Masala bonds have huge potential: Harriett Baldwin

NAYANIMA BASU KR SRIVATS New Delhi | Updated on January 20, 2018

HARRIETT BALDWIN Economic Secretary to the Treasury, UK

Harriett Baldwin, Economic Secretary to the Treasury, UK, said India and Britain are engaged in making masala bonds successful in London. In an e-mailed interview with BusinessLine, she said both countries are aiming to ink an agreement on the ₹40,000-crore National Infrastructure Investment Fund (NIIF) on the sidelines of the upcoming G20 finance ministers’ meeting in Shanghai. Excerpts:

How much and within what time-frame is UK planning to invest in the NIIF?

Governments should have a role, but as the NIIF will be commercially run, a sub-fund must be driven by mobilising the private sector. We have already seen this approach of proactively partnering with private industry, which works very well in the India-UK Financial Partnership. For example, the partnership has provided extensive input to developing the new bankruptcy code, which is a crucial part of solving the infrastructure challenge.

When do you plan to sign the MoU on NIIF? How do you plan to work out the payment mechanism?

We are expecting to sign the Terms of Reference that will kick off a formal collaboration between our two governments at the G20 finance ministers meeting in Shanghai. Our governments will together consider the best mechanisms to leverage foreign and private investment for the future success of the NIIF, and partner with industry experts to that end.

You have had a meeting with Minister of State for Finance Jayant Sinha. Did you take up the issue about raising money through a railway Rupee bond?

Naturally, given the huge potential we see for a masala bond market in London, discussing the railway bond was a central feature. These bonds will allow Indian firms to make in India and finance in the UK. The Minister (Sinha) was interested to hear the feedback we have received from institutional investors. We discussed how to successfully bring the first flagship bonds to market, thereby creating a pathfinder effect for other issuers seeking to tap the UK's deep and liquid capital base.

Can you share some details on the Green Investment Bank? What will be the corpus like and what about its management?

The Green Investment Bank is planning investments through its UK Climate Investments joint venture with the UK Government.

UK Climate Investments will invest £200 million in overseas opportunities, and India is one of its primary investment targets. Like the bank’s domestic investments, its international deals will leverage private investment and will be managed on a fully commercial basis. In the UK, this has already seen the delivery of 65 investments.

We hope to see the announcement of the first deal in India very soon, so watch this space – it will be a concrete example of ‘Make in India, finance in the UK’.

Have you identified any project for the Green Investment Bank? If yes, then in which all sectors?

The Green Investment Bank is commercially run. It's important that we don't give the impression that the government should decide which specific projects it invests in. The overall mandate is green investment and the bank has historically focussed on green energy like offshore and onshore wind energy, solar, and energy from waste. They are, therefore, focussed on these areas, initially at least, for international investments too.

From the UK's point of view what are your expectations from the upcoming Finance Budget of 2016-2017?

Like the rest of the world, and the financial markets, we'll be watching with great interest. India clearly has a window of opportunity: with favourable yields and inflation under control, and this is despite two bad monsoons. This combination of factors explains why there is so much investor interest in India.

Anything that would help to turn that interest into concrete investment on a greater scale would be very welcome.

For example, the delivery of the new bankruptcy code, where I am pleased to say the India-UK Financial Partnership has had substantial input, could really boost investor confidence.

Published on February 21, 2016

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