Sunday, May 30, 2010


Industry Overview: The huge investments by the Government of India on development of infrastructure in the country has resulted a positive spill over effects on the economy by triggering growth in other sectors like manufacturing and service sector and helped in sustaining India's growth rate in compared to rest of the world. The investment in infrastructure in India has increased from 4.9 percent of the gross domestic product (GDP) in 2002-03 to 6 percent last fiscal. The Union Budget 2010-11 has allocated USD 37 billion for infrastructure up gradation in both rural and urban areas. This amounts to over 46% of the total plan allocation for infrastructure development in the country. As per the Budget Estimates, disbursements by the India Infrastructure Finance Company Ltd (IIFCL), established by the government to extend long-term financial assistance to infrastructure projects, are expected to touch Rs 9,000 crore by the end-March 2010 and Rs 20,000 crore by March 2011. India's Government is planning a US$ 354 billion investment in its infrastructure by 2012, with another US$ 150 billion expected to come from the private sector, according to the latest report by PricewaterhouseCoopers.
Projected spending under the Eleventh Five Year Plan (FY07-FY12) should see the electricity (US$ 167 billion), rail (US$ 65 billion), roads and highways (US$ 92 billion), ports (US$ 22 billion) and airports (US$ 8 billion) sectors receive a total of US$ 354 billion. India is expected to expand at 8 per cent in 2010, the fastest among major economies in the world, and 8.5
per cent the year after, matching China's growth rate, according to a World Bank. An estimated US$ 500 bn is required by 2012 to upgrade India’s infrastructure.

India has the world's second largest road network, aggregating over 3.34 million kilometers (km). Being well-aware of the necessity to attract FDI in the segment, the Government has allowed 100 per cent FDI under the automatic route for all road development projects, in addition to offering 100 per cent income tax exemption for a period of 10 years. According to the Planning Commission, the road freight industry will be growing at a compound annual growth rate (CAGR) of 9.9 per cent from 2007-08 to 2007- 12. A target of 1,231 billion tonne km (BTK) has been put on road freight volumes for 2011-12. According to industry sources, the road sector in the country would require an investment of US$ 80 billion in the next 3-4 years of which US$ 45 billion is anticipated from the private sector.

To read the full report: INDIAN INFRASTRUCTURE