National Debt fund for equity infusion in infrastructure sector launched

A debt fund with the aim of infusing equity into the infrastructure sector has been launched by the Government of India

November 25, 2020

NBFC Infra Finance Company, NBFC Infra Debt Fund, AIFL and NIIF Infrastructure Finance Limited are co-sponsors of the fund.

The fund is expected to support infrastructure projects with an investment amount of US$ 13bn by the year 2025.

IDF Financing. Sovereign Wealth Funds, National and International pension funds are to be the sources of investment.

The development of economic corridors, improvement of roadway networks in the Northeast and Kashmir are key undertakings.

The Government of India, in partnership with the NBFC Infra Finance Company, NBFC Infra Debt Fund, Aseem Infrastructure Finance Limited (AIFL) and NIIF Infrastructure Finance Limited (NIIF-IFL) has established a national debt fund for the Infrastructure Sector. Aimed at increasing equity infusion within the sector, the fund is expected to support projects within the sector with an intended investment amount of US$ 13bn by the year 2025. Of the total sum, the Government of India is expected to invest US$ 810mn and the remaining amount is to be raised through private sector participation. 

Given the circumstances of the COVID-19 pandemic, a sum of US$ 270mn has been allotted for the 2020-21 period. Within the first year of operation, a wealth of construction and real estate projects are expected to be worked on, with sustainable investment options through IDF Financing. Sovereign Wealth Funds, national and international pension funds are to be tapped into in order to support the projects. The NIIF Debt fund will also be equipped with an intrinsic appraisal system that will accelerate the allocation of funds throughout the life-cycle projects. The investment landscape in the infrastructure space can expect to be transformed significantly through the institution of the expertise-driven NIIF Debt Fund. 

With the launch of the National Infrastructure Pipeline, several infrastructure projects have been undertaken across the length and breadth of the nation. The development of Economic Corridors in Haryana, Kerala and Delhi-Mumbai among others are to catalyse industrialisation in rural regions and several developing economies. Roadway infrastructure is also being improved in the North Eastern states as well as the border states of Jammu, Kashmir and Ladakh. The recent completion of the Atal tunnel and the Zojila tunnel are to improve the local education, trade, tourism and healthcare economies. All year connectivity over road through remote and mountainous terrain will be effectively facilitated through the completion of these projects. A more robust and well-integrated financing system would further enable the nation to enjoy significant infrastructural prowess.