What is National Investment and Infrastructure Fund (NIIF)

NIIF

Introduction

NIIF is established by the Union government as a category II Alternate investment Fund (AIF)



Background of NIIF

  • SEBI constituted the 21 member committee under the leadership of N R Narayan Murthy, Infosys Co-founder 
  • The committee was named Alternative Investment Policy Advisory Committee (AIPAC) 
  • On the recommendations of the committee, Alternate Investment Funds (AIF) were established as start up eco system in India 
  • AIFs are private equity and hedge funds defined in SEBI Regulations 
  • Any form of privately pooled investment both from foreign or India origin in the form of a company, trust, body, corporate or LLP are classified as AIF 
  • AIFs are established to raise capital to reach a size of as much as 2 % of the GDP 
  • NIIF is established as a Category II AIF 

NIIF – Establishment

  • NIIF will be established under SEBI regulations 
  • NIIF will be financed by GOI with 49% equity 
  • The rest of the funds will be done through foreign and domestic partners 
  • Initial corpus amount of NIIF is 40000 crore rupees 
  • The amount of NIIF will be changed from time to time 

Objectives of NIIF

  • To maximize economic impact through infrastructure development 
  • Investments made in brown field projects, green field projects, stalled projects and commercially viable projects 
  • NIIF would allow equity participation from anchor partners 
  • NIIF would also undertake nationally important projects 

Tax Benefits of NIIF

  • Investments made through NIIF enjoy certain tax benefits 
  • Exempted income of NIIF is not taxed withholding 10 percent 
  • Overseas investors investing in NIIF are not subject to indirect tax provisions of IT act 
  • FDI process made transparent through investment in NIIF 
  • Tax residence measures to be introduced in NIIF after making amendments to IT act, 1961 
  • NIIF will make tax procedures simplified for overseas investors to make their investments and establish their companies in India 
  • Tax policies are made consistent, clear and certain 
  • NIIF funds will have parity with public market funds considering the tax policies 

Other Benefits

  • NIIF is established to promote the “Make In India” flagship initiative of GOI to attract more FDI in a direct manner 
  • NIIF will help in infrastructure development of India as a whole in a more transparent manner compared to the old FIPB route suffering from Red Tapism 
  • NIIF is a measure towards good governance of India 
  • Ease of doing business is enhanced through NIIF 
  • Adoption of global best practices to increase transparency 
  • Cooperation among the various regulators 
  • Innovation of new business and investment practices 

Recent MoU’s made through NIIF

  • India and UAE signed a MoU in March 2016 to mobilize long term investment into NIIF 
  • This will allow transparent mechanism between investment institutions of UAE in Indian Infrastructure through NIIF 
  • NIIF signed MoU with Russian investment firm RUSANO OJSC 
  • The Russian MoU will help set up a high end technology private equity fund 
  • The will enable joint implementation of investments into diverse projects in India 
  • This will establish a joint working group to develop cooperation between India and Russia 
  • NIIF will work on the development of the agreements signed in the MoU 

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