On October 23rd, 2014, we updated our
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OECD defines as power, telecom, roads, and water supply In investment terms, it really constitutes “infrastructure” that is suitable for PPP investment – political and social constraint URGENT NEED IN INDIA : Infrastructure can directly assist the poor by: 1. Enhancing economic activity 2. Removing bottlenecks in a local economy 3.generating distributional effects by increasing the access of the poor to product markets
HIGHWAYS66,590 Km of NH (2% of network, 40% of traffic): only 12% Four lane; 50% Two-lane; and 38% Single-lane PORTS Inadequate berths, rail / road connectivity and draft areconstraints AIRPORTS Inadequate capacity: Runways, aircraft handling capacity,parking space & terminal buildings RAILWAYS Old technology; saturated routes: slow average speeds (freight:22 kmph; passengers: 50 kmph); low payload to Tare ratio (2.5) POWER9.6% energy shortage; 40% T&D losses; absence of competition
• Roads (USD 20b in each of next 2 yrs) Total opportunity of USD 42.2 bn over next 2 yrs Expressways additional opportunity of USD 11 bn• Power (USD 200 bn in next 4 yrs) 12th Plan capacity addition of 100GW (vs. 78GW) Private energy developers dominant share (64%) Investment of USD102b investment in power plants and an additional USD102b in T&D• Railways(INR800-900b spending over the next 1-2 yrs) Dedicated freight corridor (USD15b) and associated feeder route upgrades (USD5b) comprise 30% of total spending. Approximately 26% (USD15.6b) allocated for asset modernization.
Ports: 100% FDI under the automatic route is permitted for port development projects 100% income tax exemption is available for a period of 10 years Tariff Authority for Major Ports (TAMP) regulates the ceiling for tariffs charged by Major ports Investment needed in the next 5 years $18 billion Aviation Industry: 100% foreign direct investment allowed $ 9 billion program to upgrade 25 airports Delhi and Mumbai International airports – two PPP projects with estimated investment of $3.8 billion 19 greenfield airport locations identified Airport Economic Regulatory Authority being set up
• Lack of infrastructure to support real estate development• Transparency and governance• Institutionalization• Sources of finance• Corruption• Affordability of residential real estate
POLICY FRAMEWORK MARKET SIZE• 100% FDI under automatic route for • 170+ NHAI Projects having a projectall road projects cost of Rs. 1.21lac crore at various stages of bidding• 100% income tax exemption for a • Multiple State Road Projects are onperiod of 10 years anvil (Bihar, UP, Punjab and MP)• Overseas borrowing amount under • Highways: opportunity of Rs. 1.90ECB Policy increased to USD 500 mn. Lac crore in the next 2 years•Indexed user charges to recover • Expressways: additionalbuilding / maintenance costs opportunity of Rs. 50k crore
• New drinking water projects (24X7)• Solid waste management and sewage• New mass rapid transport systems• Bus terminals• Key players: Jindal Water, IVRCL, JUSCO, Global Players (such as Vivendi)
• Supplement scarce public resources.• Investment largely limited to PPP in physicalinfrastructure sector (roads, ports, power, airports, metro, urban sector).• Few PPPs in social sector (education, health, water supply).• Mixed success stories.• Positive climate.
In 2012, A.T. Kearney FDI Confidence Index has ranked India second most attractive destination. During August 2012, top 10 sectors attracting highest FDI inflows included 12% in built up infrastructure and 7% telecommunication. During the last decade, FDI entrance in the economy was hindered because Infrastructure investment were not paying back NOTE: Major factor hindering PE flows in infrastructure sector comprise delay in getting approvals and long GESTATION Period.
The Planning Commission has projected that investment in infrastructure would almost double at US$ 1,025 billion, 50% is expected to come from private sector, whose investment is 36% in eleventh plan. 12 1200 10 1,024.81 1000 8 800 6 600 4 400 Infra Invsmt. As % of GDP 229.51 259.88 2 178.17 202.38 200 Infra invstmt(US $ billion) 132.08 154.86 0 0 Base Year( 2012–13 2013–14 2014–15 2015–16 2016–17 Total 12th 2011-12) Plan
Investment requirements of infrastructure sector huge India growth story to continue 50% of the population is below 25 years Huge domestic demand Need to bridge infrastructure gaps to sustain economic growth Opportunities for international investors significant India can leverage on its vast human capital to successfully adopt the PPP model
http://indiabudget.nic.in/es2011-12/echap- 11.pdf http://unctad.org/en/docs/iteiit20061a6_en.p df Budget 2012: Infrastructure sector gets major boost : North, News - India Today Union Budget 2011: Bonanza for infrastructure sector - Moneycontrol.com