Overview Of Indian Infrastructure

Lack of infrastructure is a major constraint to Indias economic development Indias mission today is to improve roads, highways, ports, airports and increase energy production Cabinet Committee on Infrastructure (CCI) approves and reviews policies and monitors implementation of programs and projects across infrastructure sectors. The rapid growth of the Indian economy (averaging 8% over the past 10 years) has created a pressing need for Infrastructure development

power
India has the fifth largest electricity generation capacity in the world T & D network of 5.7 million circuit km the 3rd largest in the world new generation capacity is required in the next seven years

Telecom
India is the fifth largest telecom services market in the world
Telecom market has grown at about 25% p.a. over the last 5 years Favourable demographics and socio economic factors leading to high growth Investment opportunity of $22 billion across many areas Vodafone, Nokia, Elcoteq, Alcatel, LG, Ericsson are all investing in India India expected to be among the fastest growing telecom markets in the world

Large demand-supply gap

Opportunities in Transmission network ventures

Total investment opportunity of about US$ 200 billion over a seven year horizon

Highways
India has the 2nd largest road system(3.3 million kms) in the world only after the U.S. Roads carry about 61% of the freight and 85% of the passenger traffic Program for 6-laning of 6,500 km of National Highways under NHDP- V. A large component of highways is to be developed through public-private partnerships Road development is recognised as essential to sustain India's economic growth

Airport
Passenger traffic is projected to grow at a CAGR of over 15% in the next 5 years
Cargo traffic to grow at over 20% p.a. over the next five years

Favourable demographics and rapid economic growth

Indias rich heritage and natural beauty are marketed

Modernisation / upgradation of metro airports

Estimated investment of about Rs.40,000 crores

ports
India has 12 major ports and 187 minor ports along 7,517 km long Indian coastline

Railways
Technological upgradation and modernisation for higher operating efficiency

Cargo handling at the major ports is projected to grow at 7.7% p.a. (CAGR) till 2011-12

Transformation from bulk transporter to multi-modal transporter

Growth in merchandise exports projected at over 13% p.a.

Tariff rationalization and effective cost allocation mechanism

Investment need of $13.5 billion (Rs.60,750 crores)`for major ports under National Maritime Development Program

PPP envisaged in new routes, railway stations, logistics parks, cargo aggregation and warehouses

an additional port handling capacity of 530 MMTA in Major Ports

Investment need of $4.5 billion (Rs.20,250 crores) for improving minor ports

Government Policies
Full private provision, or FPP: In this case, the government allows complete ownership of the asset to private players. The government assumes no responsibility or risk for example, the Hyderabad Metro, telecom and so on. PPP schemes: In the case of PPPs, the investment is funded and operated through a partnership between the government and one or more private sector players. For example, Delhi and Mumbai airports. Private finance initiative, or PFI: These schemes introduce the benefits of private sector management and finance into public sector projects. This differs from privatisation since the responsibility of providing essential services to the public is not transferred to the private sector; nor is the asset-ownership transferred. As, for example, in solid waste management, electricity distribution franchising and so on.

PPP INVESTMENTS IN INFRA ($ Billion) Period 10th Plan 11th Plan (Estimated) 12th Plan (Projection) Approx infra sector investments 222 500 1,000 Estimate d PPP % 25 37 50 Estimated PPP investments 56 185 500

Power

100% FDI permitted in Generation, Transmission & Distribution Policy framework in place Incentives Independent Regulators

Telecom

74% to 100% FDI permitted for various telecom services 100% FDI permitted in telecom equipment manufacturing An independent regulator Revenue-share model for licences issued

Airports

100% FDI is permissible for existing airports; FIPB approval required for FDI beyond 74% by amending AAI act. 49% FDI is permissible in domestic airlines under the automatic route 100% tax exemption for airport projects for a period of 10 years Open Sky Policy of the Government and rapid air traffic growth

Highways

100% FDI under the automatic route is permitted for all road development projects 100% income tax exemption for a period of 10 years NHAI agreeable to provide grants/viability gap funding for marginal projects Model Concession Agreement formulated IIFCL to provide funding upto 20% of project cost

Railways

build dedicated freight corridors in the Western and Eastern high-density routes methodology for indexing the fare structure to line haul costs introducing commercial accounting and information technology systems

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) National Maritime Policy is being formulated to lay down the vision and strategy

Reasons to invest in India

One of the worlds fastest growing economies and growth expected to continue at 7-7.5% despite the globaldownturn
Few restrictions on foreign direct investment (FDI) for infrastructure projects Tax holidays for developers of most types of infrastructure projects, some of which are of limited duration Opening up of the infrastructure sector through PPPs