"Both countries agreed to pursue joint work on the common aim of exploring ways to encourage increased institutional investment in infrastructure," Chidambaram said in a joint statement issued with his British counterpart, George Osborne.
"This will include exploring the possibility of establishment of a London listed 'feeder fund' for Indian Infrastructure Debt Funds (IDFs)," he said after the 6th annual India-UK Economic and Financial Dialogue that ended hereon Thursday.
A feeder fund makes most of its investments through a 'master fund'. It can obtain better trading and operating costs through the master-feeder structure because of economies of scale. India has set a target of investing USD 1 trillion by 2017 to bolster its infrastructure.
The statement said that India will actively consider the UK's offer of partnership over the Bengaluru-Mumbai Economic Corridor (BMEC), and co-financing of a feasibility study.
Besides infrastructure, Chidambaram's meeting with Osborne focused on a range of issues including financial sector reforms, the importance of increasing FDI in Indian insurance sector and support for SMEs with plans to "work together to promote trade and investment between the SME sectors of the two countries".
"We agreed on the importance of passing the Indian Insurance Amendment Bill in order to enhance the Foreign Direct Investment limit in insurance companies from 26 per cent to 49 per cent and enable international reinsurers to establish in India," the ministers said.
The two leaders also discussed the importance of the "timely conclusion of an ambitious EU-India Free Trade Agreement". Chidambaram left for Paris today as part of his three-nation tour which concludes with talks in Qatar on Saturday.