CII has proposed establishing an India Development and Strategic Fund (IDSF), a sovereign-backed, professionally managed institution aimed at financing the country’s long-term growth, resilience, and global economic security. envisioned as a dual-component national fund, the IDSF would mobilize patient, long-term capital to expand India’s productive capacity domestically and protect key economic interests internationally.

Announcing the proposal, Chandrajit Banerjee, Director General of CII, stated that the time has come for India to develop its own sustainable financial engine for growth. “India is entering a crucial period of opportunity. We are already among the world’s largest economies, but to achieve developed-economy status by 2047, we need stable, long-lasting sources of capital that extend beyond the annual budget cycle,” he said. “The India Development and Strategic Fund would be a sovereign-backed, professionally managed tool that invests in both national capacity and strategic security.”

CII’s proposal is rooted in the understanding that India’s growth goals in infrastructure, energy transition, manufacturing, technology, and human development will demand funding levels beyond what annual budget allocations can provide. The Fund aims to mobilize both domestic and international savings and to recycle national capital from mature assets into new productive capacities. As Mr. Banerjee explained, “This is not about more borrowing. It is about better capital structuring, recycling our existing national strength into future assets instead of one-time fiscal use.”

The IDSF is envisaged as comprising two distinct but coordinated arms.

The Developmental Investment Arm would concentrate on financing long-term domestic priorities such as infrastructure, clean energy, logistics, industrial corridors, MSME growth, education & skilling, healthcare, and urban infrastructure. This arm would offer patient equity and blended financing to commercially viable projects that need long-term commitment. It would serve as an anchor investor, attracting pension funds, sovereign wealth funds, and institutional investors from India and abroad. CII has recommended that India’s existing National Investment and Infrastructure Fund (NIIF) could be transformed into this Developmental Arm, utilizing its governance structure and international investor network.

The Strategic Investment Arm would acquire and secure overseas assets vital for India’s long-term economic and security interests. These include energy assets such as oil and gas fields, LNG infrastructure, and green hydrogen partnerships; critical minerals like lithium, cobalt, and rare earths; frontier technologies including semiconductors, AI, and biotechnology; and key global logistics and port assets. This arm would enable India to act proactively, owning instead of merely purchasing, in crucial supply chains and technologies shaping the future global economy.

Additionally, the Fund could issue thematic instruments such as infrastructure, green, and diaspora bonds to attract long-term domestic and international savings, while co-investing with multilateral and bilateral partners. Once macroeconomic buffers are sufficient, a carefully planned allocation of a small part of India’s foreign exchange reserves could also be considered for overseas strategic purchases in areas like critical minerals and energy.

CII has emphasised that strong governance is the foundation of this concept. The proposal recommends a statutory India Development and Strategic Fund Act that defines the Fund’s mandate, capital sources, withdrawal rules, and disclosure norms. The Fund should maintain majority ownership and strategic control with the Government of India, while being managed by a professional board comprising senior Government representatives and global investment experts. Two separate investment committees would oversee the Developmental and Strategic arms, ensuring clarity of focus and accountability.

CII recommends that the Fund publish a regular “IDSF Review,” including a public dashboard on corpus size, portfolio mix, sectoral and geographic exposure, and performance metrics. Annual withdrawal limits should be capped as a percentage of the corpus to prevent fiscal misuse, while independent audits and risk management frameworks should handle currency, geopolitical, and governance risks. The institution must be professionally operated but remain sovereign in purpose, focused on financing development.

Banerjee also emphasized the potential role of public sector enterprises (PSEs) within this framework. Instead of viewing PSEs only as sources of disinvestment revenue, they should be empowered as operational arms of the Fund, capable of executing global projects in energy, mining, logistics, and technology. “Our PSEs can become national instruments of outward economic strategy,” he said. “When backed by IDSF capital and professional management, they can build India’s presence in critical global supply chains.”