New Delhi, Apr 4 () India and the UK today decided to set up a 500 million pound fund, with both governments together investing 240 million pound, to

clean energy projects here.

The fund will be set up as a sub-fund of the Rs 40,000 crore

(

), which was formed in 2015 to finance greenfield as well as brownfield projects.

While India and the UK will be the anchor investors to the '

' and invest 120 million pound each, the remaining 260 million pound has to come in from private investors.

"Both governments reaffirmed their commitment to anchor invest up to 120 million pound each in the joint fund which aims to raise around 500 million pound and has the potential to unlock much more in future," said a joint statement issued after the 9th UK-India Economic and Financial Dialogue here.

The fund will focus initial investments on India's rapidly growing energy and renewable market and a fund manager is expected "to be selected by the autumn", which is by the middle of 2017.

"Our first major step in the fund (NIIF) has been taken and there is going to be a sub-fund,"

Arun

said after a meeting with UK Chancellor of the Exchequer

.

The joint statement further said the fund will also identify other sectors for future investments.

"This is going to be the first major beginning as far as the fund is concerned," Jaitley said.

In December 2015, the government set up the NIIF as an investment vehicle for funding commercially viable greenfield, brownfield and stalled projects.

While government investment in the fund will be restricted to 49 per cent, private domestic and foreign investors can hold the remaining 51 per cent. These investors can invest in the umbrella fund or smaller sector or project-specific funds within it.

Last year, the government had announced that it is in the process of setting up two sub-funds under NIIF -- one, the clean energy fund which will primarily focus on renewable energy, and another with focus on highway projects. JD DP ARD