Indian leader vows to remove infrastructure bottlenecks, unleash economic growth
16 February 2006

NEW DELHI (AP) - India's president on Thursday pledged to remove hurdles constraining economic growth and push ahead with an ambitious plan to develop world class infrastructure in the country.

Although the Indian economy has been witnessing robust growth of 7 percent in the last three years, business leaders and foreign investors have expressed fears that the country's inadequate ports and airports and severe power shortages could cramp its economic take off.

"To accelerate economic growth and investment in infrastructure is a necessity. Government is committed to developing world-class infrastructure to make our economy more competitive," President A.P.J. Abdul Kalam said in a speech to Parliament.

Although India's president has a mostly ceremonial role, his address at the opening of the budget session of parliament is seen as a report card of the government's policies.

"Confidence in India, in our democracy and in our economy, has never been higher," he told lawmakers.

Kalam promised the government would push ahead with the modernization of India's airports and ports, and ease conditions to attract long term private sector investment in the country's infrastructure.

India's spectacular growth of the past few years has been concentrated around its sprawling urban centers and has left untouched the lives of tens of millions of people living in the country's villages and remote hamlets. It has also sparked a debate on the need to ensure that the benefits of economic growth trickle down to poorer sections of Indian society.

Kalam said the government has set a deadline of 2009 to provide electricity, safe drinking water and telephone access to every village in the country and construct six million new homes in the rural areas.

FACTBOX-India upgrades its creaking infrastructure

Feb 7 (Reuters) - India, Asia's third-largest economy, has embarked on a drive to upgrade its creaking infrastructure of ports, roads and airports as it aims at a double-digit GDP growth in the medium term.

Analysts say a woeful lack of infrastructure inhibits faster movement of goods across the country, thereby increasing costs and delays.

Various estimates say investment of $150 billion to $200 billion is needed over the longer-term to upgrade Indian infrastructure to levels of other Asian nations.

These are a few details about various initiatives taken up by the government.

ROADS

-- Indian roads carry 85 percent of passenger and 75 percent of freight traffic. Highways, making up just 2 percent of the total road network, carry 40 percent of this traffic.

-- Some 14,279 km (10,800 miles) of national highways are being converted to 4/6 lanes at an estimated cost of 650 billion rupees ($14.7 billion). These consist mainly of:

* Construction of a "Golden Quadrilateral" or roads connecting the four major metros -- Delhi, Mumbai, Kolkata and Chennai. Four laning of 5,000 kms, comprising 85.5 percent of the total length, has been completed. The rest is underway.

* Of the total 7,300 km length of the North-South and East-West corridors, a separate project, more than 800 km has been completed and 3,691 km is being implemented. These corridors are targeted to be completed by December 2008.

-- The project is being funded through a tax on diesel and petrol sales.

AIRPORTS

-- India has 450 airports and airstrips including those managed by the defence services and private companies.

-- The state-run Airports Authority of India (AAI) manages 125 of them. These include 11 international airports, 77 domestic airports, 9 airports for customs department and 28 civilian enclaves at defence airfields.

-- Passenger traffic at these airports crossed 50 million in the year to March 2005. Traffic growth is estimated at 12 percent each year between now and 2009.

-- More than 85 percent of total passenger traffic was handled by 10 airports, which generate 80 percent of AAI's revenue.

-- Delhi and Mumbai, the two major gateways, account for 49 percent of total passenger traffic and 33 percent of total revenue.

-- Only 11 airports are profitable.

-- The Delhi airport handled 10.4 million passengers in the year ended March 2004 and the Mumbai airport saw 13.28 million travellers.

-- Passengers often face long queues, delayed flights and inadequate service standards during peak hours in most airports.

-- The government estimates up to 200 billion rupees ($4.5 billion) is needed over the next five years to bring Delhi and Mumbai airports to international standards.

-- Greenfield airports near Bangalore, the technology capital, and the southern city of Hyderabad are being built on a Build Own Operate and Transfer basis under the public private partnership basis.

-- Indian carriers have been furiously expanding operations over the past two years, and new airlines have emerged because of booming demand for air travel. Indian companies have placed orders for new planes worth more than $10 billion.

PORTS

-- India's 6,000 km natural peninsular coastline, bound by the Arabian Sea, the Indian Ocean and the Bay of Bengal, is dotted with 12 major ports and 185 minor ones. The federal government manages the major ports while state governments run the minor ones.

-- The major ports handle 75 percent of traffic. About 80 percent to total volume of port traffic was in the form of dry and liquid bulk. General cargo and containers made up the rest.

-- Container traffic grew 15 percent a year in the five years to 2003/04.

-- Indian ports' capacity stood at 389.5 million tonnes at the end of 2003/04. Cargo handled by major ports grew 13.6 percent in April-September 2005 to hit 199.8 million tonnes.

RAILWAYS

-- Indian railway network, one of the largest in the world, at 63,221 km by the end of 2004. Around a third of the network is electrified.

-- Revenue-earning freight traffic of the railways rose 10.1 percent to hit 313.5 million tonnes in the first half of the year to March 2006.

ELECTRICITY

-- India has one of lowest electricity usage levels in the world with per capita consumption as low as 606 units.

-- India generated 123,667.821 megawatts of power till Dec. 31, 2005. The country's electricity demand exceeded supply by 8 percent in non-peak hours and suffers a 10 percent shortfall during peak hours.

-- Of its total 35 states and union territories, only 8 states have achieved 100 percent electric connectivity.

-- Of its total 593,732 villages, 119,570 are still in darkness.

-- Of its 138.27 million rural homes, only 60.18 million have a bulb to switch on.

-- India has embarked upon an ambitious plan to add about 100,000 megawatts of electricity by investing 8 trillion rupees by the year 2012.

(Reporting by Shailendra Bhatnagar in NEW DELHI and Hiral Vora in MUMBAI)

($1 = 44.2 rupees)

Making the trains run on time - Face value
18 February 2006
The Economist

Elattuvalapil Sreedharan has become a hero in India by doing the seemingly impossible

ALL over India, the ultra-modern jostles jarringly beside the medieval—or, these days, underneath it. At Chawri Bazar, in old Delhi, bicycle-rickshaw riders tout for business, while stray cows lounge around in the middle of the roundabout. They are ready to greet those emerging from the 21st century—the deepest station in Delhi's underground-rail network. The passengers have travelled on fast, punctual trains, and arrived to a spotlessly clean station. The ticket barriers, using tokens and smart cards, are state-of-the-art, and the three-stage escalator glides smoothly up to the surface.

Indian infrastructure is famously decrepit and is often cited as the single biggest impediment to economic growth. So Delhi is justifiably proud of its metro. Joyriders are common—in fact, the fare system has just been tweaked to deter them. Many other Indian infrastructure projects suffer controversy, scandal, delay and extra cost. An eight-year-old effort to modernise the embarrassingly shoddy airports in Delhi and Mumbai, for example, has this month suffered a nationwide strike by airport workers, and legal challenges to the contracts that have, at long last, been placed. The 17km (10 mile) metro in Kolkata (Calcutta) took 22 years to build and revised its budget upward on 14 occasions. Yet, when phase one of Delhi's three-stage metro project was completed in December, with the opening of a third line, bringing the length of the network to 56km, it was on budget and nearly three years ahead of schedule.

That it was built at all has brought kudos to Elattuvalapil Sreedharan, managing director of the Delhi Metro Rail Corporation (DMRC). That it was built so quickly, works so well and bears comparison to the best in the world has made him a national hero. Opening the new line, India's prime minister, Manmohan Singh, called Mr Sreedharan “a role model for future generations”. The adulation is a mixed blessing for a man who says he wants to retire. Already 73, he has agreed to work for three more years. This will allow him to see phase two—another 53km—well on the way to its deadline, of the summer of 2010, in time for the Commonwealth Games in Delhi.

Besides the day job, the government has called on his advice for metro projects in Ahmedabad, Bangalore, Chennai, Hyderabad, Kochi, Kolkata and Mumbai. He was even dragged into the airport-modernisation mess, as head of a committee appointed to examine the tender process.

Mr Sreedharan has a disarmingly simple explanation for his success: the ownership structure of DMRC. Half the equity is held by the central government, and half by the Delhi authorities. Instead of doubling the amount of bureaucratic meddling, Mr Sreedharan says this almost eliminates it: there is no government ministry to which every file has to be passed. Decision-making is speeded up further by the board's delegation of authority to him. When he took the job in 1997—seven years after his scheduled retirement—he demanded, and was given, full power to pick his team and a promise of non-interference.

That shows how much respect he already commanded. An engineer and career officer of state-owned Indian Railways, he had spent much of the 1990s running what was then the world's biggest overground-railway building project. This was the Konkan Railway, along India's south-western coast, which was the first such infrastructure contract in India ever awarded on “build, operate and transfer” principles.

Mr Sreedharan's experience taught him two lessons that seem obvious enough, but that many other developers of infrastructure in India have yet to learn. The first is to insist on the global best, rather than to favour Indian firms. The metro's consultants are led by a consortium from Japan (whose government has financed two-thirds of the metro's cost through a soft loan); the signalling and fare-collection systems are French, the rolling-stock Korean.

The second is an emphasis on avoiding the scourge that plagues so many Indian public-sector ventures: corruption. He has tried to purify DMRC's procurement processes by removing almost every element of subjectivity from tender-evaluation. He has also had to show the door to some employees who did not meet his exacting standards.

Pure at heart

Western prejudice might expect such a demanding boss to be some kind of tartar. Mr Sreedharan's own management philosophy sounds so glibly aggressive as to be positively American: “lead from the front, not push from the rear”. But he is not prone to table-thumping harangues. In fact, he seems more like a monk than a manager. He puts his continued health and sharpness down to a “very disciplined life”, of yoga, walks, jogging and controlled eating. His only recreation, he says, is “reading spiritual books”, which gives him “mental composure” and makes him “pure at heart”.

The new line has recently suffered some minor disruption. Earlier this month, part of it had to be shut for 90 minutes when a bird dropped a wet twig on some part of the wiring. There has been occasional trouble with points and the signalling, causing a few services to be cancelled, and some worries about crowd management and the risk of stampedes. Mr Sreedharan explains that the metro could not be “rude” to its customers by closing stations. Such courtesy is a rarity.

Mr Sreedharan denies that the zest for beating deadlines was a factor in any of the new line's “teething troubles”; nor has his reputation suffered. If he is criticised, it is for becoming indispensable, a charge he also denies, claiming there is a “good line of successors”. He is right that the principles he has followed should not need him to enforce them. Mr Sreedharan may be the exception, but his practices could be the rule.

Indian Railways Unveils Biggest Track Expansion Plan in Decade

Feb. 24 (Bloomberg) -- Indian Railways unveiled its biggest spending plan in a decade to build new tracks as faster economic growth stokes demand for transporting goods from oil to cement.

Asia's oldest rail network plans to spend 220 billion rupees ($5 billion) to build 10,000 kilometers (6,215 miles) of dedicated freight lines by 2010, Railways Minister Lalu Prasad said in his budget speech to parliament in New Delhi today.

The expansion would allow companies including refiner Indian Oil Corp. and iron ore exporter Sesa Goa Ltd. to move goods to consumers and sea ports across the world's seventh-biggest landmass faster and cheaper. The government is removing infrastructure bottlenecks to accelerate the pace of economic growth to as much as 10 percent over the next decade from an average 6 percent since 1980.

``This will be of great help for building India's infrastructure,'' said Viswanathan Vasudevan, who helps manage about $180 million of Indian equities at Aquarius Investment Advisors Pte. in Singapore. ``Speedy implementation is essential because economic growth is saturating the existing network.''

India's economy will probably grow as much as 8.1 percent in the year ending March 31, following a 7.5 percent expansion a year earlier, the country's statistics bureau forecast Feb. 7.

Prasad outlined his spending plans four days before Finance Minister Palaniappan Chidambaram's federal budget, in which analysts expect increased spending on roads and ports.

Indian Railways is the world's biggest commercial or utility employer with about 1.5 million on its payroll. It has presented its own budget since 1925, after British colonial rulers separated its finances from the federal government's in 1924.


Freight Estimate

Prasad today increased the estimate freight to be carried in the year ending March 31 to 668 million tons from 635 million tons projected a year ago. Railways aims to carry 726 million tons in the year starting April 1, he said.

``Indian Railways are scaling historic highs in freight and passenger business,'' Prasad said today. ``We will not allow resource constraints to hamper expansion of rail network.''

The railway budget seeks to accelerate the pace of freight transport growth without increasing fares and tariffs, Prime Minister Manmohan Singh said after the budget.

Prasad said Indian Railways has 110 billion rupees of surplus cash and promised to generate more funds for expansion. The network plans to borrow 41.7 billion rupees in the year beginning April 1, he said.

The minister cut freight rates for gasoline and diesel by 8 percent and said the cost of transporting most commodities will remain unchanged for the fifth straight year. Earnings from moving goods constitute about 66 percent of the railways' revenue.


Passenger Fares

Prasad cut some passenger fares for travel by air- conditioned coaches to lure passengers drawn by low-cost airlines.

Total revenue, including income from freight carrying passengers, for the year ending March 31 is estimated to increase 16 percent to 546 billion rupees, Prasad said. He projected revenue of 600 billion rupees for the year starting April 1.

``India's economic expansion is helping Railways improve its freight earnings,'' said D. H. Pai Panandiker, director general at RPG Foundation, an economic policy group in New Delhi. ``That will partly solve the finances of the expansion project.''

India was the first in Asia to get a passenger railway when British rulers opened a 21-mile track from Mumbai to Thane on April 16, 1853. The network now covers 63,000 kilometers and is the world's second largest under one management after the U.S. It runs 11,000 trains every day, 7,000 of which carry passengers.


