The Union government is gearing up for a significant capital boost to India's sovereign wealth fund, with plans to inject ₹30,000 crore as equity into the National Investment and Infrastructure Fund (NIIF). This move signals a continued strong emphasis on infrastructure-led economic growth, according to officials familiar with the matter.
Budgetary Boost for Infrastructure Funding
A formal proposal regarding this substantial equity infusion is currently under the consideration of the Expenditure Finance Committee (EFC), chaired by Expenditure Secretary V. Vualnam. The people, who spoke on condition of anonymity, revealed that once the EFC grants its approval, a cabinet note will be prepared for final clearance.
The announcement of this financial commitment is expected to be a highlight of the upcoming Union Budget for 2026. This planned infusion underscores the government's strategy to use public investment to drive GDP expansion, especially in a climate where private sector capital expenditure has been selective.
Fueling the Next Phase of NIIF's Growth
A major portion of this fresh capital is anticipated to be channeled into the NIIF Master Fund II, which is in the advanced stages of raising approximately $3.5 billion (around ₹29,000 crore). This second master fund is a core vehicle for infrastructure investments.
Beyond the master fund, NIIF is also actively developing its Private Markets Fund II, targeting a corpus of $1 billion. Additionally, the fund is engaged in discussions to establish a proposed bilateral fund with the United States, highlighting its expanding global partnerships.
Established in 2015 with an initial government investment of ₹20,000 crore, NIIF has grown into a pivotal player. The government holds a 49% stake in the fund. Its portfolio spans four key funds—the Master Fund, Private Markets Fund, Strategic Opportunities Fund, and the India-Japan Fund—managing a total of $4.9 billion in equity commitments.
Driving India's Infrastructure Ambitions
This capital infusion is strategically aligned with India's massive infrastructure goals. The government's National Infrastructure Pipeline (NIP) envisions an investment of about ₹111 trillion between FY20 and FY25. For FY26, the capital expenditure target is set at ₹11.21 trillion, constituting about 3.1% of GDP.
Analysts note that gross fixed capital formation (GFCF), a key measure of investment in the economy, is on a strong upward trend. A report by SBI Caps dated 28 November highlighted that real GFCF grew by 7.3% year-on-year in the second quarter of FY26, supported by robust government spending and vibrant activity in construction and manufacturing.
Yes Securities, in a September report, pointed out that GFCF growth has surpassed its pre-pandemic trend, largely due to government-led initiatives like PM GatiShakti, the NIP, and Production Linked Incentive (PLI) schemes.
The fund has seen notable successes recently, including the sale of Ayana Renewable Power to ONGC NTPC Green for an enterprise value of $2.3 billion and the divestment of three road assets by Athaang Infrastructure to Cube Highways Trust for $725 million. These developments have occurred under the leadership of CEO and MD Sanjiv Aggarwal, who took over in January last year.
NIIF's influential investor base includes global institutions like the Abu Dhabi Investment Authority (ADIA), Temasek, AustralianSuper, CPPIB, AIIB, and the Japan Bank for International Cooperation (JBIC).
