National Investment and Infrastructure Fund (NIIF)
The government is looking at creating a fund under India’s first sovereign wealth fund, NIIF, which will address capital requirements of domestic steel companies. Steel sector is capital-starved sector in the country.
- The move is aimed at bringing down capital costs for the steel industry, which could see a staggering $190 billion in investment if the country has to reach a 300-mtpa target by 2025-26.
- The government feels that though domestic demand has grown slower than anticipated in the last couple of years, in the medium term demand would pick up, making room for steel capacity expansion.
- India currently has around 110 mtpa steel capacity. The country aims to create an additional 190 mtpa capacity by 2025-26. Approximately $1 billion investment is required to develop 1 mtpa steel capacity.
About National Investment and Infrastructure Fund (NIIF):
The NIIF is being operationalised with an initial corpus of Rs 40,000 crore. The government would hold up to 49% in the NIIF, which is expected to catalyse financing of infrastructure projects by leveraging the same multiple times. The remaining stake would be offered to domestic as well as foreign partners.
- It was created as an investment vehicle for funding commercially viable greenfield, brownfield and stalled projects.
- NIIF is set up as a Fund of Funds (Category II Alternate Investment Fund) with a proposed series of funds.
- The government will seek participation from strategic investors such as sovereign fund, quasi sovereign funds and multilateral or bilateral investors, which can help leverage this fund to many times. Cash-rich PSUs, pension funds, provident funds, National Small Saving Fund will be able to pick up stake in the fund.
