The whole issue revolves around what concessions are granted by the government to the Resurgent India Bonds proposed by SBI, UTI executive director AN Palwankar told The Financial Express. "Our scheme will enjoy identical concessions to ensure a level-playing field for both the issues which are expected to be in the market around the same time in September/October this year," he added.

UTI also expects the government to take the exchange risks associated with the Millennium scheme as it can take only market risks and nothing more, Palwankar revealed. The scheme will have two sub-funds offering growth and income options through equity and debt schemes. Both the funds together are expected to raise around $600 million.

The funds raised willallow UTI the flexibility of investing in Indian debt paper abroad either through ECB raisings or through secondary market listings, Palwankar explained. UTI now has been allowed to invest in securities abroad.

This will be an attractive option considering the discount at which Indian debt papers are available abroad which would ensure higher yields than what would be possible in the domestic market. UTI sources had earlier indicated that the funds under the India Millennium Fund would be raised in tranches and that region-specific schemes might be floated by incorporating funds in different regions. It has already sent a team to survey investor preferences and the regulatory requirements for setting up such region-specific funds.

UTI is also to finalise the management structure for the fund and whether it would be advantageous to have a separate asset management company incorporated outside India. UTI, which has set a mobilisation target of Rs 18,000 crore for 1998-99, expects to raise at leastone-third of the target from sales of US-64 units. In July alone, sales of US-64 are expected to cross Rs 4,000 crore. However, net of repurchases the sales would be about Rs 3,000 crore. Sales in July are traditionally high considering the special offer price which is the lowest based on the pricing structure devised by UTI.