Govt proposes thematic funds for DeepTech and sunrise sectors

Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman said the government would promote thematic funds for important sunrise sectors like DeepTech, digital economy, climate action, pharma and agri tech. The blended finance model would include government share being limited to 20% and the funds being managed by private fund managers. Thematic funds are a type of equity mutual funds that invest in companies around well-defined theme across various sectors.

The announcement was a part of the Union Budget speech of February 1^st, 2022 and initiatives to boost investment and credit availability in the country. The thematic fund provision is part of the larger plan to prioritise capital expenditure, which has been up from 35.3% from Rs. 5.54 lakh crore in 2021-22 to Rs. 7.50 lakh crore in 2022-23.

Sitharaman proposed setting up of an expert committee to examine and suggest appropriate measures to scale up Venture Capital and Private Equity investment. She noted that the Venture Capital and Private Equity invested more than Rs. 5.5 lakh crore last year facilitating one of the largest start-up and growth ecosystems. “Scaling up this investment requires a holistic examination of regulatory and other frictions,” she said.

Infrastructure Status for Data Centers and Energy Storage Systems

Sitharaman also proposed that the datacenters and energy storage systems including dense charging infrastructure and grid-scale battery systems would be included in the harmonized list of infrastructure. “This will facilitate credit availability for digital infrastructure and clean energy storage,” she said.

The Finance Minister said that for financing the infrastructure needs, measures would be taken to enhance financial viability of projects including PPP, with technical and knowledge assistance from multi-lateral agencies. She further said that enhancing financial viability shall also be obtained by adopting global best practices, innovative ways of financing, and balanced risk allocation. “Stepping-up of public investment will need to be complemented by private capital at a significant scale,” she stated.