Network Expansion

India's rail network expanded by 633 route kilometers between 1990 and 2004, while China added 16,608 route kilometers in the same period, according to Morgan Stanley economists Chetan Ahya and Mihir Sheth.

China plans to invest 1.25 trillion yuan ($155 billion) in railways measuring 17,000 kilometers in length from 2006 to 2010, state-run Xinhua news agency said on Jan. 6. That will bring the country's total length of lines to 90,000 kilometers, it said.

Indian Railways' proposed freight corridor will link the capital New Delhi with Mumbai and ports in the west, and with the eastern port city of Kolkata, formerly known as Calcutta. It will be built in two phases, Prasad said.

``The government is trying to remove bottlenecks,'' said A.K. Rai, a director at Sesa Goa, India's biggest non-state-run iron ore exporter. The expansion will link ``industrial areas.''

Prasad's spending plan is the biggest on the monopoly network since the 35 billion rupee Konkan Railway Corp.'s 760- kilometer line in western India was built in 1997.

Tracks connecting the India's biggest cities are ``saturated in most sections'' and some ``are unfit to carry freight trains at higher speeds,'' according to a May 2002 government report.


`Welcome Move'

Starting dedicated freight lines may benefiting companies including Sesa Goa and Indian Oil, the nation's largest refiner.

``This will be a welcome move,'' said N. Srikumar, spokesman for Indian Oil Corp., the nation's largest refiner. ``Existing lines are used to carry both passenger and freight. So, invariably freight movement gets delayed because trains carrying passengers get priority.''

The government on Jan. 5 allowed non-state companies to run container trains. Of the 14 companies that have applied to such trains, Pipavav Rail Corp. has already been granted a license, Railways said in a Feb. 16 statement.

Railways' share of the country's freight traffic has halved to 30 percent over the past five decades as the government expanded roads and oil companies built their own pipelines and coastal shipping improved. The government is close to completing a $14 billion road program, adding 14,100 kilometers of highways.

An expanded rail network ``would reduce the reliance on roads,'' Jayesh Doshi, vice president of treasury at Gujarat Ambuja Cements Ltd., India' fourth-biggest cement maker. It transports 15 to 20 percent of its total cement volumes by rail.

http://www.bloomberg.com/apps/news?pid=10000080&sid=a1nC8Jhd0VQk&refer=asia

India wants more ADB cash for creaky infrastructure

NEW DELHI, April 24 (Reuters) - India will seek greater funding from the Asian Development Bank to improve its creaking roads, power networks and railways, Finance Minister Palaniappan Chidambaram said on Monday.

International agencies say India needs to shore up its infrastructure in order to lift economic growth to 10 per cent, from the present 8 percent.

"We must enhance our capacity to present large-scale viable projects (to ADB) and utilise funding more efficiently," Chidambaram told a news conference, ahead of the 39th annual meeting of the bank to be held in Hyderabad in May.

The finance ministry has requested other government departments to step up spending on and loan disbursement to ADB-funded projects to 20 percent from 16 percent annually.

India proposes to increase the overall size of its borrowing from the Manila-based bank from $2.25 billion in 2006 to $2.45 billion in 2007, and $2.65 billion in 2008, the minister said.

Chidambaram said the government will also request both the World Bank and the ADB to lend $1 billion to revive ailing cooperative credit societies.

India is a founder-member of the ADB and its fourth-largest shareholder, after the U.S, Japan and China. It has a 6.38 percent share of the bank's subscribed capital, and has obtained about $14 billion in loans.

Im glad that India is modernizing. What a great country, it deserves the best in the world.
; )

India picks up infrastructure pace, more needed - analysts
By Surojit Gupta

NEW DELHI, Nov 13 (Reuters) - India's multi-billion dollar drive to upgrade its neglected infrastructure is gathering momentum, but analysts say it needs to clarify some policies to smooth the way for greater private funding.

The need to provide world class infrastructure that keeps pace with 8 percent economic growth is clear. City roads are choked with traffic, power cuts are a fact of life and passengers are routinely delayed as booming air travel tests airport capacity.

Analysts say the infrastructure sector as a whole needs to grow 8 percent a year, instead of 5 percent at the moment, to meet the government's vision of even higher growth, more jobs and better basic living conditions for 260 million poor.

"The government knows that it has to move fast to improve the sector, but clarity of policies on pricing of infrastructure goods and services will help in boosting investments," said T.K. Bhaumik, chief economist with Reliance Industries Ltd.

New Delhi is mapping out $350 billion worth of road, rail, port and power projects for the next six to seven years.

In the past month, it has identified 276 port projects worth $12.40 billion for implementation by 2012, and expects about $7.67 billion to come from the private sector.

It also wants investment of $48.5 billion by 2012 to upgrade highways and has unveiled a 220 billion rupee ($4.9 billion) plan to build a dedicated rail freight corridor to cut freight costs.

Montek Singh Ahluwalia, economic adviser to Prime Minister Manmohan Singh, said last month that India needed $80 billion in private investment in infrastructure projects over the next five years.

PAST SHOULD BACK THE FUTURE

The government has had some success in the past 10 years in luring private funds into telecoms and ports, and Bhaumik said raising private money this time should not be hard.

"Once the public-private partnership is successful and shown to be working, money is not a problem," Bhaumik said.

"Then there are multilateral agencies. The capital market is buoyant, so frankly speaking funding is not a problem. The government has enough funds and there is high liquidity in the system which can be used for building infrastructure."

Others say however that private players, particularly foreigners, have been slow to invest in power and road projects in the absence of proper user charges.

"There is plenty to do for the domestic private sector, but contractual agreements need to be more investor friendly to attract attention of foreign investors," said Sitesh Mukherjee, a legal consultant for infrastructure projects.

India has a 1.74 trillion rupee programme to improve rural infrastructure over the next four years, and is awarding licences for special economic zones for export-oriented industries where tax breaks are on offer to lure investment and boost exports.

One area where private firms are operating is at Mumbai and New Delhi airports. The government stood its ground in a clash with unions last December to ram their privatisation through.

"Opportunities exist across sectors. Power, water, sanitation, energy, roads and highways. It's now worth $350 billion," said Vinayak Chatterjee, chairman of Feedback Ventures.

GEARING UP

Domestic construction and engineering firms are now tooling up as the government steps up spending. Analysts say firms in both sectors are operating at 85-90 percent capacity and planning expansion.

In construction, many companies have an order book which is at least three to four times their current annual revenue.

"We are extremely positive on construction and engineering services companies because the infrastructure story is here to stay for the medium to long term," said Ambareesh Baliga, Vice President at Karvy Stock Broking.

Reliance Industries' Bhaumik says he sees a huge opportunity for investors.

"I think beginning next year the infrastructure sector should witness strong momentum," Bhaumik said.

India needs $320 bln for infrastructure over 5 years

NEW DELHI, Dec 20 (Reuters) - Indian Finance Minister Palaniappan Chidambaram said on Wednesday the government needs $320 billion investment in the next five years to improve its infrastructure to match demands of a growing economy.

^^ Highly unlikely, in terms of receiving such a staggering amount. However, the figure probably is true, if India wants to compare with countries such as China.

FYI $1 mill ~5 cr

^^ Highly unlikely, in terms of receiving such a staggering amount. However, the figure probably is true, if India wants to compare with countries such as China.


Raising 320 bill in 5years should be challenging but not impossible.The finance ministry is setting up a panel to work it out and is trying to mobilize 170 billion dollars of forex reserves.

Panel on funding infrastructure
http://www.hindu.com/2006/12/21/stories/2006122109871700.htm
"Mr. Parekh has agreed to head the committee. I urge the committee to get on to the job and submit a quick report in six weeks in the run-up to the budget,'' Mr. Chidambaram said, while addressing a workshop on infrastructure organised by the Confederation of Indian Industry (CII) here.

The Parekh committee, he said, would look into the long-term financing needs, both equity and debt, as also the legislative changes that would be required for funding projects in the various infrastructure sectors.

Alongside, the Finance Minister, at long last, has agreed to look into the Planning Commission's suggestion on utilising the burgeoning foreign exchange reserves for funding infrastructure projects. The country's forex reserves now stand at about $170 billion. "I have asked the Finance Secretary to prepare a note on how to use foreign exchange reserves for funding infrastructure projects,'' Mr. Chidambaram said.

But before all that the financial institutions seem to be gearing up to fund various projects! Things would be more clear after the next budget in feb and we could hear many more proposals.

IDBI-LIC alliance to spend Rs 50,000 cr on core sector
http://www.financialexpress.com/fe_full_story.php?content_id=149575
The newly formed strategic alliance between IDBI Ltd and Life Insurance Corporation of India (LIC) is planning to fund Rs 50,000 crore of infrastructure financing through joint and take-out financing for long gestation projects.

As per the memorandum of understanding (MoU) signed on Thursday, the projects would be jointly financed with repayment of a major part of IDBI’s exposure being front-ended, while those of LIC would be back-ended.


Citi in talks for $5bn core sector fund
http://www.telegraphindia.com/1061226/asp/business/story_7184500.asp
Global financial services firm Citigroup is in talks with the government to start a $5-billion debt and equity infrastructure fund in partnership with IDFC.

Another US-based private equity firm, Blackstone, has also proposed a fund for infrastructure in India, the size of which is not known.

Citigroup has proposed a total fund of $5 billion, of which $2 billion is intended to be equity and $3 billion for debt, finance ministry joint secretary (infrastructure) Arvind Maya Ram said.

$350 bn at core of India`s growth (http://www.business-standard.com/economy/storypage.php?tab=r&autono=269802&subLeft=1&leftnm=3)

When smart money (read private equity) heads for a country or a sector, you can be reasonably sure that the returns are in the high-two-digit bracket.

This money is currently making inroads into India and what has always been seen as a low-to-negative returns sector — infrastructure.

“Private equity funds would not have touched infrastructure two years back. Today, they are queuing up to give money,” says Jayesh Desai, national director at Ernst & Young, as he rattles out some recent investments made by these funds — JP Morgan in L&T and Och-Ziss in Gammon.

Citigroup is reportedly mulling a $5-billion infrastructure fund, as is private equity firm Blackstone.

These would be small investments in the overall requirement of $350 billion for infrastructure, a figure arrived at by the Planning Commission after taking into account the demands of a growing economy, and the plan for higher spend on infrastructure — from 4.7 per cent of GDP to 8 per cent.

Sourcing the $350 bn
Private sector investments are nevertheless expected to provide about $75 billion of the $350 billion required over the next five years, according to Vinayak Chatterjee of consulting firm Feedback Ventures.

That is a huge order, and if even a tenth of that sum comes from overseas, it will double the FDI inflow into India ($7.7 billion this year).

The bulk of the overall burden — $200 billion — is likely to be shouldered by the government and its agencies on a stand-alone basis or through the public-private partnership (PPP) route, while the balance will be managed through Overseas Development Assistance (ODA), according to Feedback Ventures.

Shortage of “cooked” projects
The problem is not of funds but rather of “cooked” projects which are ready to take in investment, says Chatterjee, who also heads CII’s Infrastructure Committee.

A good example of cooked, ready-to-invest projects are the two ultra mega power projects that —with an investment of Rs 16,000-20,000 crore each — attracted an eye-popping 16 bids when even the most optimistic estimates were below 10.

The response has been equally enthusiastic in other sectors where sensible projects have been put together to garner investment, whether it is ports or airports.

The amazing infrastructure story in India today is not of a paucity of bidders, or of capital, but of bankable projects.

More large-scale projects are required not only in the power sector that, at $120 billion, would account for the largest chunk of infrastructure spend over the next five years, but also in all other sectors.

The $50-billion National Highways Development Programme, for example, does not have a single “one billion dollar project,” according to PwC’s executive director Amrit Pandurangi.

The country needs to look at bigger, multi-billion dollar projects to attract the large domestic and international players, and also address two other critical gaps — the lack of regulators in some sectors and the absence of political will to levy user charges.

“The roads sector has the potential to absorb a lot more investment. In fact, an efficient port-to-rail-to-road chain could have a major impact on growth,” says KPMG’s executive director Arvind Mahajan.

Seeking Financial Reforms
There is also a need to “broaden and deepen the domestic and international investor base for debt and equity funds for infrastructure,” says Vikram Limaye of IDFC, one of the two institutions that provide long-term funding for infrastructure, the other being the year-old Indian Infrastructure Finance Company.

The pipe of funds flowing into the infrastructure sector could be seriously broadened through pension and insurance reforms, deepening of the debt market and availability of long-dated paper.

It seems the stage is being set for “appropriate” financial reforms, with the government asking IDFC Chairman Deepak Parekh to do a “quick report” on long-term financing for infrastructure.

However, if the country continues with the “business as usual” refrain, investing just over 4 per cent of GDP in infrastructure instead of the target 8 per cent, the investment would be limited to $220 billion, according to Montek Singh Ahluwalia, deputy chairman of the Planning Commission.

If talk does not translate into action, “infrastructure investment will not touch even half of that required,” says Pwc’s Pandurangi.

If the country manages to swing it right though, there are optimists like KPMG’s Mahajan who see investment even exceeding $350 billion over the next five years. From time and cost over-runs to an investment over-run — that is what India truly needs!


Like they say, where theres a will, theres way. The people of India are raring to go, what we have to see is if our politicians feel the same way.

^^ Highly unlikely, in terms of receiving such a staggering amount. However, the figure probably is true, if India wants to compare with countries such as China.

Er.. I don't think Indian FM meant outside money like FDI.

Water use, infrastructure key to Indian farm growth

NEW DELHI, Feb 27 (Reuters) - An overhaul of Indian farm policy is needed to reinvigorate a sector that two-thirds of the billion-plus population depend on but which is growing at less than one third of the pace of overall economy, analysts say.

Funds need to be used to improve irrigation and other shared infrastructure, rather than the current emphasis on easy credit for farmers, analysts said.

