* Hammond plays down risks of "hard" Brexit
* Indian finance minister open to free trade deal
* Governments to back energy, renewables investments
* Indian borrowers plan to issue 'masala' bonds
By Manoj Kumar
NEW DELHI, April 4 India and Britain on Tuesday
talked up their prospects of developing a new trading
relationship, as their finance ministers met in New Delhi to
prepare for the United Kingdom's exit from the European Union.
British finance minister Philip Hammond flew in to New Delhi
for talks with Indian counterpart Arun Jaitley, days after Prime
Minister Theresa May triggered the start of the Brexit process
after last June's referendum vote to quit the European
Hammond played down the risks of a so-called "hard Brexit",
in which Britain would lose access to the markets of the bloc's
other 27 nations if the two sides cannot reach a consensus deal
within a two-year deadline.
"We have made the decision that we will not be part of the
structure of the European Union, but we've also made very clear
that we want to negotiate the maximum possible open trade
relationship with the European Union," Hammond told a news
conference after a joint economic and financial dialogue.
"We hope to be able to negotiate a deep and special
relationship with the European Union that will allow us to go on
trading and investing in each other's economy, but at the same
time allow us to rebuild our relationships with our partners and
allies around the world."
In India, the world's fastest-growing large economy with a
population of 1.3 billion, Britain has a massive market
opportunity - but also a counterpart not known for favouring
May met a cool reception on her first visit to India last
November, with Prime Minister Narendra Modi stressing the
importance not only of trade but also of freedom of movement for
his country's skilled workers.
Still, Jaitley struck a positive note by saying, "The United
Kingdom, post-Brexit, is looking at a different level of
relationship with India. And there's a huge aspiration in India
itself also, to add to, and improve on, this relationship."
No formal negotiations on a bilateral free trade agreement
would be possible until Britain has formally left the European
Union, but Hammond said the two sides would have a "deep
discussion" in the meantime.
In a joint statement, the ministers highlighted a pact for
each country to invest 120 million pounds ($149 million) in a
joint fund under India's National Investment and Infrastructure
Fund to invest in energy and renewables.
They also discussed efforts to make India's rupee currency
more freely tradeable on international markets, and promote
'masala' bonds for Indian companies to borrow in their own
currency from investors in the City of London.
The National Highways Authority of India, the Indian
Renewable Energy Development Agency and the Indian Railway
Finance Corporation all plan to issue masala bonds in the coming
months, they added.
(Writing by Douglas Busvine; Editing by Malini Menon and