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NEW DELHI : India and the UK on Thursday agreed on a $1.2 billion investment into green projects and renewable energy sector in India as part of joint efforts to tackle climate change.  

The announcement came after Chancellor of the Exchequer Rishi Sunak and finance minister Nirmala Sitharaman held a round of economic and financial dialogue by video conference. 

Of the $1.2 billion proposed investments into India, $1 billion will come from CDC, the UK’s development finance institution, according to a statement from the British High Commission. The funds will go to green projects in India during the 2022-2026 period. CDC already has a $1.99 billion portfolio of private sector investments in India. 

In May this year, the Central Board of Direct Taxes (CBDT) had notified ‘CDC Group Plc’ as a sovereign wealth fund eligible for tax breaks for infrastructure investments in India. 

Also, the Green Growth Equity Fund (GGEF), set up by both the nations with £120 million of seed capital each, is scaling up with a new commitment of $200 million from a range of international investors, according to a joint statement from the finance minister and the Chancellor of the Exchequer. GGEF fund invests in Indian renewable energy sector.  

Both the nations will also make joint investments to support companies working on innovative green technology solutions.  

The two countries also launched an initiative to mobilise private capital into sustainable infrastructure in India. These investments will support India’s target of 450GW renewable energy by 2030, the statement from the High Commission said.  

The move comes as both countries warm up to a possible trade deal.  While the UK is keen on greater market access in India, New Delhi is keen on more liberal movement of personnel between the countries. India had in May decided to sign a deal with the UK for a liberalised visa regime and a mobility partnership between the two nations.  

The UK also welcomed India’s efforts to improve ease of doing business, including the Taxation Laws (Amendment) Act, 2021, the joint statement said. India last month introduced this law to settle 17 controversial tax disputes including those with British companies Vodafone Plc and Cairn Energy Plc. 

The UK-India bilateral trade is over £18 billion in 2020, supporting nearly half-a-million jobs in each other’s economies, the statement from the High Commission said.   

The countries have also set out an ambitious goal to double trade by 2030, including through negotiating a free trade agreement, the High Commission said. 

At Thursday’s dialogue, Sunak and Sitharaman also agreed to be ambitious when considering services in the upcoming UK-India trade negotiations, which could open up new opportunities for UK financial firms and help more Indian companies to access finance in the City of London. Services account for 71% of UK GDP, and 54% of Indian GDP, the High Commission said. 

“The UK and India already have strong ties, and today we’ve made important new agreements to boost our relationship and deliver for both our countries. Supporting India’s green growth is a shared priority so I’m pleased that we’ve announced a $1.2bn investment package, and launched the new Climate Finance Leadership Initiative (CFLI) India partnership, to boost investment in sustainable projects in India as the UK gears up to host COP26," the statement from the High Commission said quoting Sunak. 

 “With trade negotiations also coming up, our agreement to be ambitious when considering services will create new opportunities in both markets, supporting jobs and investment in the UK and India," the statement said.