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The Asian Infrastructure Investment Bank will invest $200 million in India’s National Investment and Infrastructure Fund even as it assuaged concerns over China’s dominance over it and stressed that it works for all its shareholders.
“The AIIB will invest $100 million in the NIIF’s fund of funds at present, followed by another $100 million later,” said Economic Affairs Secretary Subhash Chandra Garg on Sunday at a press conference ahead of the AIIB’s third annual meeting starting Monday.
The AIIB has approved the concept note for lending $200 million to NIIF. Its board of directors at its meeting on Sunday will take up the proposal for the first tranche of $100 million and the proposal for the second tranche would be taken up later.
The fund of funds will be invested in other funds. “Two such funds have already been conceptualised, including a green growth fund which will also have investments from DFID. Likewise, we will conceptualise other funds,” Garg said, adding that the investments can be leveraged 10 to 12 times.
India is already the largest borrower from the AIIB with $1.2 billion financing in six projects. In total, the AIIB has invested $4.39 billion in projects. India is the second largest shareholder of the AIIB with an 8.72 per cent stake.
The two-day annual meeting is being attended by Finance Ministers or representatives from all of AIIB’s member countries, as well as Finance Minister Piyush Goyal and Prime Minister Narendra Modi.
Eyes more projects
Sir Danny Alexander, Vice President and Corporate Secretary AIIB said the bank is also looking at more projects in India, including the fourth line of the Mumbai Metro, other transportation projects, energy sector projects such as power grid improvements and renewable energy, as well as those for water and waste management.
Asked whether the Beijing-based AIIB, is dominated by Chinese interests, Alexander stressed that it is an international and apolitical bank, where financing is based on approvals by shareholders.
Though the AIIB has 86-member countries, China has the largest shareholding at about 31 per cent leading to concerns that it may increase the country’s influence across the region.
“It should not be considered as belonging to any particular country,” Garg also stressed, adding that there has not been any project specifically funded for China’s belt-and-road initiative.
Garg also stressed that there is no ban on investments by Chinese companies into India, except on security concerns or if the project is aimed at encouraging the Make in India initiative.
NDB credit rating agency
The Economic Affairs Secretary also said that the proposal for setting up a credit rating agency for BRICS country is at an advanced stage. It is expected to move forward at the BRICS summit in Johannesburg in July.
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