National Investment and Infrastructure Fund
Also written NIIF · National Investment and Infrastructure Fund (NIIF) · National Infrastructure Investment Fund
The Government of India's own alternative investment fund, set up in 2015 as a Category II AIF to invest in infrastructure and strategic assets.
In plain language
Most alternative investment funds are set up by private managers. NIIF is set up by the Government of India.
It was created in 2015. Its job is to put money into infrastructure and strategic assets.
The interesting part for an exam candidate is not what it invests in. It is which category it sits in.
A fund that invests in infrastructure looks like a Category I AIF. Category I has an Infrastructure Fund sub-category, and Category I is the home of funds the government thinks are socially or economically desirable.
But the workbook registers NIIF as a Category II AIF. So the label does not follow the sector. It follows the definition the fund actually fits.
NIIF is one of three government pushes the workbook records. The other two are funds of funds for start-ups and for new technology. All three do the same thing: put public money into the AIF structure so that private money follows.
How it works
Section 6.4.1 records the government's direct participation in the AIF industry, and NIIF is the flagship. The workbook states that the Government of India set up the National Infrastructure Investment Fund (NIIF) in 2015 as a Category II AIF to invest in infrastructure and strategic assets.
What Category II means for it. A Category II AIF is one that falls in neither Category I nor Category III, and that does not undertake leverage or borrowing other than as permitted by the regulations. Practically:
| Condition | Category II AIF |
|---|---|
| Leverage at fund level | Not permitted, beyond the temporary borrowing allowance |
| Maximum investment in one investee company | 25% of investable funds of the scheme |
| Minimum investment by each investor | Rs 1 crore |
| Minimum scheme corpus | Rs 20 crore |
| Specific government incentives or concessions | None, by definition of the category |
The government's other two AIF commitments, in the same section, for contrast:
- A fund of funds of Rs 10,000 crore for start-ups, established under the Department for Promotion of Industry and Internal Trade (DPIIT) and managed by SIDBI under Category I and II AIFs. It invests in SEBI-registered AIFs, which in turn invest in start-ups, acting as an enabler to attract private equity, quasi-equity, soft loans and other risk capital.
- A further Rs 10,000 crore fund announced in 2025 to invest in emerging technologies, artificial intelligence and machine learning.
A naming point worth knowing. The workbook prints the name as National Infrastructure Investment Fund. The fund's own name, and the name this page is filed under, is the National Investment and Infrastructure Fund. Both refer to the same NIIF, and the abbreviation is the safe thing to carry into the hall.
Who else funds infrastructure through AIFs. Section 6.2.6 names the key investors in the infrastructure space as sovereign wealth funds, multi-lateral funds and thematic AIFs, and gives the reason: high illiquidity, long gestation risk in project implementation, and long amortisation of the debt.
A worked example
Set NIIF beside a private Category I Infrastructure Fund to see why the category differs.
| NIIF (as the workbook records it) | Sahyadri Infrastructure Fund | |
|---|---|---|
| Set up by | Government of India, 2015 | Private manager |
| Category | Category II AIF | Category I AIF, Infrastructure Fund sub-category |
| Invests in | Infrastructure and strategic assets | Primarily unlisted securities, partnership interest, or listed or securitised debt of companies and SPVs operating, developing or holding infrastructure projects |
| Cap on one investee company | 25% of investable funds | 25% of investable funds |
| Fund-level leverage | Not permitted | Not permitted |
Now the arithmetic that makes the cap real. Suppose a government-backed Category II AIF has investable funds of Rs 4,000 crore and is offered a Rs 1,200 crore commitment in a single national highway SPV.
1,200 ÷ 4,000 = 30% of investable funds — above the 25% ceiling by Rs 200 crore. The most the scheme may take in that one SPV is Rs 1,000 crore.
Compare the DPIIT fund of funds. Its Rs 10,000 crore is not invested in start-ups at all. It is committed to SEBI-registered AIFs, which then invest in start-ups. So a Rs 100 crore commitment from it is one investor's cheque in somebody else's Category I AIF, and the 25% investee-company test is applied by that fund, not by SIDBI.
The pattern is the same in all three cases: public money enters as an investor in the AIF structure, and the private manager still runs the fund under the ordinary AIF conditions.
Why NISM asks about it
Chapter 6 (Alternative Investment Funds in India and its Suitability), section 6.4.1 on the suitability of Category I and II AIFs, is where NIIF appears, alongside the DPIIT fund of funds and the 2025 emerging-technology fund.
The examinable point is the category. A question asking which category NIIF was set up under is a trap for anyone who reasons from the word infrastructure, because the Infrastructure Fund sub-category sits in Category I while the workbook puts NIIF in Category II. The year 2015 and the two Rs 10,000 crore government funds — DPIIT through SIDBI for start-ups, and the 2025 fund for AI and machine learning — are the other recall points.
Common exam traps
- NIIF is a Category II AIF in this workbook, not Category I. The Infrastructure Fund sub-category of Category I is a different thing.
- The workbook spells the name National Infrastructure Investment Fund. The fund's actual name is the National Investment and Infrastructure Fund. Answer by the abbreviation NIIF and you cannot go wrong.
- 2015 for NIIF, 2012 for the AIF Regulations. Two dates in the same passage, and they get swapped.
- The DPIIT fund of funds is managed by SIDBI, invests in AIFs rather than in start-ups directly, and operates under Category I and II. The Rs 10,000 crore figure belongs to it, not to NIIF.
- The 2025 Rs 10,000 crore fund is for emerging technologies, AI and machine learning — a third fund, not an increase to either of the others.
- Sovereign wealth funds and multi-lateral funds are the key private investors in AIF infrastructure, not the government.
Where this is taught
Free preparation for NISM Series XIX-CRelated terms
- Alternative Investment FundA privately pooled investment vehicle registered with SEBI that raises money from select Indian or foreign investors under a defined investment policy — never from the public at large.
- Fund of fundsAn AIF that invests in the units of other AIFs rather than directly in investee companies — buying diversification across managers and strategies, and paying two layers of fees for it.
- Infrastructure FundA Category I AIF investing primarily in the unlisted securities, partnership interest or listed and securitised debt of companies and SPVs that operate, develop or hold infrastructure projects.
- Investable FundsThe corpus of an AIF scheme net of the administration and management expenditure estimated for the fund's tenure — the base on which Social Impact Fund investment limits are measured.
- Investment FundUnder Section 115UB, a Category I or Category II AIF (or an IFSCA-regulated fund) established in India — the only AIFs given tax pass-through. Category III AIFs are outside the definition.
- Closed-ended AIFAn AIF scheme offered for a limited period, funded by commitments drawn down through capital calls, with no redemption before the fund winds up — compulsory for Categories I and II.
- Sovereign Wealth FundA state-owned fund set up by countries with large trade surpluses — OPEC members, Norway, China, Japan, Singapore, Malaysia — that invests across markets, including through AIFs.