Infrastructure Sector

Prospects
 INFRASTRUCTURE
The basic physical and organizational structures and facilities
(e.g. buildings, roads, power supplies) needed for the
operation of a society or enterprise.

Infrastructure sector plays an important role to counter

balance against slowing economic activity and lower
consumption.

In India the infrastructure sector currently accounts for

26.7% of India’s industrial output and thus remains a useful
tool to balance the economy.

Infrastructure is the lifeline of any business activity, proper

infrastructure increases business activity manifold.
 Economy Growth
India’s economic growth is attracting wide
attention
Indian economy – The 4th largest & 2nd
fastest growing economy in the world
In 2006-07 India’s growth was 9.4%
Economic prosperity is placing huge
demands on infrastructure
Infrastructure Requirements
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
Infrastructure Sectors

Power
Oil & Gas
Telecom
Roads & Bridges
Aviation
Ports & Shipping
Water
Finance
Infrastructure Deficit
 Roads
◦ 66,590 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 are
constraints
 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)
 Power
◦ 13.8% peaking deficit and 9.6% energy shortage; 40% T&D
losses; absence of competition; and inadequate private
investment
Projected Eleventh Plan Sector
Share

Ports Airports Storage Gas

4% 2% 1% 1%
Water Supply
and Electricity
Sanitation 32%
7%
Irrigation
12%
Railways
13% Roads
15%

Telecom
13%
Development of PPP market in
India
PPPs in India are at a nascent stage
Slew Measures by government
◦ 100% foreign investment allowed in infra
sectors
◦ Model Concession Agreements evolved
◦ Viability Gap Funding (VGF)
◦ Setting up of IIFCL (Indian Infrastructure
Finance Company)
◦ Regulatory institutions (Telecom Regulatory
Authority, Port Tariff Authority)
PPPs in India are accelerating
◦ 118 projects valued at $13.4 billion are
progressing in roads, ports, airport sectors
Transport Sector – the potential in India
 46,000 km to be developed by 2012: $ 59 bn
 PPP programmes approved so far: 21,036 km
◦ 6-laning of 6,500 km of GQ & Other NH
◦ EW & NS Corridors: 4-laning of 6,736 km
◦ 4-laning of 6,800 km in selected sections on BOT
◦ 1,000 km of new expressways

 Safety
◦ Setting up of Directorate of Safety & Traffic
Management
◦ Setting up of a dedicated road safety fund
Railways
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
Aviation
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
◦ MRO market expected to grow by 10%
Ports
India has coastline of 7500 KMs
12 major ports; 187 minor ports
Traffic has grown by a compounded
average of 8.5%
◦ 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
Role of IIFCL
IIFCL is a SPV to provide long term finance
to infrastructure projects
◦ Overriding priority to PPP projects
◦ Finance projects in sectors like roads, airports,
ports, power, urban infrastructure etc
Since inception in April 2006
◦ Financed 77 projects to the tune of $4.3 billion
with a total project cost of $31 billion
Conclusion
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