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National Investment and Infrastructure Fund
The Union Cabinet on March 23 gave its ex-post facto approval for a MoU between India and the United Arab Emirates (UAE) signed on 11th February, 2016 to mobilise long-term investment into the National Investment and Infrastructure Fund (NIIF).
The Union Cabinet on March 23 gave its ex-post facto approval for a MoU between India and the United Arab Emirates (UAE) signed on 11th February, 2016 to mobilise long-term investment into the National Investment and Infrastructure Fund (NIIF).
The objective of NIIF is to maximize economic impact mainly through infrastructure development in commercially viable projects, both greenfield and brown-field, including stalled projects, NIIF would solicit equity participation from strategic anchor partners.
The Government of India set up the NIIF in July 2015. It was announced in the Union Budget 2015-16. The operational framework was approved on 20 August 2015. It has been established as a Category II Alternate Investment Funds (AIF) as per the regulations of the Securities and Exchange Board of India (SEBI).
The government’s share in its corpus is 50 per cent and it intends to invest Rs 20,000 crore. Private investors will be bringing in the remaining funds. Besides, the UAE, international pension funds and sovereign wealth funds from Europe and Asia evinced interesting in joining the fund.
The Joint Statement with UAE (India-UAE) during the visit of Prime Minister of India to UAE on 16-17 August 2015, mentions the establishment of UAE-India Infrastructure Investment Fund, with the aim of reaching a target of $75 billion to support investment in India's plans for rapid expansion of next generation infrastructure, especially in railways, ports, roads, airports and industrial corridors and parks.
NIIF is basically a fund of funds. It will sponsor and invest in sector-specific funds like stressed-assets fund, renewable energy fund, brown-field projects fund etc. NIIF would also raise debt to invest in the equity of infrastructure finance companies such as Indian Rail Finance Corporation (IRFC) and National Housing Bank (NHB).
The objective of NIIF would be to maximize economic impact mainly through infrastructure development in commercially viable projects, both green-field and brown-field, including stalled projects. It could also consider other nationally important projects, for example, in manufacturing, if commercially viable.
The NIIF Governing Council first met on December 29, 2015, and approved formation of India Infrastructure Finance Company Ltd (IIFCL) as Investment Advisor to NIIF Ltd. At present, the selection process of Chief Executive Officer (CEO) of NIIF Ltd is underway. Despite a tight fiscal deficit target of 3.5 per cent India is stepping up public expenditure for the next fiscal.
