Mukherjee also said that he was confident that the establishment of the Infrastructure Debt Fund through PPP model would be a guiding principle for future activities. Funds around $1 trillion (100,000 crore) are needed in the next five years for infrastructure projects such as roads, ports and airports.
The Finance Minister was speaking after a Memorandum of Understanding (MOU) was signed here today in his presence for setting-up India’s First Infrastructure Debt Fund(IDF) structured as a Non-Banking Finance Company (IDF-NBFC).
To accelerate and enhance the government’s ambitious programme of infrastructure development, Pranab Mukherjee in his last budget had announced setting-up of Infrastructure Debt Funds (IDFs).
To attract offshore funds into IDFs, the Finance Minister had also announced that withholding tax on interest payments on the borrowings by the IDFs would be reduced from 20% to 5%. Income of the IDFs are also exempt from income tax.
ICICI Bank, Bank of Baroda, Citi and LIC will hold 31%, 30%, 29% and 10% shareholding respectively in the IDF-NBFC.
The IDF would seek to raise debt capital from domestic as well as foreign resources and would invest in infrastructure projects under the Public-Private Partnership model that have completed one year of operations.