UK-India Infrastructure Financing Bridge
The UK-India Infrastructure Financing Bridge (UKIIFB) marked its first anniversary in September 2025. The initiative, launched jointly by the Indian and U.K. governments in 2024, aims to boost infrastructure investment in India. Despite initial project delays, the focus has shifted to eight strategic recommendations to de-risk investments. The second year emphasises renewable energy and improving India’s global competitiveness in infrastructure finance.
Background
UKIIFB was created to channel investments into India’s infrastructure sector. India requires $2 trillion by 2030 to meet its infrastructure needs. The initiative is led by the City of London Corporation from the U.K. side and NITI Aayog from India. It aims to attract global investors by addressing risks and inefficiencies in Indian infrastructure projects.
Key Findings and Challenges
The first year revealed that initial projects were dropped. The main challenges include regulatory complexity, operational risks, and limited competition. The infrastructure sector is dominated by a few large firms, reducing innovation and efficiency. India’s procurement processes need alignment with global standards like the U.K.’s Five Case Model. Transparency and predictability in construction remain concerns for investors.
Recommendations for Improvement
The UKIIFB report proposes aligning India’s procurement and ESG (Environmental, Social, Governance) standards with international frameworks. It urges simplifying revenue protection and repatriation of funds for foreign investors. Tax policies should be amended to treat foreign and domestic funds more equally, including revising withholding tax rules on foreign loans. Encouraging mid-sized firms in infrastructure is vital to increase competition and innovation.
India’s Economic Context
India’s economy has a unique company-size distribution described as an hourglass, with few mid-sized firms. There are only about 60,000 mid-sized companies with 100-200 employees, limiting competition. The country’s young workforce and rapid growth make it a test case for balancing development with climate goals. The government is moving towards a better regulatory environment, but progress is ongoing.
Bilateral Agreements
Negotiations for a bilateral investment treaty between India and the U.K. continue. While treaties help protect investments, capital can flow through other jurisdictions like Singapore or South Korea. The report stresses that India must improve tax and regulatory frameworks to make investments more attractive. Simplifying cross-border financial flows is key to increasing foreign participation.
Focus on Renewable Energy
The second year of UKIIFB will focus on renewable energy infrastructure. This aligns with India’s climate commitments and need for sustainable growth. Enhancing investment in renewables can help India meet its energy demands while reducing carbon emissions.
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