India and Oman will be using the joint investment fund of $100 million, mooted by Prime Minister Manmohan Singh during his 2008 visit to the Sultanate, to enhance bilateral investments and trade between the two nations.
India's external affairs minister S M Krishna announced on Thursday that the seed fund would be channelised to enhance investments mutually. Krishna met his Omani counterpart, Yousuf bin Alawai bin Abdullah, who is on a visit to India, seeking closer trade and political ties.
The two foreign ministers discussed ways to expand economic and commercial ties, which have been growing rapidly in recent years.
Bilateral trade between the two nations stood at $4.5 billion and bilateral investments amounted to over $7.5 billion across a dozen sectors.
Non-oil trade stood at $3.3 billion. Indian companies won contracts worth nearly $850 million in Oman last year. Firms from the Sultanate have also invested about $200 million in India.
Abdullah acknowledged India had a major role to play in the Gulf, where eight million of its citizens were living.
The proposal for a joint investment fund - to operate out of Mumbai - was initiated by Prime Minister Manmohan Singh when he visited Oman in November 2008.
The fund, with a seed capital of $100 million, could be raised up to $1.5 billion at a later stage. In July, O P Bhatt, chairman, State Bank of India (SBI), and Warith Al-Kharusi, CEO, State General Reserve Fund (SGRF) of Oman, signed a joint venture agreement in Delhi, setting up the $100 million fund, which aims to make equity investments in various sectors of the Indian economy.
SBI and SGRF contributed equally to the fund, which initially plans to focus on investment opportunities in India. The objective of the fund is to attract capital from the Gulf to India. The profits will also be shared equally by the two partners.