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The decision of the central government to grant 100% tax exemptions for sovereign wealth funds for their investments in the infrastructure sector is expected to give a boost to the infra investments in India. Besides the exemption, abolition of dividend distribution tax (DDT) is also will give benefits to the global yield-seeking infrastructure investors in India

India requires enormous investments in the infrastructure sector that could be more than $1 trillion over the next 4 years.

Apart from The National Investment and Infrastructure Fund (NIIF) - the country's only sovereign wealth fund, India has already seen a large pool of infrastructure investments by global sovereign wealth funds such as Singapore based GIC, Temasek Holdings and Middle East based Abu Dhabi Investment Authority.

According to Rahul Mody, managing director & head of infrastructure at Ambit Corporate Finance,“a number of SWFs are already significantly invested or are considering investing in the Indian infrastructure sector. The announcement of 100% tax concession to SWFs on investment in infrastructure projects along with the concessional tax rate for power generation companies is significantly positive for new investments in the sector.

NIIF is India's first sovereign wealth fund that was set up by the Government of India in February 2015. It manages over $4 billion of capital commitments across three funds.

Finance minister Nirmala Sitharaman has also announced abolition of dividend distribution tax (DDT).

According to a fund manager with a global infra fund,"the global yield-seeking infrastructure investors in India will benefit with the abolition of DDT. Also, the budget is pretty complimentary from infrastructure point of view,"

The government will provide tax exemptions for a sovereign wealth fund which is wholly owned and controlled, directly or indirectly, by the Government of a foreign country and it is set up and regulated under the law of such foreign country