India, UK announce climate change agreement, investments at Economic & Financial Dialogue

India and UK on Wednesday, 1 September 2021, announced a mutual agreement for tackling climate change and boosting investments at the 11th Round of Ministerial UK-India Economic and Financial Dialogue (EFD) led by India’s Union Minister for Finance & Corporate Affairs Nirmala Sitharaman, and UK’s Chancellor of Exchequer, Rishi Sunakhel on Thursday, 2 September 2021. Talks held remotely via video conferencing as per the COVID-19 protocols were also convened by India’s Secretary of Department of Economic Affairs Ajay Seth, Chief Economic Adviser K.V. Subramanian, as well as other senior officials from India’s Ministry of Finance, the Indian Union Ministry of Finance informed in a tweet. 

UK announced a $1.2bn package to help drive India’s green growth ahead of the COP26 climate conference scheduled for November, which will be hosted by Britain. The package includes both public and private investments in green projects and renewable energy to help India reduce its carbon footprint. The $1bn investment from CDC, the UK’s development finance institution in green projects in India, and the joint investments by the government of both countries will provide support to the companies working on innovative green tech solutions.

The new funding towards India’s green projects also includes a new $200m private and multilateral investments for the joint Green Growth Equity Fund that will accelerate India’s renewable energy, UK's finance ministry said.

Climate Finance Leadership Initiative (CFLI) will be led by UN Special Envoy for Climate Ambition and Solutions Michael Bloomberg, according to a joint statement issued by the Government of India (GoI) and the UK. As per the agreement, UK will provide financial institutions, corporates, and existing sustainable finance initiatives across India to accelerate the efforts to mobilize private capital into the country. CFLI India would be co-chaired by Shemara Wikramanayake, CEO of Macquarie Group, and Natarajan Chandrasekaran, Chairman of Tata Group. It will be supported by Bloomberg, the Global Infrastructure Facility, Her Majesty’s Government, the Government of India, and the City of London Corporation.

The agreement focuses on private sector financing of sustainable infrastructure projects in specific low-carbon sectors to support India’s ambition of meeting their nationally determined contribution (NDC). CFLI India will also launch technical assistance initiatives, sustainable infrastructure project preparation and pipeline development, and support financing vehicles and funds to facilitate accelerated private capital mobilization for India’s low-carbon, climate-resilient development. 

“Both countries also welcomed the launch of the Climate Finance Leadership Initiative (CFLI) India partnership to mobilise private capital into sustainable infrastructure in India, including clean energy like wind and solar power and other green technologies,” according to a press document released by HM Treasury, UK’s economic and finance ministry.  

“The partnership will be led by a group of leading financial institutions responsible for $6.2tn of assets and chaired by Michael Bloomberg, UN Special Envoy on Climate Ambition and Solutions,” the ministry added. 

 

Indian Minister of Finance, Nirmala Sitharaman, and UK’s Chancellor Rishi Sunak 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 as well as help more Indian companies to access finance in the City of London. These services account for 54 per cent of Indian GDP and 71 per cent of UK GDP.

'India’s green growth is a shared priority,' says UK Chancellor Sunak 

India and the United Kingdom upgraded their bilateral relationship to ‘Strategic Partnership’ in September 2004. The two countries have since then held talks to boost high-level economic and technological cooperation and close coordination on regional and global issues.

“Supporting India’s green growth is a shared priority,” UK Chancellor of the Exchequer, Rishi Sunak said on Thursday, adding that the UK and India “already have strong ties”, and the new important agreements will further boost the relationship, and deliver for both the countries.

“I’m pleased that we’ve announced a $1.2bn investment package, and launched the new CFLI India partnership, to boost investment in sustainable projects in India as the UK gears up to host COP26," he added.

“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,”

UK and India share strong economic ties with bilateral trade of over £18bn done over the last year, 2020. The two allies created almost half a million jobs in each other’s economies. Both UK and India have struck ambitious goals to double trade by 2030, including through negotiating a Free Trade Agreement. UK Prime Minister Boris Johnson and Indian Prime Minister Narendra Modi earlier this year launched the UK-India 2030 Roadmap, to strengthen the economies of both countries and boost cooperation. 

“At EFD, both countries agreed to be ambitious when considering services in the upcoming UK-India trade negotiations and strengthen the financial market collaboration efforts already underway to finance growth,” the UK’s ministry of finance stated. “The UK also welcomed India’s recent decision to lift the Foreign Direct Investment cap in the insurance sector from 49% to 74% which will help British firms to take greater ownership of their operations in India,” it added.