Prime Minister Manmohan Singh has called for stronger growth in the farm sector, raising the prospects for Wednesday's government budget to address some of the concerns.

"There has to be a long-term vision. Just by giving more and more credit to farmers won't help as we have hardly seen an increase in productivity by doing so," said D.H. Pai Panandikar, economist with the RPG Foundation, a private think tank.

The government expects economic growth of 9.2 percent in the 2006/07 year to end-March, the fastest in 18 years, but the farm sector is likely to lag with growth of 2.7 percent.

Moreover, economists say the average annual farm growth this decade has fallen to 2.3 percent, from 3.1 percent in the 1990s.

The government is aware of the problem.

"With more than half the population directly depending on this sector, low agricultural growth has serious implications for the 'inclusiveness' of growth," India's annual economic survey said on Tuesday.

It added that supply shortfalls due to poor productivity made price stability difficult.

Last year a poor wheat crop led to 5.5 million tonnes of expensive grain imports, the first in six years, pushing up food prices and adding to inflationary pressures.

Limited overseas availability of pulses, a diet staple for Indians, also meant domestic productivity would have to be increased to soothe price volatility, the ministry of finance survey said.

"Finding immediate answers to inflation induced by commodity-specific supply shortfalls is difficult. A durable solution to such inflation problem has to be found in increasing yields and domestic output," it added.

Irrigation and better land management were cited as priorities to lift the farm sector.

"Food productivity is not rising because of lack of irrigation facilities," said D.K. Joshi, principal economist at CRISIL. "Giving more fertilisers alone will not do the job."

Only about 40 percent of the country's lands are irrigated, leaving farmers vulnerable to the weather.

"We have to also trap the rainwater flowing into oceans and make them into lakes and tanks. One really does not see too much progress in this area," Panandikar said.

CONSOLIDATION

A step that would lift output but may be politically unpalatable would be to encourage consolidation of farming land in a country where most blocks are around 1 to 1.5 acres.

"Unless you have land holdings of 100 to 200 acres, it becomes a barrier to introducing new technologies," Panandikar said.

"Tax and monetary incentives should be given by the government to encourage farmers to pool their lands."

But since farmers are a major voting block in elections, changing the smallholding landscape may be difficult.

Sharad Joshi, a farm leader and member of parliament's upper house, said the government should help with schemes to create larger land parcels that would boost farmers incomes rather than just have corporates take control.

Thousands of debt-ridden farmers have killed themselves over the last four to five years, when bad weather destroyed crops and left them with little income to repay loans.

"The urgent need for taking agriculture to a higher growth trajectory of 4 percent annual growth can be met only with improvement in the scale as well as quality of agricultural reforms undertaken by various states," Tuesday's survey said.

Devinder Sharma, an independent agriculture analyst, said the government needed to provide a fixed income to farmers together with insurance for their crops to make them feel secure.

The farm sector could get a boost as Bharti group, Reliance Industries and others move into food retailing, especially as it might entail better supply chain management that would cut down food spoilage, estimated at around 40 percent by some.

CRISIL economist Joshi said investments needed to be made in research for long-term growth.

"The growth situation won't be corrected in a day, but it is better late than never."

India faces hurdles in winning chip factory investments
Mon Apr 9, 9:53 AM ET
InfoWorld

A decision by Intel to build a $2.5 billion chip factory in China represents a key loss for India, which won't likely see any chip factory projects from major companies this year due to its poor infrastructure, a Gartner analyst said in a report Sunday.

India had offered to finance up to a quarter of the cost of the project for Intel, but still lost the deal, said Ganesh, an analyst for Gartner.

"Intel's decision to move to China was driven mainly by China's superior infrastructure facilities, compared with those in India, and Intel's need to be closer to its customers in China and Japan, even though China's supply of semiconductor talent is considered to be weaker than India's," said Ramamoorthy, in the report.

With the world's second largest population, India is battling to gain a foothold in manufacturing, which China dominates. In the semiconductor business, factory investments represent multi-billion dollar projects and thousands of technical jobs. Although there is no shortage of labor talent in the nation, chip production has not caught on as investors remain focused on the Pacific Rim.

The main investments in new chip production lines last year were in Japan, the U.S., Taiwan, and South Korea, according to figures published by Semiconductor Equipment and Materials International, an industry trade group. Spending in China grew faster than any other area, up 74 percent to $2.3 billion, but the overall figure is still dwarfed by Japan, at $9.2 billion, and the other three leaders, which each saw over $7 billion in spending.

India, which is best known for its research and development prowess and focus on outsourced services, has been trying to attract chip factory investments to build up its manufacturing talent. Last month, the government passed a series of investment incentives aimed at attracting new chip factories, which would reportedly finance up to 35 percent of an entire project, a huge sum of money.

The country is also growing as a market for electronics devices, an argument China has used to attract investments. The number of mobile phone users in India has grown at a steady pace of over 6 million new subscribers in each of the past several months, a figure rivaled only by China. India also boasts universities which produce about 133,000 new engineers each year, according to a study published by the India Semiconductor Association and Ernst & Young.

Plentiful engineering talent has helped the country emerge as a place for chip R&D investment, but it hasn't helped India gain any chip factory investments.

The country's infrastructure and logistics outweigh all other issues, Gartner said. The new investments in China and projects such as an Intel initiative to invest $45 million to establish a semiconductor training site at a local university near its Dalian factory site will help China narrow its engineering gap with India, Ramamoorthy said. The Indian government needs to take more proactive measures on its infrastructure if it hopes to win chip factory projects over the next few years.

Press Trust of India
Hyderabad, May 05, 2006
First Published: 00:00 IST(13/1/2007)
Last Updated: 12:03 IST(5/5/2006)
$150 bn needed for infrastructure: PM

Prime Minister Manmohan Singh said on Friday that over $150 billion investment is needed in the next few years for development of India's infrastructure.

Speaking at the 39th Annual Meeting of the Board of Governors of Asian Development Bank (ADB), he said, "India's infrastructure need in next few years is estimated at over $150 billion."

ADB, which till now has funded public transport, power and urban infrastructure projects in India, is now looking at investments in new areas including restoration of water bodies, tourism infrastructure and agriculture.

India's investment rate, he said, was 31 per cent of the GDP. This along with foreign investment flow was expected to further increase in future.

He said India had signed agreements with SAARC, Singapore and Thailand and it was working with China, Japan and South Korea for similar agreements.

Singh also said the economic cooperation may herald new FTAs in all over Asia that could even extend to Australia and New Zealand.

He, however, said the Asian crisis of 1997, which had severly dented global confidence towards globalisation, was something from which lessons could be learnt.

"With the benefit of hindsight, there's a view that funding must come from international financial institutions before the foreign exchange reserves dry up," he said.

Referring to the vast disparity in world economies, Singh said in 2005, USA had a current account deficit of $805 billion or 6.4 per cent of the GDP. At the same time, Japan had a current account surplus of $163.9 billion, China, $158.6 billion and the Middle-East region had a surplus of $196 billion.

While mismatch in current account deficit were expected in large global economies, large disparities raised concern, he said.

"Global imblance cannot be sustained forever," Singh added.

A coordinated effort by the deficit and surplus countries was needed to prevent a sudden downturn, he said.

Stating that East and South East Asia had become an engine of global growth, he said Asia would consume more food and energy and would demand better infrastructure and services.

"We must therefore find ways of better use of our skills, collective savings and surplus in the region," Singh said.

Chinese economy, the Prime Minister said, had performed exceedingly well and the world had lots to learn from the its growth pattern.

He warned against the threat of terrorism derailing economic progress.

On the surging international oil prices, Singh said international lending agencies need to pool in their collective wisdom to devise credible ways to tackle volatilities in prices.

Challenge before Asians is to create hike economic growth on a sustainable basis. "Our government is committed to ensure that growth is all pervasive and reaches all sections of society... We are committed to reducing the gap between rural and urban income that may create imbalances in the society. And this must be done through participatory policies".

"If growth is equitable, we could have open democratic societies," he added.
http://www.hindustantimes.com/StoryPage/Print.aspx?Id=0f54df8a-e048-4248-98b0-42e5912c87c6

ANALYSIS-Indian infrastructure requires funding, patience
By Tony Munroe and Himangshu Watts

MUMBAI, March 13 (Reuters) - Opportunities to invest in India's creaky infrastructure are on the rise, with $350 billion worth of projects in the pipeline, but red tape and ingrained political mistrust of privatisation mean progress is slow.

Several Indian engineering and construction firms plan capital-raisings this year. On the project level, wider acceptance of public-private partnerships will drive institutional and corporate infrastructure investment.

"Up until now, the supply of high quality infrastructure projects has been constrained by government antipathy towards privatisation," said Frank Hancock of ABN AMRO, which advised the government on projects to upgrade airports in Delhi and Mumbai.

Those public-private partnerships attracted investment from domestic and overseas firms -- as well as strikes and court challenges from opponents. Similar projects are planned for airports in Chennai, Kolkata and elsewhere.

"This model for public-private partnership, Indian-style, can be applied to other infrastructure sectors as well, such as roads, ports, power, and ultimately water and other basic services," said Hancock, who is ABN AMRO's head of M&A and equity capital markets for India.

Besides India's notorious red tape, insufficient long-term funding in a country with underdeveloped bond, pension and insurance markets limits private sector investment in big-ticket projects with decades-long lifespans.

The need for investment is clear. India's 9 percent economic growth is threatened by clogged roads, rails and ports, frequent blackouts and inadequate water supply.

A cargo ship in India takes an average of three-and-a-half days to turn around, compared with 10 hours in Hong Kong's privately run ports. Investment in electricity, meanwhile, is unattractive when nearly 40 percent of output is lost or stolen.

But outright privatisation is difficult under India's communist-backed coalition government, and the history of private sector infrastructure investment is patchy.

GHOST OF ENRON

Private investment in infrastructure began spectacularly in the early 1990s, when Enron Corp. announced plans to build a $2.9 billion power plant soon after India shed socialist policies and adopted liberal reforms.

But what had been a showcase of India's ability to lure foreign capital collapsed in 2001, when the plant was shut after a billing dispute with a state utility, its sole buyer of power.

Enron's Dabhol plant was acquired and revived last year by Ratnagiri Gas and Power Pvt. Ltd., owned by gas transmission firm GAIL (India) Ltd. and NTPC Ltd., but its legacy continues to haunt potential investors.

"It is important that projects are presented in a viable, ring-fenced fashion that provides the sort of returns that investors in infrastructure would like to see, and I think if you look carefully there are some very attractive projects around," said Dominic Price, JPMorgan's senior country officer.

FUNDS FORMING

The easiest access to the Indian infrastructure story is through listed construction companies, although stocks in the sector were hammered late last month when the 2007/08 budget proposed withdrawing tax breaks on construction projects.

Nonetheless, a handful of such firms, including Hindustan Construction, IVRCL Infrastructures, Nagarjuna Construction and Gammon India Ltd. were considering equity-raisings this year, a market source said.

In a sign of growing interest in funding projects, Citigroup , private equity firm Blackstone Group, India's Infrastructure Development Finance Company Ltd. (IDFC) and India Infrastructure Finance Co. unveiled plans last month to raise $5 billion for infrastructure projects.

IDFC, Citigroup and Blackstone will invest a combined $250 million, with the remainder to be raised from global and domestic institutional investors. About $2 billion will be equity funding and the remainder will be long-term debt.

"We need project-level equity, and the Indian Infrastructure Financing Initiative addresses this," said Sanjay Nayar, Citigroup's chief executive for India, who figures that of the government's $350 billion worth of planned infrastructure projects, $75-$100 billion can be funded by the private sector.

Optimists point to the success of India's cellphone industry. Where a decade ago it could take years to get a phone line, India's privatised mobile sector is now the world's fastest-growing, with some of its cheapest call rates.

The industry is also profitable.

"If telecom has happened, why can't airports, ports, roads and power do the same? The unfortunate part is that there is so much to be done ... it is taking time," said Mihir Doshi, managing director and India country head at Credit Suisse. (Additional reporting by M.C. Govardhana Rangan)

patience is a nice, rarely used word when describing India's pace of development.

In the last few years, a lot has picked up though. What India needs most is clear and concise rules and regulations. More than anything, modern regulations will ensure a speedier completion of important projects than pumping in more money.

Yea. India could do more with its infrastructure.
I was in Mumbai last yr.
The roads can hardly cope with the traffic :nuts:
And more rules and regulations and enforcement should be in place.

Yea. India could do more with its infrastructure.
I was in Mumbai last yr.
The roads can hardly cope with the traffic :nuts:
And more rules and regulations and enforcement should be in place.

Mumbai needs a mass transit system. The buses are very old and a metro system would be nice to start.

HCC to increase focus on infrastructure projects

MUMBAI, April 27 (Reuters) - Hindustan Construction Co. Ltd. plans to increase its focus on infrastructure projects, with several large road and airport construction projects expected to come up in the next few years, a top official said on Friday.

The Mumbai-based firm, which currently operates a single toll-road project in south India, plans to bid for a number of build-operate-transfer (BOT) projects and will consolidate these under a wholly-owned subsidiary that it hopes to set up this year.

"We are pre-qualified to bid for highway projects worth 50 billion rupees and will submit bids either individually or in joint venture," Chairman and Managing Director Ajit Gulabchand told reporters.

"We also see large opportunities coming up in the airport construction and hydel power segments," he said. "We will tie up with foreign partners, if necessary."

Earlier on Friday, the company reported a 16 percent fall in January-March net profit to 367.3 million rupees, which it attributed to higher tax outflow due to withdrawal of tax breaks for construction companies.

"There is no impact on cash flows as we had earmarked reserves for this purpose, in anticipation of the issue coming up," Gulabchand said.

