India and Britain on Tuesday agreed to jointly set up a fund with corpus contributions of 120 million pounds each to finance Indian infrastructure projects, it was announcement.

"In a major step taken today (Tuesday) on the National Investment and Infrastructure Fund (NIIF), a sub fund with UK and NIIF participation was agreed upon," Finance Minister Arun Jaitley told reporters.

It came after the ninth India-UK Economic and Financial Dialogue here with the British delegation led by Chancellor of the Exchequer Philip Hammond.

"The Green Growth Equity Fund will have contributions of 120 million pounds from each participant to finance energy needs in India," he added.

The joint statement at the end of the talks said the "joint fund aims to raise 500 million pounds by also leveraging private sector investment from the city of London to finance Indian infrastructure projects."

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

While the government will invest Rs 20,000 crore in NIIF, the remaining would come from private domestic and foreign investors who can invest in the umbrella fund or smaller sector or project-specific funds within it.

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