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National Investment and Infrastructure Fund (NIIF)

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National Investment and Infrastructure Fund (NIIF) is a fund created by the Government of India for enhancing infrastructure financing in the country.

This is different from the National Investment Fund.

NIIF was proposed to be set up as a Trust, to raise debt to invest in the equity of infrastructure finance companies such as Indian Rail Finance Corporation (IRFC) and National Housing Bank (NHB). The idea is that these infrastructure finance companies can then leverage this extra equity, manifold. In that sense, NIIF is a banker of the banker of the banker.

NIIF is envisaged as a fund of funds with the ability to make direct investments as required. As a fund of fund it may invest in other SEBI registered funds.

Its creation was announced in the Union Budget 2015-16. The operational framework was approved on 20 August 2015.NIIF got registered with SEBI as Category II Alternative Investment Fund (AIF) on December 28, 2015. A website was created on 8 June 2016.Mr. Sujoy Bose, Director and Global Co-Head, Infrastructure and Natural Resources, International Finance Corporation(IFC), Washington DC, was appointed as the first Chief Executive Officer (CEO) of NIIF Ltd on 27 June 2016. Its first investment was made in January 2018.

Financial Times (London) had adjudged NIIF as the Most Innovative structure in Asia Pacific under Finance category.


The objective of NIIF would be to maximize economic impact mainly through infrastructure development in commercially viable projects, both greenfield and brownfield, including stalled projects. It could also consider other nationally important projects, for example, in manufacturing, if commercially viable.

Functions of NIIF

The functions of NIIF are as follows:

  1. Fund raising through suitable instruments including off-shore credit enhanced bonds, and attracting anchor investors to participate as partners in NIIF;
  2. Servicing of the investors of NIIF.
  3. Considering and approving candidate companies/institutions/ projects (including state entities) for investments and periodic monitoring of investments.
  4. Investing in the corpus created by Asset Management Companies (AMCs) for investing in private equity.
  5. Preparing a shelf of infrastructure projects and providing advisory services.


  1. provides equity / quasi-equity support to those Non Banking Financial Companies (NBFCs)/Financial Institutions (FIs) that are engaged mainly in infrastructure financing. These institutions will be able to leverage this equity support and provide debt to the projects selected.
  2. Invest in funds engaged mainly in infrastructure sectors and managed by Asset Management Companies (AMCs) for equity / quasi-equity funding of listed / unlisted companies.
  3. provides Equity/ quasi-equity support / debt to projects, to commercially viable projects, both greenfield and brownfield, including stalled projects.

Operational Aspects

As per the operational framework approved on 20 August 2015 NIIF is not a single entity. There can be more than one fund. The NIIF will be established as one or more Alternate Investment Funds (AIF) under the SEBI Regulations. Of the various forms an AIF can take, NIIF was proposed to be set up as a Trust though other legal forms could also be considered from the perspective of flexibility and taxation. If set up as Category I and II AIFs, then NIIF will be eligible for a pass through status under the Income Tax Act. A 'pass-through' status means that the income generated by the fund would be taxed in the hands of the ultimate investor, and the fund itself would not have to pay tax on the same. In the case of category III AIF, where pass through status is not available, all income received by NIIF will be taxable at its level and any distribution made to the unit holders (investors) would be tax exempt.

The proposed corpus of NIIF is Rs. 40,000 Crores (around USD 6 Billion). The initial authorized corpus of NIIF would be Rs. 20,000 crore, which may be raised from time to time, as decided by Ministry of Finance. Government can provide upto 20000 crore per annum into these funds. Government's contribution/share in the corpus will be 49% in each entity set up as an alternate Investment Fund (AIF) and will neither be increased beyond, nor allowed to fall below, 49%. The whole of 49% would be contributed by Government directly. Rest is open for contribution from others. The contribution of Government of India to NIIF would enable it to be seen virtually as a sovereign fund and is expected to attract overseas sovereign/ quasi-sovereign/multilateral/bilateral investors to co-invest in it. Cash-rich Central Public Sector Enterprises (PSUs) could contribute to the Fund, which would be over and above the Government's 49%. Similarly, domestic pension and provident funds and National Small Savings Fund may also provide funds to the NIIF. NIIF may utilize the proceeds of monetized land and other assets of PSUs for infrastructure development. The NIIF will work out these details in consultation with the Ministry of Finance, to match different investors’ preferences.

Finally, NIIF was formed as a category II AIF, as a Trust, under Indian Trust Act on 28 December 2015 alongwith the formation of National Investment and Infrastructure Fund Trustee Ltd. and National Investment and Infrastructure Fund Ltd. India Infrastructure Finance Company Ltd (IIFCL) was appointed as Investment Advisor to NIIF Ltd and IDBI Capital Market Services Ltd as Advisor to NIIF Trustee Ltd initially for 6 months and 1 year respectively.

Pursuant to discussions with investors the structure of NIIF was further refined. The NIIF can have various sector-specific or investor-specific close ended Schemes (“funds”) and each fund may issue various classes of units. Government along with other investor(s) would subscribe to the units of various funds. The units, investment strategy and accounts of each fund shall be distinct from and independent of the other funds.

National Investment and Infrastructure Fund (NIIF) Ltd. signed a Memorandum of Understanding (MoU) with RUSNANO of Russia on 2 February 2016 to set up the RUSSIA-INDIA HIGH TECHNOLOGY PRIVATE EQUITY FUND for joint implementation of investments into projects in India. RUSNANO is a Russian development institute with interest to invest in projects in the field of high technologies and defense including the projects aimed at establishment of manufacturing industrial enterprises in India.


There will be a Governing Council of the NIIF which will have Government representatives and experts in international finance, eminent economists and infrastructure professionals. It could include representatives from other non-Government shareholders. The terms and period of appointment of the Governing Council of the NIIF will be as decided by the Government. The Governing Council will oversee the activities of the Trust and will be constituted as a separate legal entity, if necessary.

NIIF would be supported by one or more Chief Executive Officers (depending upon the number of funds created) and a small investment team consisting of limited number of expert staff, at arm's length from the Government. Their salaries would be market-linked. It would be possible for the NIIF Governing Council to appoint one or several Fund Managers.

NIIF would have full autonomy for project selection. NIIF would formulate guidelines and would follow due processes for selection criteria for AMCs and Non-Banking Financial Companies (NBFCs) / Financial Institutions (FIs). Appropriate rules of bidding including potential conflicts of interest will be worked out.

Structure and composition of NIIF.PNG

Investment Policy

  1. units of funds engaged mainly in infrastructure sectors and provide equity/quasi-equity or debt funding to listed/unlisted companies;
  2. equity/quasi-equity in NBFCs and Financial Institutions that are engaged mainly in infrastructure financing; and
  3. Equity/ quasi-equity or debt to commercially viable projects, both greenfield and brownfield.

investing in the project. Co-investment by NIIF along with other co-investors would be on a no fees basis.

NIIF made its first investment in January 2018 partnering with DP World to create an investment platform for ports, terminals, transportation and logistics businesses in India. The platform will invest in opportunities in the ports sector, and beyond sea ports into areas such as river ports and transportation, freight corridors, port-led special economic zones, inland container terminals, and logistics infrastructure including cold storage. An India-UK Green Growth Equity Fund (GGEF) is also being set up under the fund of funds vertical of NIIF, and shall have anchor commitments of GBP 120 million each from Government of India (through NIIF) and Government of UK.

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