The company reported a 8 percent rise in quarterly net sales to 8.27 billion rupees, which it hopes to improve in the new financial year.

The company held orders worth 93.12 billion rupees at the end of March and in addition was shortlisted as the lowest bidder for projects worth 24.74 billion rupees.

Shares in the company, which fell on the lower results, were down 6.4 percent at 98.35 rupees, in a weak Mumbai market.

India set for private sector boost
By Joe Leahy in Mumbai
FT
Published: April 27 2007 00:22 | Last updated: April 27 2007 00:22

Indian companies have plans to invest $500bn over the next three years in infrastructure and manufacturing projects, according to one of the country’s foremost bankers.

K.V. Kamath, chief executive of ICICI Bank, the country’s biggest private sector lender, said the average profitability of the country’s corporates had been more than 25 per cent for several years, creating the conditions for a massive increase in capital spending.

“If you look at the pipeline of investment, this exceeds the investment done in the country today, in the history of the country,” Mr Kamath said.

“It’s like we are doubling investments or doubling the number of projects’ productive capacity in the span of three years compared with what we had.”

The splurge in investment cannot come too soon for India’s economy, which is struggling with bottlenecks in infrastructure that are driving up inflation.

The economy has been growing at more than 8 per cent, with a strengthening of the rupee on Wednesday pushing India’s gross domestic product over the $1,000bn (€736bn, £502bn) mark for the first time.

Of the investment pipeline, Mr Kamath said about $300bn of the total was slated for investment in infrastructure and infrastructure-related sectors while the remaining $200bn was destined for manufacturing and other sectors.

He said companies would fund up to 70 per cent of this spending from internal cash.

“Sixteen quarters of excellent profitability has meant they are throwing up surpluses, which are going to meet this investment,” Mr Kamath said.

Any large-scale investment in infrastructure will be welcomed by analysts, who worry that the government has been too slow to respond in this area.

“Rapid growth in demand for infrastructure over the past four years and a less than proportionate rise in infrastructure spend has meant that capacity utilisation in electricity, roads, seaports and major airports is at their maximum limits,” Chetan Ahya, Morgan Stanley economist, wrote in a recent report.

Talking about infrastructure, Mr Kamath said the biggest concern was the power sector.

“Even with all the power investment that takes place over the next three years, we’ll find that we’re still short by 20 to 25 per cent on our power needs,” Mr Kamath said.

“So particularly on the power front, it will be a catch-up deal.”

In the report, Mr Chetan said that during its 10th five-year plan ending March 2007 the government had targeted 41,000MW of new electricity generation capacity but had only achieved 18,000MW.

India must deepen reforms to sustain economic growth: WTO

GENEVA, May 23, 2007 (AFP) - India must carry out further reforms in agriculture, and open up the country's maritime transport and energy sector to competition if it is to sustain its "impressive" economic growth, the World Trade Organisation said on Wednesday.

Continued structural reform would also help create productive employment for new entrants to the labour force, helping India reap a "demographic dividend," with one third of its population currently aged below 18, a WTO report said.

The WTO said in its Trade Policy Review on the South Asian country that India's economy is expected to grow over nine percent in 2006/07, building on "impressive" growth averaging over seven percent between 2001/02 and the present day.

Growth has largely been driven by unilateral trade and structural reforms, with the services sector playing a prominent role. Manufacturing has also performed well, despite some infrastructure constraints.

By contrast, "agriculture growth continues to be slow and erratic... causing considerable distress, especially among small and marginal farmers," the WTO warned.

The agriculture sector employs around 60 percent of the working population but is bedevilled by low productivity, at only around one sixth of its level in the rest of the economy, according to the review.

Meanwhile, public investment in agricultural infrastructure and research has been inadequate due to excessive spending on direct and indirect subsidies to farmers, the WTO noted.

Infrastructure remains a "major bottleneck" across all of India's economy, the trade policy review said.

Whilst competition has been increased in telecoms and some transport sectors, maritime transport and port services continue to suffer from inefficencies.

This constitutes "a major impediment to trade," the WTO said.

The energy sector also needs reform, as there are frequent shortages of supply, and little progress seems to have been made in tackling the losses of state electricity boards, it said.

India's tax-to-GDP ratio is relatively low and "seemingly insufficient to meet its developmental needs," the review noted.

This is compounded by a "disappointing" level of foreign direct investment (FDI) at around just one percent of GDP, with high real rates of interest acting as a deterrent.

The government has set up special economic zones (SEZs) to boost exports, especially in the electronics sector, but the WTO was doubtful as to their effectiveness in boosting both employment and investment.

"As many of the industries attracted... appear to be capital intensive, it is not clear that this is the most effective way to create employment opportunities, especially for the less-skilled labour force," it said.

India to hike roads spend, corruption a "cancer"-PM

NEW DELHI, May 23 (Reuters) - India on Wednesday pledged to dramatically step up its spending on roads in rural areas, where the government wants to boost sluggish farm growth and raise hundreds of millions of people from abject poverty.

Prime Minister Manmohan Singh told a conference that 480 billion rupees ($11.8 billion) would now be spent on a four-year project ending in 2009 to connect 66,000 villages. "Rural road connectivity is a critical component of our overall strategy for rural development. It promotes access to economic and social services and facilitates the growth processes on our rural economy," Singh said.

Singh's premiership has seen annual growth rates of between 8 and 9 percent, but analysts say his government has failed to provide the investment in infrastructure and education needed to build a solid base for future expansion.

The prime minister told government officials that corruption was holding back development.

"A major reason for poor quality roads is corruption and the lack of quality assurance. Corruption in road construction projects has spread like cancer to every corner of our vast country," he said.

In the fiscal year that ended in March the finance ministry pledged to spend 52 billion rupees on the rural road network.

Better village roads would help India cut farmers' transport costs, promote crop diversification and create more non-farm jobs, the prime minister, who leads a coalition government headed by the Congress party and supported by communists, said.

Sixty percent of India's one billion plus population are dependent on the farm sector, and rural consumption contributes significantly to overall growth.

Farm expansion has stagnated at around 2 percent in recent years, and the government wants to double that to sustain an average 9 percent growth up to the fiscal year 2011/12.

The road building is part of the ambitious 1.74 trillion rupee "Bharat Nirman" scheme to improve infrastructure, boost rural incomes and bridge the urban-rural divide.

Financing will come from direct budget support and a Rural Infrastructure Development Fund, Singh said, adding states must ensure roads are built on time.

The village road scheme runs parallel to a national highway project involving investment of 2.2 trillion rupees. ($1=40.56 rupees)

Macquarie eyes Indian airports, cautious of risks
By Reuters
Tuesday June 12, 03:55 PM

MUMBAI (Reuters) - Australia's Macquarie Bank, the world's second-biggest owner of airports, is interested in investing in Indian airports but the risks needed to be carefully considered, an official said on Tuesday.

Regulatory frameworks, flexibility to raise capital and exit options were all important considerations in an infrastructure sector where intense competition has pushed prices up around the world, Ambalika Banerji, an associate director at Macquarie Bank, told an aviation conference in Mumbai.

"There's a significant pool of equity chasing a limited supply of airport assets globally, and investors are paying a huge premium for control," she said.

"Demand for airport assets is at an all-time high, and airport trading and transaction multiples are going up very quickly."

Speakers at the conference, organised by the Centre for Asia-Pacific Aviation, estimated the average transaction EBITDA multiple for a controlling stake in a regulated airport was 19.5 in the years 2000 to 2006, up from 15.8 before the year 2000.

The average transaction EBITDA multiple for a controlling stake in a non-regulated airport was 20.5 in 2000 to 2006, up from 11.8 beforehand.

There were about 60 active and potential buyers worldwide, holding about $50-$150 billion for airport assets, the conference was told.

And potential buyers were bidding aggressively, with even traditionally conservative investors such as pension funds jumping in, Singapore-based Banerji said.

"Bidders are willing to take on a lot of risk, especially for control, and we find that people are taking a more aggressive view of due diligence as well," she said.

"Pension funds are going directly and bidding aggressively."

A recent example was Birmingham Airport, which drew at least 35 parties for a 48.25 percent stake up for sale. Bidders included pension funds, besides investment bankers, private equity firms and airport operators, Banerji said.

In India, the government, in partnership with domestic and international firms, is modernising ageing airports and building new ones to support the rapid growth in aviation.

Second airports have been approved in the largest cities of Mumbai and New Delhi. New airports in Bangalore and Hyderabad are scheduled to open in 2008.

Macquarie, which Banerji said was the world's second-biggest owner of airports after BAA, which is owned by Spain's Ferrovial, would be keen on investing in India but would weigh the risks carefully.

"Look at Mumbai and Delhi - some of the standards set down seem unreachable, and the time given to reach some standards is not realistic," she said.

"Land acquisition and resettlement are big issues, too."

Still, Macquarie was interested in making investments and would even consider a greenfield opportunity, she said.

"Most - if not all - our investments to date have been brownfield, and that would be more comforting, but a greenfield has its own pluses," she said.

India JNPT plans 70-bln-rupee spend for port upgrade

MUMBAI, Nov 15 (Reuters) - India's Jawaharlal Nehru Port Trust plans to spend 70 billion rupees over the next five years to develop its infrastructure, a top official said late on Wednesday.

In addition to developing its fourth terminal, the country's largest container port plans to extend one terminal, deepen and widen its harbour channels, buy rail-mounted quay and rubber-tyred gantry cranes.

To start with, the port plans to widen and deepen the harbour channel draught to 14 metres from 12.5 metres now. The project is expected to cost 8 billion rupees, Chairman S. Shahzad Hussain said.

"We don't have a problem with funds... There are several banks who are interested," Hussain told reporters, adding it would be a mix of own resources and debt.

The western India-located port with its three terminals handled 2.30 million twenty-foot-equivalent containers in the first seven months of 2007/08, 26.4 percent more than in the same period last year.

While Jawaharlal Nehru Port operates one terminal, one is handled by Dubai Ports World and the third is jointly operated by APM Terminals, which is part of A.P. Moller-Maersk <MAERSKb.CO> and state-run Container Corp of India .

The Indian government has announced a $12.4 billion plan to upgrade 12 major ports to meet the rising volume of trade. Cargo handled by these ports has risen 9.5 percent a year over the last three years, a Citigroup report said.

Jawaharlal Nehru Port plans to buy three rail-mounted quay cranes by April 2008 and six rubber-tyred gantry cranes by 2009 to upgrade its container handling infrastructure, Hussain said.

It takes about 159 hours for each container to move out of the port, which is far higher than that in developed nations and adds to transportation costs, N. Sasidharan, chief commissioner of customs, said.

Of this, eight percent of the total dwell time, right from the time of arrival to clearance of cargo, is taken up by the customs authorities, he said.

"I need at least twice the staff I have now as the volume of traffic has gone up sharply," Sasidharan told Reuters. (Reporting by Arpan Mukherjee; Editing by Sunil Nair)

India's poor left behind by blistering growth: minister

NEW DELHI, Dec 4, 2007 (AFP) - India's scorching growth is failing to filter down to its hundreds of millions of poor people, a ruling Congress party minister has warned, stoking fears of social conflict.

India's economy grew by 9.4 percent last year and the government is targeting nearly nine percent expansion or higher this year for the country of 1.1 billion people.

"Here we are kissing 10 percent growth and instead of living standards rising, they are falling (for many)," minister for local governments Mani Shankar Aiyar told the India Economic Summit in New Delhi that winds up on Tuesday.

"India is becoming prosperous but not Indians," Aiyar said.

The boom is "disproportionately affecting a small percentage of the population," Aiyar said, noting despite strong growth, India sank in the Human Development Index to 128th place from 126 last year.

While summit speakers have been upbeat about business prospects, they have also reminded delegates that India has no room for complacency.

A quarter of Indians exist below the poverty line with most living off small subsistence farms, delegates were told at the summit, whose theme is how to reshape India in an "inclusive and sustainable way.

A report prepared by the summit, part of the World Economic Forum in Davos, listed a litany of challenges.

India's crumbling infrastructure is stretched to its limits, it said.

The country has 18 percent of the world's population but only four percent of the planet's water and demand for water will exceed supply by 2050.

"Eighty percent of Indians don't have access to proper sanitation, most don't have access to power," said Anand Mahindra, vice chairman of giant Indian truckmaker Mahindra & Mahindra.

India accounts for one-third of the world's illiterates with just 64 percent of adults able to read.

Aiyar blamed a lazy, bumbling and sometimes corrupt bureaucracy for many social and infrastructure problems, citing estimates that only 15 percent of each rupee allocated to social spending reaches the needy.

Distribution of resources needed to be done by local councils, or panchyats, that would have better accountability, he said.

Finance Minister P. Chidambaram admitted on the weekend to the same meeting that India would fail to meet some UN Millennium Development Goals set for 2015 covering hunger, literacy and poverty reduction.

India also needs to stop the massive migration to the cities that are becoming unlivable, Aiyar warned.

"We must take (job and education) opportunities to rural India" using such tools as information technology, he said.

Seventy percent of the population lives in rural areas but by 2025 the urban population will be 40 percent, the summit report said.

"Right now people prefer to live life in utterly filthy" conditions in the cities because they feel opportunities are better, Aiyar said.

India's financial and entertainment capital Mumbai is home to Asia's largest slums in which 60 percent of the city's population of 18 million live.

Half a million people migrate each year to India's capital which has a population of around 16 million "to eke out a living," piling pressure on the city's already scarce power and water supplies, said New Delhi chief minister Sheila Dixit.

"Social unrest could become a major issue if the growing inequalities in access to basic needs are not addressed" as such imbalances can "feed a vicious cycle of despair," said the conference report.

Already Maoist rebels, who say they are fighting to improve peasants' lives in a conflict that has killed thousands of people in recent years, control wide swathes of central, eastern and southern India.

