Cabinet authorises NHAI to set up Infrastructure Investment Trust

News:The Union Cabinet has given its approval to National Highways Authority of India (NHAI) to set up infrastructure investment trusts (InvITs).

Facts:

About InvITs:

• InvITs are investment scheme similar to mutual funds.They allow investment from individuals and institutional investors in infrastructure projects to earn a portion of the income as return.
• This investment is more attractive for investors as it provides greater flexibility and they don’t have to build an infrastructure project from scratch and is averse to construction risk.
• Besides, mutual funds and institutes like Pension Fund Regulatory and Development Authority(PFRDA) can also invest in infrastructure space through InvITs.

About NHAI’s InvITs:

• NHAI’s InvIT will be a Trust established by NHAI under the Indian Trust Act, 1882 and Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014.
• The InvIT Trust will be formed with an objective of investment primarily in infrastructure projects.
• InvIT may hold assets either directly or through a Special Purpose Vehicle(SPV) or a holding.
• This will enable NHAI to monetize completed National Highways that have a toll collection track record of at least one year and NHAI will reserves the right to levy toll on the identified highway.

Additional information:

About NHAI:

• The National Highways Authority of India was constituted under National Highways Authority of India Act,1988.It is a nodal agency of the Ministry of Road Transport and Highways.
• It is responsible for the development, maintenance and management of National Highways entrusted to it and for matters connected or incidental there.