Subramanyam said that UTI, which is giving finishing touches to the scheme, will target a $500-million mop-up under the scheme being offered to non-resident Indians.

The scheme, which was announced by the finance minister, will be different from the Resurgent India Bonds (RIBs) which had mobilised $4.2 billion. In the case of RIBs, the exchange risk is being borne by the government.

Though the Millennium scheme will be launched before the end of this fiscal, Subramanyam said the exact timing has not yet been decided. "We will tap the market at an appropriate time. The timing of the scheme is crucial to its success," he said in his address at an Assocham-organised seminar on capital markets in New Delhi on Monday.

A major portion of the scheme's corpus will be invested in equities, while a part of thefunds will be invested in debt to provide stability to the scheme. "Proceeds of this scheme will be invested in infrastructure and core sectors," the UTI chairman said.

The UTI chairman, who is bullish on the markets and revival of demand for cement and steel industries, said, "We are looking at a distinct set of NRI investors." The investors will share the upside gain under the scheme, said Subramanyam.

For the stock markets, this means a major support from UTI, as $500 million means an inflow of nearly Rs 2,000 crore at current exchange rates. Even if 70 per cent of the mop-up is invested in stock markets, it will mean an inflow of over Rs 1,400 crore in the current fiscal.

Though UTI intends to invest part of the scheme's proceeds in debt, a major part has to go to equities to offset the loss arising out of the exchange risk. The capital appreciation could offset the loss on account of rupee depreciation to the extent of 5-6 per cent per annum.