Higher Indian growth depends on improving infrastructure: official
Tue Dec 4, 8:48 AM ET
AFP

Billions of dollars must be spent to improve India's creaking infrastructure to achieve the economic growth needed to lift millions out of poverty, a top government policy advisor said Tuesday.

India's dilapidated ports, roads, power supplies and other infrastructure are a "critical constraint" to stronger growth, Montek Singh Ahluwalia, deputy chairman of the government's key Planning Commission, told the India Economic Summit.

"Investment in infrastructure in 2006-07 was five percent of gross domestic product and was inadequate. We need to increase it to about nine percent" by the financial year 2011-12 to around five billion dollars, said Ahluwalia.

India's goal of attaining 10 percent growth by the 2011-2012 financial year would be unachievable unless infrastructure spending moves into much higher gear, said Ahluwalia.

India has logged 8.6 percent average annual growth in the last four years and economists say expansion must shift to double digits to make a significant dent in deep poverty afflicting millions.

The Indian government will pick up the tab for 70 percent of the infrastructure spending but the rest -- around 150 billion dollars -- must come from private sources, Ahluwalia told the summit, part of a series of regional meetings ahead of the World Economic Forum in Davos, Switzerland in early 2008.

The meeting of financial players from around the world eager to learn about India's rapidly expanding economy has heard a litany of complaints from business leaders about the disastrous state of India's infrastructure.

The Indian government has introduced new policies to attract private sector investment and "now the scale of activity needs to increase" to compensate for India's "infrastructure deficit," Ahluwalia said.

India's high growth has pushed its shabby infrastructure to its limits. Power cuts last hours, congested ports delay loading and unloading and the nation's roads are notoriously potholed.

"Which state electricity board can guarantee continuous uninterrupted power?" asked Deepak Puri, chairman of compact disc giant Moses Baer India.

Many companies run their own captive power plants to overcome energy shortages and ensure continuous production.

Rajat Nag, managing director of the Asian Development Bank, called infrastructure India's most urgent problem.

India needs to spend as much as 1.6 billion dollars over the next decade or 10.5 to 12.5 percent of its GDP on infrastructure to keep growth on track, Nag said.

Rajiv Lall, managing director of the Infrastructure Development Finance Co., a private sector financier of Indian public works, said poor governance leading to slow decision-making was a major hurdle in drawing infrastructure investment.

He added there was also a shortage of the skills required for building civil engineering and other projects.

However, Ahluwalia said investors were showing interest in putting money into the power sector as India's states plan to introduce reforms to tackle widespread transmission and distribution losses.

India set for flood of infrastructure investment, report says

BANGALORE, India, Nov 6, 2007 (AFP) - India is set for a flood of investment in highways, ports, airports and power plants as foreign funds tap opportunities in its deficient public works, Ernst and Young says in a report.

"We expect private investments in infrastructure projects in India to cross the four trillion rupee (101 billion dollar) mark in the next five years," said Kuljit Singh, partner at the Indian unit of the consultancy.

"Infrastructure is key to growth in emerging markets around the globe and private investors are eager to support it," Singh said in the report received Tuesday.

Investment in roads, railroads, water utilities, energy, ports and airports is expected to equal nine percent of national economic output by 2012, up from five percent now.

The lack of a "master plan" has limited India's ability to attract investment in infrastructure to keep pace with its economic growth, now running at a yearly nine percent, the report said.

Still, India's need for private capital in public works is opening up opportunities for foreign investors.

The shabby infrastructure is seen by economists as the main impediment to accelerating the pace of economic growth in a nation of 1.1 billion people and closing the gap with neighbouring giant China.

Power outages are common, water supply rationed, loading and unloading of freight at the ports is woefully slow and planes have to often circle airports for an hour awaiting landing slots.

In Bangalore, India's computer-software capital, it can take two hours for programmers to be bussed over 20 kilometres of pot-holes and chaotic traffic to the immaculate campuses of companies such as Infosys, Wipro and Mindtree.

India, its government's budget already overstretched, has been courting foreign and domestic private investment in infrastructure that has been slow in coming, as investors chased quick returns in sectors such as consumer goods.

Unlike China, which already had the infrastructure in place to spur rapid economic growth, India is trying to refurbish and reinforce its public works to keep up with economic expansion.

"India's challenge is not only to improve its existing infrastructure, but also to build new infrastructure to keep pace with its rapid economic growth and remain competitive," said Jayesh Desai, a director at Ernst and Young.

"Ïndia's capital needs are so great it will require substantial private investment of approximately 100 billion dollars that spells opportunity for global investors," Desai added.

Foreign investors such as private equity funds from the US and Europe are attracted to India by a risk-returns ratio comparable with developed markets, said Desai. The average rate of return on infrastructure projects is about 14 percent to 20 percent, he said.

India plans nine trillion rupees of investment in roads over the next five years to improve and expand more than 50,000 kilometres of highways. It plans to invest 5.2 trillion rupees to generate 200,000 megawatts of power by 2012, up from the present capacity of 130,000 megawatts.

The government is seeking three trillion rupees of investment by 2012 in developing private container trains and freight corridors to meet demand for railroad shipments.

It is promoting joint ventures in seaports, estimating 486 billion rupees of investment, and also needs 364 billion rupees for airports to meet air traffic growth.

India mobile firms pool infrastructure to cut costs, speed rollout

NEW DELHI, Dec 9, 2007 (AFP) - Three leading Indian private mobile operators have announced the launch of a new company to share communications infrastructure to cut costs and help speed the rollout of a nationwide phone network.

India's cellular market is growing by eight million subscribers a month and totals over 217 million customers, making it the world's fastest expanding.

Now three major private mobile firms -- Bharti Airtel, Vodafone and Idea Cellular -- say they will merge their wireless infrastructure operations in what they say is a move to make growth even faster.

They announced on Saturday they would set up an independent communications tower operator company, Indus Towers, to lower costs and push the mobile phone network deeper into rural areas.

"This is the first such venture to be launched in India and we're inviting other players -- government and private -- to join us in helping roll out mobile phone services to every nook and corner of this country," Akhil Gupta, managing director of Bharti Enterprises, said in an interview.

Bharti Airtel, led by billionaire Sunil Bharti Mittal, is India's biggest private mobile phone operator.

"This way there will be no duplication of infrastructure building efforts," Gupta told AFP.

The companies will pool existing communications towers so Indus Towers will start out with 70,000 tower sites and will be an independently managed company, sharing profits from rents charged to firms which use it.

"This company is a major leap forward in reducing costs," Gupta said. "No longer will each company have to build a tower where it wants to go -- it can concentrate on growing its business."

India's teledensity -- the number of people owning a phone out of every 100 people -- stands at just 21 percent compared to the West where the market is saturated.

So far India's "mobile revolution" has been mainly confined to the cities but analysts say the real prize lies in the vast rural hinterland where 70 percent of the 1.1 billion population lives. Telephone penetration in urban India is around 25 per 100 people but just under two percent in rural areas.

Bharti and Vodafone, owned by the British mobile operator giant with the same name, will hold 42 percent stakes each in the company. Idea Cellular, controlled by the Aditya Birla conglomerate, will hold the rest.

The new company will also share infrastructure with other wireless service providers like broadcasters and broadband service providers, a statement said.

India's mobile phone costs are already among the world's cheapest at less than two cents a minute that has helped operators win customers among poor income groups who have been driving subscriber growth.

But the companies believe they can push down costs even further, reaching a new layer of clientele.

"If we can make as operators phones affordable to the lowest common denominator on the economic ladder, the industry will flourish," said Gupta.

The government is targeting 500 million mobile phone users by 2010. The easiest way to increase teledensity is through mobile phones as landline networks are more complicated and take longer to set up, analysts say.

Sharing mobile phone infrastructure had been done on a smaller scale by such US companies as American Tower Corp and Crown Castle "with huge success" but in India "it will be on a huge scale," Gupta said.

India wants Chinese funds for building; China wary of risk

SHANGHAI, Dec 11 (Reuters) - India hopes China will boost investment in the south Asian nation's underfunded infrastructure sector, but Chinese firms are wary about opening their wallets for Asia's third-largest economy due to worries about returns.

At a seminar in Shanghai on Tuesday, Indian government and company officials called on Chinese firms to pour funds into India's road, port, telecoms, power and property projects, which need $500 billion over the next 5 years.

They said China's experience and expertise developed through a more than two-decade infrastructure construction boom at home would help India achieve its goal, and the Indian government is offering tax and other incentives to woo private investment.

"India can certainly learn from China in terms of infrastructure investment," Prakash Gupta, consul and head of chancery of India's Consulate General in Shanghai, told the seminar about infrastructure investment in India.

The rapid expansion in bilateral trade between the two giant Asian economies means there is much room for China to boost its direct investment in India from around $6 billion, Gupta said.

Bilateral trade soared to $30 billion in January-October from just $3 billion in 2000, he said.

Chinese firms investing in India include Shanghai Urban Construction Group and firms based in eastern China, such as Ningbo Bird Co Ltd and Haier Group , according to Gupta, who also noted a company from eastern China's Jiangsu province is to build an industrial park in India.

J.J. Shrikhande, China head of Indian construction and engineering firm Larsen & Toubro Ltd , said his company is working with Chinese firms on infrastructure projects in India. He did not give details.

Nitin Sen, Beijing representative of Indian law firm Remfry & Sagar, said Chinese capital and technology are well suited to a developing country such as India.

"The Chinese service is okay and their prices are also good," said Sen. "Only Chinese can help India."

But some Chinese company officials said they currently had no plans to make any significant investment in India's infrastructure sector because of risk concerns.

"We are interested but we are not familiar with the risks in India. For example, if they get a new government, can we still reover our investment as planned?" said an official of a Chinese construction firm.

Investment in India's infrastructure sector has lagged an economy growing at 9 percent a year, partly because of regulatory issues.

China is moving much faster in infrastructure development, particularly in the power industry.

China added 283,000-megawatt (MW) capacity in five years, dwarfing the 21,100 MWs built by India in the same period, said M.V. Rabade, chief representative of India's Adani Group in China.

He said India's steel and cement capacity could not meet the power sector's requirements, and imports are increasingly essential.

ADB offers $500 mln to India Infrastructure Fin

NEW DELHI, Dec 14 (Reuters) - The Asian Development Bank (ADB) will provide loans up to $500 million to state-run India Infrastructure Finance Co (IIFCL) in multiple tranches over the next four years, the bank said in a statement on Friday.

IIFCL will provide funds on commercial terms with over 20-year maturity for infrastructure projects, which is not currently being provided by the market.

"It is estimated that the money will help catalyze private-sector investments in infrastructure of up to $3.5 billion," ADB said.

In March, Reuters reported that IIFCL was looking to raise money abroad including that from multi-lateral agencies, to fund large projects.

ADB said government funding would not be sufficient to meet an estimated $475 billion needed between now and 2012 for ramping up India's roads, railways, seaports, airports, electricity transmission lines and other infrastructure.

"A serious lack of infrastructure is seen as India's Achilles' heel and it is estimated to cost the country 3-4 percent in terms of gross domestic product every year," said Cheolsu Kim, Principal Financial Sector Specialist at ADB.

"India needs to double its current level of investment in infrastructure and to increase and mainstream public-private partnerships."

(Reporting by Rajkumar Ray, Editing by Sunil Nair)

India mulls alternate uses for forex reserves - minister
Friday December 14, 07:35 PM

LONDON (Reuters) - India is examining alternative uses for its growing foreign exchange reserves, but creating a sovereign wealth fund like some of its Asian peers is not on its immediate agenda, commerce and industry minister Kamal Nath said.

Several Asian and Middle Eastern countries have set up so-called sovereign wealth funds to explore non-traditional investments, taking on more risk in a bid to generate greater returns for their vast foreign reserves.

A Chinese sovereign wealth fund -- China Investment Corp -- bought a nearly 10 percent stake in private equity group Blackstone earlier this year, and similar funds of the governments of Singapore and Abu Dhabi have recently bought into Citigroup and UBS.

"We are not following the Chinese model. We're not looking at creating any sovereign fund investment structure at the moment," Nath told Reuters in a brief interview conducted on Thursday.

Nevertheless, new uses for the country's foreign exchange reserves of more than $270 billion were being considered.

"We are having a revised look about what we should do with this in the light of the current uncertain global economic situation," he said, adding that India could consider alternative investments for its reserves.

He did not specify what those investments would comprise.

The bulk of India's reserves, which stood at $273.5 billion as on Nov. 30, is invested in U.S. government securities, leaving it exposed to the dollar's decline and falling interest rates.

An Indian government report last month said it was considering whether to release part of the reserves to a proposed financing entity for infrastructure projects.

These could then be lent to Indian firms involved in domestic infrastructure projects for buying capital equipment abroad, or used to invest in securities and provide insurance for overseas fund-raising for home projects.

Asia's third-largest economy is looking for ways to fund development of roads, ports and power, and estimates it needs nearly $500 billion to upgrade its infrastructure over the next few years to 2012.

almost $20 billion was spent on import of defence equipments last year. it's too much for India.

it's better to invest more on building their power plants and transportation systems than to feed russian/european/american armament dealers.

of course, india has the right to build its military power and to buy those expensive weapons. but, you know, to run 3 aircraft carriers is very expensive.

^India has one of the lowest defense expenditure in world, This kind of rubbish logic only comes from few Pakistanis (are you one?). Even if India cut military budget by 10 billion (a pretty low budget for a big country like India), how much is that going to help? It needs 500 billion USD in next 6-7 years for it's infrastructure. It would require more than a trillion dollars in next 10-12 years. In 10 years it would save 100 billion USD by "cuts". The way you are complaining I thought the cuts are going to solve all Indian problems! May be you should figure out the numbers first. If anything, India should try to improve tax collection and cut on wasteful subsidies if it really wants to invest in anything.


