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Russia, India agree $2bn cooperation deal for infrastructure projects

27 Dec 2012

The state-backed Russian Direct Investment Fund has teamed up with the State Bank of India to agree to invest up to $2bn in infrastructure projects in the countries.

Russian President Vladimir Putin and Indian Prime Minister Manmohan Singh looked on as representatives of the institutions signed a memorandum of understanding during the former’s visit to India this week.

The pair have agreed to invest up to $1bn each in developing infrastructure to boost access to long-term capital in both countries, and also to promote mutual investments.

Emphasis will be placed on projects geared towards higher purchasing power of the population, ensuring demand for infrastructure, creation of value addition in the extraction and processing of natural resources, and the development of manufacturing businesses and service sector companies.

RDIF CEO Kirill Dmitriev said, “We are delighted to find a new partner represented by India’s largest state-owned banking institution.

“At present BRICS countries show strong investment potential, and the co-investment consortium, given the government support, helps mitigate the risks that might arise from the global economic situation.

“Our agreement is focused primarily on the most promising and highest-demand sectors.

“Also, let us not forget that given Russia’s and India’s macroeconomic performance one can expect high investment returns.”

State Bank of India chairman Pratip Chaudhuri said, “Both the Russian and Indian economies are in need of substantial investment.

“Together this partnership between RDIF and SBI is expected to make a major contribution towards enhancing the economic cooperation between the two countries.

“In our view, a partnership of developing economies can really result in a win-win situation for both the countries.”

In April this year Russia and China confirmed plans to create an investment fund worth up to $4bn, including a $1bn contribution from the $10bn RDIF investment vehicle, which was launched by the Kremlin in September last year.

The Russian-Chinese Investment Fund (RCIF) will be pooled from the RDIF and the China Investment Corporation (CIC), the country’s $410bn sovereign wealth fund.

That vehicle made its first investment in September by agreeing to part with about $200m for a share of Russia’s second-largest forestry company Russia Forest Products.

The investment will fund the company’s move up the value chain from producing primarily raw logs to higher value added products like veneer and sawnwood.

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