Budget 2026: Centre plans to invest ₹30,000 crore in NIIF
A significant part of the large tranche being raised for NIIF is expected to be deployed towards its second infrastructure fund.
NEW DELHI : The Union government is planning an equity infusion of ₹30,000 crore in India’s sovereign wealth fund, according to two people familiar with the development, signalling a continued focus on infrastructure development that has bolstered economic growth.
A note has been circulated for the consideration of the Expenditure Finance Committee (EFC) regarding the injection of capital into the National Investment and Infrastructure Fund (NIIF), according to the people quoted earlier, who spoke on the condition of anonymity.
Once the EFC chaired by expenditure secretary V. Vualnam approves the plan, a cabinet note will be circulated for approval, and an announcement is likely in the upcoming Union budget, the people said.
“A significant part of the large tranche being raised for NIIF is expected to be deployed towards its NIIF Master Fund II that is in the process of being raised," said one of the two people cited above.
The NIIF is in the process of raising around $3.5 billion for its second master fund. Infrastructure spending has become central to India’s economic growth, with public investments driving GDP expansion over the last few years amid tepid private investments.
NIIF is also coming up with its Private Markets Fund II, which has a target corpus of $1 billion, and is in discussions for a proposed bilateral fund with the US.
Queries emailed to the spokespersons of NIIF and the finance ministry on Sunday evening remained unanswered until press time.
The NIIF is sponsored by the Indian government, which holds a 49% interest in it. It primarily focuses on investing in core infrastructure sectors. The sovereign fund manages $4.9 billion of equity capital commitments across its four funds—Master Fund, Private Markets Fund, Strategic Opportunities Fund, and India-Japan Fund—with investments in sectors such as ports and logistics, renewable energy, roads, digital infrastructure, and manufacturing.
NIIF was established in 2015 with an initial investment of ₹20,000 crore from the Union government. In 2020, another ₹6,000 crore was approved as an equity infusion by the Union cabinet in the NIIF Debt Platform, comprising Aseem Infrastructure Finance Ltd (AIFL) and NIIF Infrastructure Finance Limited (NIIF-IFL).
NIIF’s investors include Abu Dhabi Investment Authority (ADIA), Temasek, AustralianSuper, Ontario Teachers’ Pension Plan, Canada Pension Plan Investment Board (CPPIB), Asian Infrastructure Investment Bank (AIIB), Asian Development Bank (ADB), New Development Bank (NDB) and Japan Bank for International Cooperation (JBIC).
The NIIF is expected to play a key role in India’s infrastructure development goal. The government’s National Infrastructure Pipeline (NIP) targets a projected infrastructure investment of around ₹111 trillion from FY20 to FY25.
India’s capital expenditure target for FY26 is pegged at ₹11.21 trillion, or about 3.1% of GDP. In the previous year’s budget, it was ₹11.11 trillion, or around 3.4% of GDP. Also, according to the government, the effective capital expenditure for FY26 is projected at ₹15.48 trillion against ₹13.18 trillion in the previous fiscal.
Analysts say the gross fixed capital formation (GFCF), a key economic indicator capturing total investments in fixed assets, is on an upward trajectory.
“Real GFCF increased by 7.3% y/y in Q2FY26. Despite private capex remains in selective sectors amid trade and tariff uncertainty, the GFCF growth has surprised, helped by government capex and buoyant construction and manufacturing activity," SBI Caps wrote in a 28 November report “The share of GFCF in GDP appears to be peaking in real terms as consumption is gaining traction."
Yes Securities wrote in a 22 September report that “GFCF growth (8.1% in FY23–25) has surpassed its pre-pandemic trend (7.4% in FY10–19), largely due to strong government-led spending under initiatives such as PM GatiShakti, the National Infrastructure Pipeline, and Production Linked Incentive (PLI) schemes. Capital outlays have tripled since FY2020, generating productivity gains across sectors."
NIIF has seen some stellar successes after Sanjiv Aggarwal, who was earlier overseeing global private equity firm Actis’s energy investments in Asia, took over as NIIF’s chief executive officer (CEO) and managing director (MD) in January last year.
These include the sale of Ayana Renewable Power Pvt. Ltd to ONGC NTPC Green Pvt. Ltd (ONGPL) at an enterprise value of $2.3 billion; and the sale of Athaang Infrastructure’s three road assets for an enterprise value of $725 million to Cube Highways Trust. Aggarwal took over from Rajiv Dhar, who served as NIIF’s interim MD and CEO after Sujoy Bose, the fund’s boss since its inception, quit in May 2016. Dhar was earlier NIIF’s executive director and chief operating officer (COO).
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