P.S: Indian didn't spend 20 billion on military imports. Hell it has never spent 20 billions ever on military. Even if it allocates total annual budget of 27-28 billion for military, a good portion of money for weapon purchase remains unutilized due to various reasons.

i just googled, got these info:

"India to Buy 350 T-90S Tanks from Russia, they'll buy more later.
India to buy 140 Russian-made Sukhoi-30
India's aircraft carriers: 2 in use, 1 U/C in russia, 1 planned to be built in india."

so, ur statement, "India has one of the lowest defense expenditure in the world", doesn't sound reasonable. :)

one thing is very important:
before india has those weapons, don't forget to get the infrastructure done. i mean those military used sea/air ports, railway to move tanks, etc. :)

btw, pakistan may not be a good neighbor, but they have the capability to build their own tanks:)

i just googled, got these info:

"India to Buy 350 T-90S Tanks from Russia, they'll buy more later.
India to buy 140 Russian-made Sukhoi-30
India's aircraft carriers: 2 in use, 1 U/C in russia, 1 planned to be built in india."


you sir don't even know that India is planning to buy these things for some time and these purchases will take many years and all the expenditure would be spread over those years. After all the aircraft carrier India is building won't be finished for 7-8 years atleast.


so, ur statement, "India has one of the lowest defense expenditure in the world", doesn't sound reasonable. :)


Actually it's more than reasonable. Expenditure on these purchases are spread over many years and in NO way the sum in one years comes close to 5 billion far less 20 billion USD. On the other hand, budget allocation happens EVERYYEAR and substantial amount of money is actually spend on people since military provides employment for millions, adding RAF etc. ofcourse .


one thing is very important:
before India has those weapons, don't forget to get the infrastructure done. i mean those military used sea/air ports, railway to move tanks, etc. :)


Blah blah blah! I don't come preach about whatever country you come from, you do the same. If you don't have anything logical to say, try joining some Indian bashing forum but spare us the nonsense. Anyways, if you come out of jungle you are living in, you might see that India IS spending money on infrastructure. Funny though since Indian section is next to Pakistani section! Being ignorant is not really that great.


btw, pakistan may not be a good neighbor, but they have the capability to build their own tanks:)


I am sure Pakistan is on the top of world as for as engineering is concerned, but do I give a damn?! Keep up the "Pakistan" thing and I will send a mail to the mods. This is not a political forum.

Keep up the "Pakistan" thing and I will send a mail to the mods. This is not a political forum.

go ahead! just do it the indian way. :lol::lol::lol:

go ahead! just do it the indian way. :lol::lol::lol:

Please stop trolling these threads. We do not need politically-charged idiots ruining the forums, thanks.

Getting back on topic... I'm glad India's improving it's infraestructure not only for economic growth but for movement in general :okay:

Getting back on topic... I'm glad India's improving it's infraestructure not only for economic growth but for movement in general :okay:

Yeah, in major cities especially Mumbai its hard getting around by car, its definitely good that infra is being upgraded a lot

20billion usd for weapons.
4 million usd for 1 KM world standard expressway in china(must be similarly in india), so can build 5000KM expressway.
i am not saying india should not develop military, but economy should be first.

^^that propaganda. Indian goverment doesn't have 20 billion USD to spend on weapons far less on anything else. Anyways, government shouldn't be spending a dime on roads. Let private firms finance such projects. Goverment should concentrate on social infrastructure. By the way, India has 27-28 billion USD of outlay for military which employess more than 2 million people and every year, they fail to spend all the money so most of the money actually gets spendon fighting terrorism and providing salary. Ofcourse, in future India will reduce the size of military but in present, it's a good source of job!

Friday, Dec. 28, 2007
Flying India's Unfriendly Skies
By Madhur Singh/New Delhi
http://www.time.com/time/business/article/0,8599,1698974,00.html

http://img.timeinc.net/time/daily/2007/0712/india_airlines_1227.jpg

These are heady times for India's fast-growing airline industry, which has been charting roughly 25% growth for the last three years. Never before have so many Indians found it so convenient and so affordable to fly for work or leisure, thanks to competition between a bevy of carriers like Air Deccan, SpiceJet, Kingfisher, IndiGo and Go Air. Their rock bottom airfares have helped make more of India accessible to Indians, turning backwaters into boom towns. Last year, Indian airports handled 90.44 million passengers, compared with 67.95 million in the previous year.

But this explosive growth has met the same problem that other suddenly successful industries have encountered in India: There has been no accompanying growth in infrastructure, leaving airports struggling to cope with long queues of harried passengers, and severely compromising air safety. A series of so-called near-misses in New Delhi over the last two weeks has focused attention on a host of problems ranging from shortage of air traffic controllers and pilots to outdated technology and inadequately maintained equipment at the 125 airports around the country. Experts say it is a wonder disaster has not yet struck.

"India needs 4,000 air traffic controllers, but has only 1,500," says D.S. Raghavan, president of the Delhi-based Air Traffic Controllers' Guild. He says Indian traffic controllers work without weekly breaks to make up for the shortfall, which is against international norms and poses severe safety risks. "Given how stressful the job is, traffic controllers are allowed to work no more than eight hours a day, and 110 hours a month. But we work 10-hour shifts round the year!"

Pilots are also in shortage, too — it is estimated that the industry needs 400 pilots a year but produces only about 100. While new training schools are being set up, nearly a quarter of India's 2,300 pilots are foreigners. Due to the shortage, there have been several reported cases of pilots with invalid licenses or who should be in retirement but continue to serve. An air passengers' organization has also been campaigning against what it calls lax health checks for expatriate pilots who are given temporary, six-month licenses.

This December has been particularly bad for Delhi's domestic and international airports. An airport radar broke down on December 8 and some 40 flights were delayed. Thousands of passengers were left in the lurch. The onset of winter fog in December has also delayed scores of flights, despite the DGCA's much-publicized installation of the advanced CAT-III system to aid with low-visibility landings. It turns out that many of the new Indian domestic airlines, including some that fly internationally, do not have enough CAT-III trained pilots, not deeming it necessary because foggy conditions occur only a few days each year.

Industry insiders have been pointing out that with more than 35% of airspace under the military's control, not enough is let to fill the growing demands of civil aviation. At the same time, a shortage of runways and inefficient operating procedures often result in flights having to hover over airports for hours before they are cleared to land.

A series of near-collisions also led the DGCA to decree that simultaneous operations on the two runways — whose flight paths merge instead of lying parallel — be discontinued. Those simultaneous runway operation had been implemented in April 2006 to increase flight departures and arrivals from 25 to 42 per hour. That was, however, a violation of international safety norms because both of Delhi's runways do not lie parallel. A new parallel runway will not be operational until the middle of next year, and traffic movement will slow down considerably until then.

There are other problems. During a surprise check by the Directorate General of Civil Aviation (DGCA) earlier this month — during Air Safety Week — a pilot was found drunk on duty. The check also revealed that airline crews, including pilots, were often giving dispensing with pre-flight briefings, a serious lapse since they are how pilots get updates on weather and navigation.

Inadequate attention to safety concerns is also reported from the ground — in October, a young ground staffer was run over by an inter-terminal bus inside Delhi's international airport. Earlier this month, a state-level minister was hurt when the driver of the boarding bus braked suddenly to avoid a collision at Delhi's domestic airport. The bus driver had been talking on a cell phone.

Many observers believe privatizing the airports may solve many problems. But it is always a touchy subject in India. The Delhi and Mumbai airports were privatized last year in the face of strong protests from employees' unions and left-wing parties allied with the ruling Congress party. Like many other things in India, politics rears its head in running the airline industry. "Important policy decisions... are pending before the government," says Joseph Thachil, former editor of aviation magazine Skyflier, "but with elections due in 14 months, they will likely remain pending."

India, Japan for increasing bilateral collaboration in infrastructure sector

New Delhi, Jan 4 (ANI): Union Finance Minister P Chidamram and his Japanese counterpart Fukushiro Nukaga met here today, and called for increasing bilateral collaboration in infrastructure sector, including the Dedicated Freight Corridor Project and the Delhi Mumbai Industrial Corridor Project.

They also discussed about boosting collaboration in the financial sector, a government release said.

Chidambaram and Nukaga noted that relations between the two countries have steadily progressed in the last few years.

"The visits of the Indian Prime Minister to Japan in 2006 and the visit of the Japanese Prime Minister to India in 2007 have further strengthened the India-Japan Global Partnership," the release said.

It added that the two sides expressed the hope that this partnership would further deepen. (ANI)

AIG's new fund bets on India infrastructure, growth

MUMBAI, Jan 10 (Reuters) - The Indian fund arm of American International Group launched an equity fund on Thursday to invest in firms engaged in building domestic infrastructure and likely to benefit from the country's economic liberalisation.

The theme has been a rage among investors as well as mutual fund houses in the recent past with such funds generating top returns in the last two calendar years, triggering a spurt in infrastructure-related fund launches.

At least nine of India's 32 fund firms offered infrastructure related equity funds in 2007 and two so far this year, taking the total number of such funds to about 18 in the 5.5 trillion rupees Indian fund industry, data from fund tracker ICRA showed.

"The government has realised that there's an urgent need to provide infrastructure," Tushar Pradhan, chief investment officer of AIG Global Asset Management Co, told reporters while introducing AIG Infrastructure and Economic Reform Fund.

Only 9 percent of highways in India are 4-laned and only 2 percent of the roads are national highways, he said, adding there was an "unprecedented opportunity" to make money as India steps up investments to build a world class infrastructure.

Stocks of firms building India's creaky infrastructure have risen sharply with investors betting on an estimated $500 billion investment expected over the next four to five years to strengthen the country's transport and power backbone.

Shares in Larsen & Toubro Ltd and power equipment maker Bharat Heavy Electricals Ltd have risen about 199 percent and 127 percent respectively in one year as compared with 54 percent gain of India's benchmark index <.BSESN>.

India's top performing fund for 2007 -- Reliance Diversified Power Sector Fund -- largely invested in the sector, while three others in the top 10 equity funds for the year predominantly bought shares related to the infrastructure sector.

AIG's fund, open for subscription till January 31, will invest at least 80 percent of its assets in equities and the rest in debt and money market instruments.

AIG mutual fund, which began its operations last year, managed assets worth about 29 billion rupees at the end of December across one equity and two money market funds, data from the Association of Mutual Funds in India showed.

'Green Revolution' pioneer sees crisis in India's agriculture

VISAKHAPATNAM, India, Jan 10, 2008 (AFP) - Indian agriculture is heading for a crisis as food output stagnates and millions of poor farmers struggle with high debt and crop failures, the nation's foremost farm scientist has warned.

Economic growth averaging nine percent a year, fuelled by manufacturing and services, has masked the crisis in the countryside, said M.S. Swaminathan, who led the "Green Revolution" of the 1960s that made India self-sufficient in food.

"While the contribution of manufacturing and services is laudable, it is still the farm sector that provides the largest employment in the subcontinent," said Swaminathan, 82, who heads India's National Farmers' Commission.

About two thirds of India's 1.1 billion people still depend on agriculture for a livelihood and are being neglected in the euphoria of a surging economy, the scientist said in an interview last week in this southern Indian city.

At a conference in Visakhapatnam attended by Swaminathan and other scientists, Prime Minister Manmohan Singh called for a "second Green Revolution" using new technologies that are "eco-friendly, efficient, affordable and scalable" to boost food production and improve farmers' lives.

Farmers are a powerful voting block in India, where Singh's Congress party came to power in 2004 on a pro-rural platform amid perceived disenchantment over economic policies tilted towards industry and the cities.

Swaminathan, a plant geneticist, spearheaded the first Green Revolution that began in the late 1960s, helping turn India from a starving nation into a food exporter.

Under the programme, recognised as one of the world's most successful agricultural turnarounds, the planting of high-yield varieties of wheat and rice resulted in a dramatic rise in food output.

But Indian agriculture, hostage to the vagaries of the monsoon, has been in decline in recent years and is growing at less than a quarter the pace of the overall economy.

Annual per capita foodgrain production declined from 207 kilograms (455 pounds) in 1995 to 186 kilograms in 2006. The rate of agricultural growth fell from five percent in the mid-1980s to less than two percent in the past half-decade.

At the same time, thousands of debt-ridden farmers have committed suicide after crop failures forced many to sell plots held for generations.

"Unlike in the 60s and 70s, when the first Green Revolution was ushered in, farmers of the present generation are a lot more pessimistic," Swaminathan said.

"They are cynical and diffident about the way politicians and governments deal with them," he added. "They are no longer enthused to take to farming seriously."

In 2006, the ruling Congress party launched a multi-billion-dollar welfare drive promising 100 days of work for every rural family in the battle against rural poverty.

But only about three percent of households which signed up received employment for 100 days and many only got about two weeks, the Indian Express reported recently.

The data came from a six-month internal audit of the programme which cited widespread examples of corruption, inefficiency and misuse of funds for the poor performance.

The government has repeatedly said it wants to make India's economic growth more inclusive as national elections in 2009 near.

But the delivery system has collapsed because of "monstrous growth" in the bureaucracy, said Swaminathan.

"When the first Green Revolution was launched, it was carried out like a symphony in unison by scientists, policy makers, state agriculture departments, marketing agencies and farmers," he said.

While the government is spearheading the establishment of Chinese-style special economic zones for industry, Swaminathan said the time has come to set up special agricultural zones to boost farm production and reduce the widening income disparities between rural and urban India.

The government should step in with administrative and infrastructure support and market access while scientists and agricultural think tanks contribute "technology and tools," he said.

Investors gear up for Reliance Power IPO
14 January 2008
Financial Times

India's largest initial public offering, the planned Dollars 3bn listing of Reliance Power, is expected to receive a huge response from investors this week when it opens for subscription, with the IPO clearing its last legal hurdles on Friday.

