The debt for infrastructure would be in the state of private equity funds of venture capital and would avail special tax incentives As these proposed funds will be subscribe by foreign investors and therefore they will also enjoy exemptions from Securities and Exchange Board of India (SEBI) regulations for foreign VC funds and also under the Reserve Bank of India rules on external commercial borrowings.

Mr. R Gopalan, secretary of Department of economic affairs, asserted that these funds will play pivotal role in bridging India’s infrastructure deficit and the information about the same will be notified within a month.

Mr. Pranab Mukherjee, finance minister, proposed setting up of infra debt funds for channelizing the foreign funds flow into infrastructure structure. Presently, India is facing nearly 30% gap in its infrastructure funding need, which is set at Rs. 41 lakh crore in 12^th five year plan. Decision has been taken in this regard to offer special regulatory benefits to infrastructure debt funds, without making any change in the existing rules.

One of the officials said, “When Planning Commission came out with the idea of such a Fund, they said certain exemptions should be given to it from the Sebi regulations as a special dispensation. We thought it would look odd if exemption is given to one particular fund. So a general framework is being worked out so that all such funds can enjoy these benefits.”