Indian or other regional projects beyond India.

Set up in 2011, RDIF makes equity co-investments alongside reputable international financial and strategic investors, while the NIIF was floated by the Indian government in its efforts to support infrastructure investment.

With a corpus of Rs40,000 crore ($6 billion), the NIIF is a vehicle to attract equity investments from domestic and international sources. It will invest into the infrastructure sector in commercially viable projects, both greenfield and brownfield, including stalled projects.

The government plans to contribute 49 per cent to the corpus.

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