Investor excitement in India over the issue comes in spite of analyst concerns about execution risk at Reliance Power.

The group has ambitious plans to build a network of power plants with capacity equal to about one quarter of India's existing grid, but has negligible earnings or operating assets.

According to dealmakers familiar with the situation, more than 3m retail investors have requested forms to participate in the IPO, trumping the previous record of 2.1m for Reliance Petroleum in 2006.

Investors have five daysto apply for shares from tomorrow, with the price range set at Rs405-Rs450. One person familiar with the listing said: "Unless something dramatic happens, the IPO will be set at the top of the price range."

Reliance Power shares were trading at a premium of over 70 per cent to the top of the range in the so-called "grey market" on Friday.

Reliance Energy and Reliance Power are controlled by Anil Ambani, the billionaire industrialist, who last week embarked on a global roadshow for the IPO. The offering is part of an infrastructure push in India that is expected to drive another record year of capital-raising in 2008.

R Venkataraman, executive director at Mumbai brokers India Infoline, said the IPO's expected huge demand stemmed partly from the status of the Reliance name among retail investors.

Anil's late father, Dhirubhai Ambani, was a pioneer of modern corporate India. "Historically, retail investors have always made money on Reliance companies," Mr Venkataraman said.

Huge demand for India's biggest share offer: banker

MUMBAI, Jan 15, 2008 (AFP) - India's biggest ever share offer by Reliance Power was some 10 times oversubscribed only a few hours after it opened Tuesday with the aim of raising nearly three billion dollars, a banker said.

The offer was fully subscribed in just 60 seconds earlier in the day, the banker said, as investors scrambled for a piece of the action in India's booming economy and stock market.

"The issue saw strong institutional and high net worth individual demand at the higher end of the price band," said the merchant banker, who is close to the share issue but wished to remain anonymous.

The initial public offering comes as the government strives to invest hundreds of billions of dollars revitalising India's creaky infrastructure in a bid to maintain high economic growth.

There were bids for 2.39 billion shares, more than 10 times the 228 million Reliance Power shares available, stock exchange data showed by late afternoon, even though the offer runs until January 18.

"Investors seem to be confident in the future of the Indian economy," the country's finance minister P. Chidambram told the Press Trust of India amid the stampede for a stake in the company.

Reliance Power is offering a total of 260 million shares, or 10.1 percent of its capital, with the extra 32 million shares allotted to Reliance group firms. The stock was priced at 405 to 450 rupees.

The company, owned by Indian tycoon Anil Ambani, aims to raise between 105 billion and 115 billion rupees (2.6 to 2.9 billion dollars).

Some experts forecast the Indian economy's energy demands may create a booming business, though others are wary that investors may have become too exuberant as the firm currently has little operating capacity.

The firm is a subsidiary of Reliance Energy, which has said the money raised will fund power generation projects. Reliance Power is developing 13 medium and large power projects with a combined planned capacity of 28,200 megawatts.

India's previous biggest initial public offering was by the property giant DLF, which raised 2.24 billion dollars last July.

Reliance Energy emerged from a split two years ago in the Reliance group sparked by a family feud.

Anil Ambani took control of the telecommunications, power and finance divisions, while older brother Mukesh retained the petrochemical and oil businesses. The Ambani brothers are among India's richest businessmen.

The Reliance Power offer comes amid a share price boom in India, one of Asia's best performing stock markets. Indian stocks rose a record 47.1 percent in 2007, largely due to foreign investment of some 17 billion dollars.

China ready to help India to increase speed of trains (http://timesofindia.indiatimes.com/India/China_ready_to_help_India_to_increase_speed_of_trains/articleshow/2711688.cms)

18 Jan 2008, 1829 hrs IST,PTI



NEW DELHI: China has agreed to provide more speed to Indian trains and help develop railway stations in this country of international class.

The highest speed clocked by an Indian train so far is 150 km/hour by Shatabadi Express between Delhi and Agra.

In China, the highest speed recorded is 275 km/hr. The two countries' cooperation in rail sector is envisaged in a Memorandum of Understanding (MoU) signed during Prime Minister Manmohan Singh's recent visit to Beijing.

Experts from the two sides will visit each others' facilities and help in training personnel. The agreement, valid for three years, envisages development of rail-related programmes of mutual interest.

The other areas in which India seeks cooperation of the Chinese Railways include development of multimodal logistics parks, heavy haul operations and research and development.

Senior officials of Chinese Railways are expected to visit India soon to firm up the details and modalities of mutual cooperation.

The Chinese Railways' experience in signalling and telecommunication, traction supply, high axle load operations, design and maintenance practices, track machines, development and operations and multimodal transport in railways sector would be of benefit to Indian Railways.

Chinese Railways carries the highest level of freight traffic in the world and a very high level of passenger traffic.

India’s economy is booming, but weak infrastructure hampers growth
21 January 2008
Shipping Digest

South Asian giant offers big opportunities for 3PLs

Jervis B. Webb International Co. began doing business in India in 1993. Looking to capture a share of India’s fast-growing industrial building components market, the Farmington, Mich.-based manufacturer formed Webb-India Pvt. Ltd., a joint venture with Kolkata-based engineering firm Vinar Systems Ltd.

Using components imported from the U.S. and Europe, Webb assembles material-handling systems at its four Bangalore plants for domestic sale and export. Goods are shipped through the ports of Chennai and Mumbai, with projects using as many as 35 containers.

When Dan Ellens, vice president and managing director for Webb’s non-U.S. operations, arrived in India in 1996, electricity outages occurred daily. There were few, if any, traffic lights in Bangalore. Communications were disrupted constantly, making reliable scheduling impossible.

While India’s telecommunications network has improved dramatically since then, the nation’s outdated road, rail and port infrastructure continues to present logistical challenges. To meet those challenges, Webb now works with several 3PLs, including Itasca, Ill.-based SEKO Worldwide, which moves shipments of finished goods and materials to automotive plants in Mexico.

Congestion, red tape and the occasional trucker strike can slow India’s supply chain, but the good news is that most shipments can be pre-cleared electronically, said Cynthia Lewandowski, a SEKO Worldwide project manager. “Things have improved a lot over the years,” she said. “So far, no sailings have been missed.”

Already a global leader in business processing outsourcing, India has emerged as a production base and key consumer market for foreign manufacturers. The dynamic growth of India’s middle class, coupled with liberalized trade and investment rules, have produced a white-hot domestic consumer market — and an urgent need for modern, cost-effective logistics operations.

The Indian 3PL market, currently about 25 percent of the country’s total $90 billion logistics market, is expected to grow at a compound annual rate of more than 16 percent from 2007 to 2010, as consumer markets expand beyond the hubs of Mumbai, Delhi, Bangalore, Chennai and Hyderabad, according to London-based research firm Datamonitor.

For the third consecutive year, India topped A.T. Kearney’s Global Retail Development Index of the top 30 countries for retail development and investment opportunities.

As competition intensifies between Indian retailers — foreign retailers are restricted to licensing and franchising arrangements — the need for efficient outsourced logistics will grow tremendously, said S.N. Srikanth, senior partner at Chennai-based Hauer Associates, a consulting firm for international investors and terminal operators looking to invest in Indian ports. Because of the country’s poor infrastructure, Indian corporations increasingly see 3PLs as providing even greater benefits than in other countries.

“There is not a tradition of using outsourced logistics, but that is changing as people are able to see those services and experience their adoption,” Srikanth said.

Distribution is seriously hampered by an inadequate logistics infrastructure that knocks 1 to 2 percent off India’s average annual gross domestic product growth rate of around 9 percent, said Kenneth Glenn, APL Ltd.’s president for South Asia.

The liberalization of trade and investment laws that allowed foreign ownership of rail operations in recent years has ended the monopolistic intermodal rail services that created some of the highest port and rail costs in the world. Even so, it still costs 50 percent more to transport a container in India than in the U.S.

“If India can develop thriving retail and manufacturing sectors to rival its services sector, the sky is the limit in terms of its economic potential,” Glenn said. “But currently, inadequate infrastructure and high costs are hurting its development as an exporter to the rest of the world.”

How in need of upgrading is the infrastructure? Only 2 percent of India’s roads are highways, yet those highways handle more than 40 percent of freight traffic. Rail service is constrained, and two-thirds of the nation’s commercial trucks are owned by carriers with fleets of five trucks or less. As a result, logistics costs are estimated at about 13 percent of GDP, compared with well below 10 percent in most developed economies.

Thousands of small companies are emerging from the transportation and warehousing sectors in India to operate as 3PLs, said Robert Lieb, professor of supply-chain management at Northeastern University and author of a 2007 Penske Logistics survey of chief executives of major 3PLs operating in the Asia-Pacific region. The poor state of logistics is leading many foreign companies to contract manufacturers rather than investing in their own facilities.

“India is projecting double-digit growth with respect to manufacturing, but whether the country can absorb that and avoid national gridlock is the question,” Lieb said.

Global 3PLs are investing heavily in India and should take significant market share from the small players, said Praveen Ojha, a logistics analyst at Datamonitor and author of “India Logistics Outlook 2007.” DHL and Lemuir Group, a major Indian logistics provider, in May announced a consolidated joint venture, DHL Lemuir Logistics Pvt. Ltd. With 2000 employees and 150 facilities, the joint venture “positions us as a clear leader in contract logistics, air and ocean freight forwarding and customs brokerage in India,” said John Allan, global chief executive of DHL Logistics.

Last year Netherlands-based TNT Express acquired Mumbai-based Speedage Express Cargo Services, adding 514 depots, 26 transit hubs, 730 vehicles and 1,195 employees to its Indian network. Maersk LogisticsIndia operates a major logistics center and is investing in port terminals.

Kuehne & NagelIndia, founded in 1997, has 25 locations and more than 600 employees. And major Indian logistics providers such as Hyderabad-based DRS Logistics and Chennai-based TVS Logistics Services Ltd. also are preparing for rapid growth through acquisitions or strong positions in the automotive sector and other niches.

According to U.K. research and consulting firm Frost & Sullivan, 3PL penetration in India is highest in the automobile sector followed by IT hardware and electronics, with lower rates of penetration in consumer goods and pharmaceuticals.

No single 3PL has significant market share, given the complexities of moving goods between states that is unlikely to change, Ojha said. 3PL penetration is limited to a handful of the largest companies in each sector. The vast majority of Indian companies either own fleets or work with local truckers on a cash basis. “The concept of value-added services is just now starting to catch on,” Ojha said. “Most think of warehouses as nothing more than places to store goods.”

A new national value-added tax is expected to boost the logistics sector by replacing an interstate sales tax system, which has forced companies to establish warehouses in multiple states to lower tax burdens, Ojha said.

Nowhere is the need for infrastructure improvement more apparent than at the nation’s ports. Although the government’s five-year plan for 2007-12 includes $12 billion for port improvement projects — part of a planned $320 billion investment in ports, railroads, highways and airports over the next 15 years — it may not be enough to handle huge projected increases in container traffic. According to London-based Drewry Shipping Consultants, Indian container traffic has increased at an average annual rate of 13.4 percent over the last decade, with an increase of 22 percent in 2006. It is projected to reach around 10.8 million 20-foot containers in 2012.

India’s 12 major ports are controlled by the central government, and 187 smaller ports are controlled by state authorities. India’s biggest container port is Mumbai’s Jawaharlal Nehru Port Trust (JNPT). In fiscal 2006-07 the port’s three container terminals handled a record 3.3 million TEUs, more than 50 percent of the nation’s total container throughput. Chennai, India’s second-largest container port, handles around 900,000 TEUs per year, about 15 percent of all containerized cargo.

All of the ports face significant challenges from capacity, dredging and channel access to shortages of tugs and pilots, Glenn said. The three container terminals at JNPT are expected to be at full capacity by the middle of next year. The access roads to Chennai, which wind through the city, are severely constrained.

Although it is India’s largest container port, JNPT ranked 25th on The Journal of Commerce’s ranking of top global container ports for 2006. The Journal of Commerce is a sister company of Shipping Digest.

By the end of 2008, close to 25 percent of the world’s cargo will be shipped on vessels with capacities of 6,000 TEUs or more, yet no Indian port can accommodate them. “Berth capacity is a significant issue at all of India’s major ports,” Glenn said. “With volume increases, things will get worse before they get better.”

APL serves all 12 major Indian ports. This year, the company expects to move about 450,000 TEUs through India and anticipates a 15 percent growth rate for the coming years, although growth in lanes connecting India and China is much higher.

India is the second-largest Asian market for Inttra, a major provider of e-commerce platforms and other tools for streamlining container shipping, behind China. By the end of the third quarter of 2007, Inttra, which counts 24 of the world’s largest ocean carriers as customers, had processed 350,000 container moves through Indian ports.

Suez set to sign water, waste deals in India-source

PARIS, Jan 22 (Reuters) - Suez Environnement will sign water and waste deals worth nearly 100 million euros ($145 million) combined in India during a state visit by French President Nicolas Sarkozy this week, a source familiar with the situation told Reuters.

Degremont, a unit of Suez Environnement , will be awarded a contract to build and operate a drinking water plant in Mumbai, and a waste treatment plant in an unidentified Indian city, the source said, asking not to be named.

"Degremont will sign a contract for a big plant in Mumbai, but there will be another second contract for waste treatment in a very big Indian city," the source said on Tuesday.

"This will be worth several tens of millions for the two contracts ... a little less than 100 million ($145 million)."

Nicolas Sarkozy will be in India for a state visit on Friday and Saturday.

India's showpiece highway thrown open to traffic

New Delhi, Jan 23 (IANS) India's most talked and written about expressway connecting the capital to the booming suburban town of Gurgaon was inaugurated here Wednesday, promising a fast-track ride for thousands of commuters and international air passengers.

