Transcript India`s Infrastructure

INDIA’S INFRASTRUCTURE –
Issues and Prospects
PRESENTATION BY
SS Kohli
Chairman & Managing Director
INDIA INFRASTRUCTURE FINANCE COMPANY LTD
NEW DELHI
INDIA GROWTH STORY
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India’s economic growth is attracting wide
attention
India & China are enjoying high economic
growth
In 2006-07 India’s growth was 9.4%
Economic prosperity is placing huge
demands on infrastructure
India is the third largest economy behind
USA and China
Infrastructure Requirements
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World Economic Forum has noted that
India’s annual investments in infrastructure
between 1998 and 2005 averaged 4% of
GDP compared to 8.2% for China
Government of India is addressing the
infrastructure requirements
11th Five Year Plan (2007-2012) calls for
more than doubling the financial outlay for
infrastructure
Investment requirements
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Total financing requirements
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$492 billion in the next five years
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Of this, $147 billion to come from private investment
Share of private investment in total to rise
from 17% to 30% by 2012.
Investment to touch $1.48 trillion by 2017
Interest of international
investors
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Strong interest evinced by international
investors in India’s infrastructure
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This includes Private Equity
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International banks
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3i, Blackstone etc
Citigroup, Macquarie Bank (Australia), Mizuho
(Japan), Deutche Bank
Multilateral institutions including ADB, World
Bank, IFC, JBIC, KfW
Challenges before India
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India growth story likely to continue
Strong economic growth will fuel further
demand on infrastructure
India should absorb the large investments in
infrastructure sector to sustain growth
momentum
Indian rupee has appreciated against the
dollar by 5% over the past year and 20% in
the past five years
Development of PPP market in
India
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PPPs in India are at a nascent stage
Slew of measures by government
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100% foreign investment allowed in infra sectors
Model Concession Agreements evolved
Viability Gap Funding (VGF)
Setting up of IIFCL
Regulatory institutions (Telecom Regulatory Authority,
Port Tariff Authority)
PPPs in India are accelerating
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118 projects valued at $13.4 billion are progressing in
roads, ports, airport sectors
Transport Sector – the potential
in India
Aviation infrastructure
 100% foreign direct investment allowed
 $ 9 billion programme 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
Air transportation - growth
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Passenger traffic is projected to cross 100
million passengers p.a. by 2010
Cargo traffic to grow at over 20% p.a.
over the next five years
- To cross 3.3 million tonnes by 2010
Maintenance, Repair and Overhaul (MRO)
growing in a big way
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MRO market expected to grow by 10%
Roads and Highways
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India has the second longest road
network in the world of 3.3 million KMs
Expressways and highways constitute
only 2% of the above
US $54 billion earmarked for the sector
Cargo traffic expected to grow by 1518% over the next 5 years
Roads - Potential
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100% foreign direct investment allowed
Incentives:
- 100% income tax exemption for a period of
10 years
- Grants/viability gap funding for marginal
projects available
- Model Concession Agreement formulated
Opportunities in construction equipment (earth
moving, material handling equipment etc),
tolling equipment services and advisory
(architecture, structural design, soil
investigation etc)
Railways
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India has one of the largest railway
networks in the world (63,000 route KMs
network)
Accounts for 30% of total freight traffic
Traffic volumes set to double by 2012
Potential for rolling stock, locomotives,
passenger coaches, track equipment,
signalling equipment
Ports
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India has coastline of 7500 KMs
12 major ports; 187 minor ports
Traffic has grown by a compounded average of
8.5%
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Traffic expected to reach 880 million tonnes by 2011-12
95% of India’s exports & imports moved by sea
India expects to double its exports to $150 billion
in the next five years
Ports
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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
Ports - Opportunity
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Opportunities exist in
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Development of greenfield ports
Development of container and bulk
terminals
Logistics infrastructure
Dredging services
Port related equipment
Ship building, ship repair, maritime training
Role of IIFCL
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IIFCL is a SPV to provide long term finance
to infrastructure projects
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Overriding priority to PPP projects
Finance projects in sectors like roads, airports,
ports, power, urban infrastructure etc
Since inception in April 2006
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Financed 77 projects to the tune of $4.3 billion
with a total project cost of $31 billion
Conclusion
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Investment requirements of infrastructure sector
huge
India growth story to continue
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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
THANK YOU FOR YOUR ATTENTION