CHICAGO: India’s infrastructure sector is poised for a ‘big leap’ in the years ahead offering significant investment opportunities for US and global investors, according to BK Chaturvedi, a member of Indian Planning Commission
Chaturvedi was addressing a group of delegates and invitees during a Seminar on “Indian Infrastructure – The One Trillion Dollar Opportunity'” organized by Indian Consulate in Chicago in partnership with FICCI and USIBC on September 26 at Hilton Hotel in Chicago Downtown.
The objective of the Seminar was to introduce US firms to the large investment opportunity in Indian Infrastructure and share experiences and best practices for making such investments and identify specific project opportunities for potential investment. It also aimed to provide an opportunity for US firms to meet with leading Indian infrastructure development and financing firms who may serve as potential partners
Calling upon the prospective investors to have confidence in ‘India infrastructure story’ and Indian market, he said investment in India’s infrastructure sector has high potential, not high risk. However, he cautioned that such potential has to be assessed on medium-to-long term basis, since any objective or correct assessment cannot be done based on one investment or two, or for short term. Strong arguments exist in favor of the Indian market for international investment, Chaturvedi added.
Indian Ambassador Nirupama Rao flew from Washington DC to attend the Seminar. In her remarks, she highlighted the enormous potential for Indo-US collaboration in infrastructure development in India and observed that the present emphasis on public private partnership (PPP) would lead to the share of private sector in total investment in infrastructure moving up from around 40% in the 11th Five Year Plan to 50% in the 12th Plan.
Alluding to the persistent emphasis and thrust of Prime Minister Manmohan Singh to speed up the pace of implementation of infrastructure projects, Ambassador Rao said it is now the most critical area for immediate action. This is vital for removing supply bottlenecks which restrict growth in other sectors, and also for boosting investors’ confidence to raise the overall rate of investment.
Delivering the keynote address, Dr. Rajiv Lall, Vice Chairman & MD of IDFC Ltd stated that the great Indian infrastructure story is not about how much we have not been able to attain, but what all substantial achievements have been accomplished so far in this area with specific examples of success.
The day-long program deliberated at length on various key issues such as infrastructure financing, innovative models to make public private partnership (PPP) work and how to accelerate investment in Indian infrastructure sector.
It was argued that in view of the massive investment requirements for developing necessary physical infrastructure in India and the limited availability of public resources for investment, it is imperative to explore new avenues of financing and adopt innovative approaches for financing the country’s infrastructure needs. PPP also promotes efficiency in public infrastructure and adds financial capacity to accelerate growth. Public Private Partnerships and private investment have thus emerged as focus areas.
A number of panelists articulated many remarkable success stories in India’s infrastructure sector and showcased Indian firms’ capability to create quality assets, manage and execute mega projects in timelines that may be set as new benchmarks. Some constraints notwithstanding, it was held, the ‘India Story’ particularly that in the area of infrastructure has so many ‘positives’ which reflect the huge scope for working together for achieving ‘win-win’ outcome.
During the discussion it emerged that detailed roadmaps have already been worked out for flagship infrastructure projects with ambitious targets. They represent a significant scale-up over earlier performance. For example, it is planned to award 9,500 kms of roads for construction this year and over 4,000 kms for maintenance under the new system of OMT (Operate, Maintain, Transfer). In railways there are plans to award work on the Elevated Rail Corridor in Mumbai, 2 new locomotive manufacturing units and the PPP stretch of Dedicated Freight Corridor, in addition to redeveloping 4 or 5 stations through PPP mode.
In shipping a task has been set for awarding work for two new Major PPP Ports, besides capacity addition targets which are three times those last year. In Civil Aviation, work will be awarded on 3 new Greenfield airports (Navi Mumbai, Goa and Kannur) and 3 or 4 new international airports (Lucknow, Varanasi, Coimbatore, Trichy and Gaya). As regards urban transport, while Metro Rail projects are currently under implementation in 7 Indian cities covering a length 476 km, Prime Minister Manmohan Singh recently laid the foundation of the eighth Metro Project in Kochi. Detailed Project Reports (DPR) for metro rail have been prepared for another 12 cities.
Of the challenges to overcome, funding constraints, land acquisition issues, delays related to identification & award of projects, regulatory uncertainties, and shortage of skilled manpower were pointed out as some of the major reasons causing delays in infrastructure development in India.
The stimulating discussion in the symposium suggested that the investment target for infrastructure sector in the current Plan period is achievable, provided India could change the way to approach infrastructure development per se.
The change required is needed across all phases including planning, bidding and execution of infrastructure projects. More thorough and forward-looking project preparation and a sound land-acquisition process would be crucial in facilitating successful implementation of projects. Similarly, reduced uncertainty in the regulatory environment, effective dispute resolution, strong monitoring system, developing a sophisticated debt market and diversified set of financial instruments will increase the confidence of the private sector including foreign investors to invest in infrastructure projects in India.
The well-attended symposium attracted several other eminent experts and industry leaders including James S Metcalf, Chairman & CEO of USG Corporation; Larry Walther of the EXIM Bank; Dr. Marshall Bouton, President of the Chicago Council on Global Affairs; P K Chaudhery, Chief Secretary, Government of Haryana; R V Kanoria, President of FICCI; Ron Somers, US India Business Council; Shailesh Pathak, President of Srei Infrastructure Finance Ltd; Dr. Rajiv Kumar, Secretary General of FICCI; George Tapas of URS Corporation; Prof. Rajinder Gupta, Kellogg School of Management; and Prof. Krishna Pagilla, Illinois Institute of Technology.
Ramesh Soparawala
India Post News Service
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