NIIF to be established as series of Sebi-regulated AIFs

The Rs 20,000-crore National Investment and Infrastructure Fund (NIIF) will be established as Sebi-regulated Alternate Investment Funds (AIFs) with government contributing 49 per cent in each of them.
The Fund, which will seek to maximise economic impact through commercially viable infrastructure projects both greenfield and brownfield, will virtually be sovereign fund and will seek investments from domestic and offshore institutions.
In an office memorandum, the Finance Ministry said the NIIF would be set up as a trust or legal entity from the point of view of taxation and flexibility.
Select AIFs would enjoy the "pass through" status under the Income Tax Act. In case they are not eligible for this status, all income received by them shall be taxable at its level and any distribution made to the investors would be tax exempt, it added.

It further said that the initial corpus of the NIIF would be Rs 20,000 crore, which may be raised from time to time.
"Government's contribution/share in the corpus will be 49 per cent in each entity to be set up as an AIF and will neither be increased beyond, nor allowed to fall below 49 per cent. The whole 49 per cent would be contributed by the government directly," the office memorandum said.

The government's funding to each AIF would be based on its annual plan, it said.
Besides overseas institutions, cash rich central public sector enterprises would also be permitted to contribute to the fund which would be over and above the government's 49 per cent.

It would be managed by a governing council which will have government representatives and experts in international finance, eminent economists and infrastructure professionals.
The Council will oversee activities of the Trust and will be constituted as a separate legal entity.
The Cabinet had last month cleared setting up of NIIF which will primarily focus on fund infusion in infrastructure projects - greenfield, brownfield and the stalled ones.
The Fund is expected to be operational by year-end.