India and Russia have started work on the details of the proposed bilateral fund for investing in high-tech products in India which is likely to be launched with an initial corpus of $2 billion.

Representatives from Russia's state owned Rusnano Corporation were in India recently to discuss the terms and conditions of the fund with their counterparts from the National Investment and Infrastructure Fund (NIIF) under the Finance Ministry, a government official told BusinessLine .

Officials from the Department of Industrial Policy and Promotion (DIPP) also attended the meeting. “Russia is keen on launching the fund soon as it is looking for alternative markets to invest its funds after its relations with the US and the EU has become cold following the Ukranian crisis,” the official said.

There is a lot of scope for Russia to invest in India as its total investments in the country is to the tune of just $3 billion while India’s investments in Russia is more than double at $8 billion.

While the corpus of the proposed ‘Russia-India High Technology Private Equity Fund’ is estimated around $2 billion and it is to be a 50:50 joint venture between the two countries, the details are still being worked out.

The key areas of work of the fund will largely be the implementation of hi-tech projects at growth stage, including dual-use technologies and defense industry products.

New Delhi is also insisting on technology transfer, and Moscow has responded by saying that it will be carried out according to interests of both countries in creating the production facilities and service infrastructure on their territories, the official added.

While India and Russia had started discussing the fund more than a year back, discussions were suspended for some time when the Finance Ministry announced the creation of the ₹40,000 crore NIIF in last year’s Budget and there was no clarity on whether participation of quasi sovereign fund would be allowed.

“When finally it was decided that the NIIF could have participation of quasi sovereign fund also, talks re-started when Prime Minister Narendra Modi visited Russia in December 2015. An MoU was subsequently signed by the two countries to go ahead with the bilateral fund,” the official said.

Russia has a similar investment fund with China launched in 2012, which, too, was started with an initial corpus of $2 billion, contributed to equally by both partners. The Russia China Investment Fund also seeks to raise another $2 billion from Chinese investors.

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