Investment in Infrastructure in India

Article by Harjeet

Though there are excellent opportunities for investment in infrastructure, major investment concentration is seen in sectors such as roads and highways, ports and airports, railways and power. Infrastructure in India is gaining in importance and a number of public private partnerships (PPPs), targeted at US$150 billion, is receiving support from the government. India needed huge investment and the private sector has a major role to play on its own as also in association with the government.

New avenues for foreign investment
Several avenues have been opened up flow of foreign investment in the infrastructure sector. SEBI-approved mutual funds have been allowed to accept subscription by foreign institutional investors to help boost overseas investment in Indian companies including those engaged in infrastructure projects. FII ceiling on investment in infrastructure bonds has been raised to $25 billion from $5 billion and the overall limit for corporate bonds to $40 billion. FIIs can also invest in unlisted bonds with a minimum lock-in period of three years.

The Indian market offers a good deal to investors who can gainfully use their expertise in these sectors. The Indian Government is seeking investment in infrastructure from both local and domestic capital. To encourage FDI in infrastructure in India, the government is allowing 100% FDI in a large number of sectors. Even in those sectors where prior approval is required, it requires only between 6 and 8 weeks to get clearance.

Investment in infrastructure to be doubled
The Indian Prime minister Dr. Manmohan Singh wants investment in infrastructure to be doubled to about $1,000 billion during the 12th Five Year Plan ending 2017 and has advised the Finance Ministry and the Planning Commission to draw a plan of action for achieving this level of investment.

The optimism arises from the impressive performance by the telecom sector.

Concern areas in infrastructure is said to be power deficit and the aggregate losses of around 30%, causes mainly because of technical and commercial faults are worrisome. Other concern areas are low capacity addition in the port sector, a huge investment backlog in railways and low penetration of broadband services.

23% increase in infrastructure projects
In this year’s Union Budget the Indian Finance Minister has projected an increase in infrastructure projects by another 23%. There has already been a considerable hike in Government focus on investment in infrastructure. This further thrust is likely to give a tremendous boost to this sector.

As per reports of the mid-term appraisal (MTA) of the Eleventh plan (2007-12) private sector investment in infrastructure has risen in the last few years. This has encouraged the government to go on an overdrive regarding infrastructure creation.

It is expected that the private sector will contribute at least half of the over $1 trillion dollar (Rs 40.99 lakh crore) investment planned in infrastructure in the 12th plan (2012-17).

About the Author

Harjeet is an Indian – born mass-market novelist, who covers the world internet related topics . He writes columns and articles for various websites and internet journals in the domain of Investment Opportunities and Investment Sectors.