In order to boost foreign investment in India’s infrastructure sector, the government has issued a notification that, effective from April 1, 2021, sovereign wealth funds and global pension funds will be fully exempt from tax in respect of their incomes arising from interest and dividend, and capital gains arising from their investments in India.

Reports indicate that investments made by such funds either, directly or through vehicles such as Category-I or Category-II Alternative Investment Funds, into as many as thirty-four (34) defined infrastructure sectors will qualify for the tax exemption.

Sovereign wealth and pension funds have deep pockets and are patient long-term investors. Giving them such a huge tax benefit will surely incentivize them to make big-ticket investments in infrastructure, including warehousing, logistics, cold chains, energy, hospitals, telecom, educational institutions, etc.