'It is a huge boost to Delhi's road connectivity. Now, you have a multi-lane flyover to Gurgaon to ease traffic snarls. Let the traffic flow and we will remove the minor bottlenecks, if all they exist, on the stretch,' Delhi Chief Minister Sheila Dikshit told IANS.

She was present at the inauguration by Transport and Shipping Minister T.R. Baalu. The formal inauguration happened after impatient commuters 'inaugurated' the crucial road link a week ago by removing the barriers, fed up as they were with delays in its opening.

'There will be as many flyovers required for a better-connected and improved Delhi. Residents should have no room for complaints. But the irony is we are better with them and better without them,' the chief minister said alluding to the resentment, doubts and allegations that marked the mega infrastructure project, a showpiece of the capital.

Dikshit was, however, cryptic about the delay in the completion of the project. 'There was mischief,' she smiled enigmatically, when asked why did it fall behind schedule by almost three years. The project was initially scheduled for completion in 2005.

The 27.7-km long Delhi-Gurgaon Expressway is part of the ambitious Golden Quadrilateral Project to connect the country's north-south-east-west corridors, first conceived by the government of former prime minister Atal Bihari Vajpayee. The project comprises nine flyovers, four pedestrian subways and two foot bridges.

The expressway, a toll road with three collection centres, is located in one of the highest vehicle density zone - the Delhi-Gurgaon commercial hub. The artery will connect the 14.3-km stretch from the heart of the capital to Gurgaon, a business and shopping hub, in 25 minutes instead of the 45 minutes to two hours earlier. The 32-lane toll was also inaugurated Wednesday.

Baalu, who formally opened the Rao Tula Ram Marg-Palam flyover, said there will be at least six more foot bridges - over and above the existing two - to facilitate movement of pedestrians.

There are four underpasses, and two overbridges, one at Palam junction and the other at Subroto Park.

The expressway, said National Highways Authority of India (NHAI) officers, is a boon for air travellers. It will reduce travel time to and from the Indira Gandhi International Airport and make the ride more comfortable for thousands of passengers, who are otherwise subjected to traffic snarls, delays and poor access through a dusty and poorly lit arterial road.

Explaining the advantage to air-travellers, a senior NHAI officer said passengers driving from the capital to the airport will have to take a downramp (road on which traffic flows downward) through the access-controlled expressway and those entering the capital from the airport will have to take a upramp to reach the expressway.

'The upside is that those coming from the airport will not have to play toll tax at the toll gate and there will be no red lights to stop traffic. Only those going to the airport will have to pay toll tax,' he said.

The safety measures are also in place. 'There are 24 emergency booths and three ambulances to take care of commuters in distress. Road marshals to guide commuters along the stretch,' said R.P. Indoria, the chief project director.

In India, national highways are the mainstays of surface communication. They cover nearly 67,000 km of which only 200 km are expressways. Indian highways constitute only two percent of the total road network in the country, but ferry nearly 40 percent of the total traffic.

PE firms fight shy of India's single road projects

MUMBAI, Feb 4 (Reuters) - Private equity (PE) firms are fighting shy of investing in road projects in India, put off by long gestation periods and risks of a single asset investment, industry players said.

Industry tracking firm, Venture Intelligence, found that in 2006/07 only one percent of PE funds went into roads in terms of value.

And it is not that they are losing propositions. A single toll project, Noida Toll Bridge Co , funded by IL&FS Investment Managers Ltd , proved to be one of the most successful projects in India. It became operational in 2001 and turned profitable in 2005/06.

"Private equity firms tend not to invest in single asset portfolios like toll roads," said Raja Parthasarathy, principal, IDFC Private Equity Co Ltd.

"They invest in companies which are doing road projects among other infrastructure projects but not in the projects themselves," said Arvind Mahajan, executive director, KPMG Advisory Services Pvt Ltd.

Roads offer a huge potential in terms of investment opportunities in booming India. Between 2007 and 2012, investments in roads is projected to be about $76 billion, Mahajan said. India expects a significant portion of this amount from the private sector.

CASH VERSUS CARRY

PE funds choose to put their money either through a special purpose vehicle (SPV) or into a firm engaged in various infrastructure projects

The benefit of SPVs is that the cash, when generated, comes back to the investor, while it gets ploughed back into other projects in a holding company, said Anil Ahuja, India head of Britain's 3i Group Plc .

If re-investment opportunities are high, then one should invest in holding companies, but if one is looking for a cash-flow return, then the SPV is better, he said.

"If you've got a fund which has a dividend policy, then he or she needs to be in a SPV model."

However, there is a dearth of deals, especially large ones, for SPVs. Besides, returns are much lesser than what PE firms are used to.

Returns from an infrastructure firm is around 30 percent, while in a project it would be in the teens, depending on the time of entry, said Mahajan.

They are also higher when the PE firms come in at the bidding or concept stage, though the risk too is greater at that stage, such as a delay or scrapping of the project itself, he added.

"I will not like to invest in a single-site infrastructure project, maybe it'll work, maybe it'll not work, but if I invest in a clutch of assets....then there is enough tailwinds in all the deals, something will work," said P.R. Srinivasan, managing director, CVC International.

India Bharti Airtel open to sharing all infrastructure

NEW DELHI, Feb 21 (Reuters) - India's leading mobile telecoms firm Bharti Airtel Ltd is open to sharing its active telecoms infrastructure with other operators, its chief said on Thursday.

The Economic Times newspaper reported on Thursday the government was close to accepting recommendations from the telecoms regulator on sharing infrastructure such as transmission systems, radio access networks and antennae.

India currently allows operators to share passive infrastructure, such as towers, buildings and power backup facilities.

"We are very keen that maximum infrastructure, active or passive, be shared," Bharti Chairman Sunil Mittal told reporters on the sidelines of a conference.

"Everything is available to be shared."

Bharti Airtel along with Vodafone Plc- controlled Vodafone Essar and Idea Cellular in December formed a tower-sharing company, Indus Towers, pooling about 70,000 of their existing towers in 16 of India's 23 telecom zones.

These towers can be leased by any wireless telecoms operator on a non-discriminatory basis.

Sharing infrastructure reduces the operating costs and capital expenditure of wireless telecoms operators, allowing them to maintain margins in a competitive market that has call rates as low as 2 U.S. cents a minute.

It will also allow firms granted telecoms licences by the government in January to roll out their networks faster and begin services, as they will not have to build their own infrastructure.

New Bangalore airport exposes India's infrastructure challenge

BANGALORE, India, Feb 26, 2008 (AFP) - In southern India the much-awaited Bangalore international airport is almost ready, but getting there could prove a nightmare for travellers facing more chaos on clogged roads.

The 630-million-dollar facility is 95 percent complete, and will open for flights as scheduled on March 30, Bangalore International Airport Ltd. (BIAL) chief executive officer Albert Brunner said.

Brunner has met his deadline to complete the airport, located 36 kilometres (22.5 miles) north of the choked city centre, in three years.

That feat alone is remarkable in a country where such large infrastructure projects routinely run into major delays.

But the government has not delivered on promises to widen access roads or build a dedicated rail link to and from the city -- meaning the commute could take much longer than a short-haul flight.

The railway is still only a proposal on paper, while a four-kilometre road from the nearest highway to the airport is still to be completed. The airport itself has taken over construction of the link in a bid to open it on time.

"It's a pity the government didn't do anything about connectivity to the airport," lamented Marcel Hungerbuehler, chief operations officer at BIAL, a consortium that includes Unique Zurich Airport, Siemens of Germany and Larsen and Toubro of India.

The Bangalore project well illustrates the problems India faces in fixing its creaky infrastructure to match an economy expanding at an annual rate of nine percent.

Growing personal incomes have fuelled a surge in air traffic and car sales, straining aviation and road infrastructure in a country that needs to invest tens of billions of dollars in public works.

Domestic air traffic is forecast to double to 60 million passengers by 2010 from last year, while car sales are projected to reach two million units from 1.4 million in the same period.

"BIAL has done its job," said Kapil Kaul, the India head of the Centre for Asia-Pacific Civil Aviation.

"The other stakeholders, mainly the state government, have almost totally ignored their responsibility of providing logistics.

"I find it shocking that an airport is ready, but there may be no way of getting there."

From Electronic City in south Bangalore -- the hub of India's information technology industry -- it could take a four-hour drive to reach the airport when it opens.

Flying time to the nearby southern city of Chennai is just 40 minutes.

"It will be a nightmare driving to the airport," said N. Reghuraj, the head of the local chapter of the Confederation of Indian Industry, who flies out of Bangalore's old airport twice a week.

"The passengers are not happy, the cargo guys are not happy."

India's traffic problem is particularly acute in Bangalore, and seemingly set to worsen. The city of six million people adds 1,000 vehicles to the roads a day and traffic crawls at an average speed of 13 kilometres an hour.

Bangalore also recorded growth of 38 percent in air traffic in the year to August 2007, the highest for any Indian city.

The new airport is one of several from Hyderabad to Mumbai and Delhi where old terminals are bursting at the seams, and had to be redesigned to handle 11 million passengers a year over earlier estimates of five million.

Under an agreement between the government and BIAL, the existing airport in east Bangalore, a modest 10 kilometres from the city centre, will be closed to commercial traffic when the new facility is open.

But calls to keep the old airport open are becoming louder as airlines and passengers prepare for a painful transition.

"People don't want to spend four hours on the roads commuting from the south to the north of Bangalore," said G.R. Gopinath, head of Deccan, India's biggest budget carrier.

"Multiple airports add competitive pressure for better pricing and better service quality -- there shouldn't be a monopoly."

Meanwhile, he plans to start a helicopter shuttle from the city to the new airport for passengers who can afford to cough up 4,000 rupees (100 dollars) for the ride.

India plans $63 bln expansion of rail infrastructure

NEW DELHI, Feb 26 (Reuters) - India will invite private investment in upgrading rail infrastructure at a cost of 2.5 trillion rupees ($63 billion) over the next five years, Railways Minister Lalu Prasad Yadav told parliament on Tuesday.

Of the total investment, a trillion rupees would be in public-private partnership projects to upgrade facilities at railway stations, rail equipment manufacturing, multi-modal logistics parks, running of container trains, Yadav said.

"It would be difficult to finance such a large investment programme solely from Railways' own resources. Therefore we have started many public-private partnership schemes," he said while presenting the Railway Budget for 2008/09.

India also plans to increase the rail capacity of about 20,000 kilometers of high-density network, coal and iron ore routes and port networks over the next seven years at a cost of 750 billion rupees, he said.

Three quarters of the railways' goods traffic travels on these lines, which are operating at capacities in excess of 100 percent, Yadav said.

Indian Railways, running more than 14,000 trains a day, also plans "commercial use" of its vast land across the country to boost revenues, he said.

India is being plagued by bottlenecks in the transport sector that threaten to choke growth, and this has prompted government to build more rail lines, roads, ports and airports.

Yadav said work will start in the next fiscal year on the eastern corridor from Ludhiana in Punjab to Dankuni in West Bengal and the western corridor linking Delhi to Mumbai port, being build at a cost of 282 billion rupees.

($1=39.9 rupees)

Hoteliers say tax holiday largely irrelevant

MUMBAI, Feb 29 (Reuters) - India's hoteliers said the budget on Friday did not bring them widespread benefits nor help the industry tackle the shortage of rooms in India.

Finance Minister Palaniappan Chidambaram in the 2008/09 budget proposed to grant a 5-year tax holiday for two, three and four-star hotels established in specific districts that are UNESCO-declared 'World Heritage Sites'.

The hotel should be constructed and start functioning during the period April 1, 2008 to March 31, 2013, he said.

"This budget, as far as the hotel industry is concerned, is negative," S.P. Jain, Senior Vice President, Hotel & Restaurant Association, Western India, said.

"The shortfall of rooms will continue and there's no support from the Finance Minister to attract finance to the sector." Jain, also managing director of Pride Group of Hotels, added.

To help meet the shortage of rooms, the hotel industry wanted to be given infrastructure status, benefiting from easier financing, and a tax holiday to be given to all categories of hotels across India.

"This will give boost to tourism sites like Hampi," Chender Baljee, chairman of Royal Orchid Hotels Ltd said.

"It's a very small benefit and not very significant. The tax holiday could have been extended to Tier II, Tier III cities, which can do with budget hotels," he added.

"It's a positive step but it's not relevant to us," Rajiv Kaul, Senior Vice President, Hotel Leelaventure Ltd said. "The need of the moment is to build more hotel rooms and this incentive will perhaps add up to 2,000 rooms."

About 400 billion rupees would be needed to build an estimated 100,000 rooms, needed for the expected arrival of 10 million foreign tourists in the country by 2010, the Federation of Hotel & Restaurant Associations of India said.

India is hosting the Commonwealth games in 2010.

BUDGET VIEW-Hotel industry seeks infrastructure status

MUMBAI, Feb 12 (Reuters) - The hotel industry expects to get infrastructure status in the forthcoming budget to help the sector match surging room demand through easier financing.

"Cheaper loans would be available to them if they get infrastructure status," said an analyst, who did not want to be named.

In the last budget, the industry got a five-year tax holiday for hotels up to the 4-star category and convention centres with a minimum 3,000 seating capacity to be built around the National Capital Territory of Delhi and adjacent districts by 2010.

India is hosting Commonwealth games in 2010.

The Federation of Hotel & Restaurant Associations of India wants the provision "to be extended to all categories of hotels throughout the country" that will open in the next 5 years, as an incentive to ease the shortage of rooms.

"Hotels would be needed across India. There is shortage all over so it will definitely help in building capacity," Chender Baljee, chairman of Royal Orchid Hotels Ltd said.

As of Dec. 31 2007, there were 84,327 rooms approved by India's tourism ministry across all categories of hotels, according to the tourism department.

About 400 billion rupees would be needed to build an estimated 100,000 rooms more needed for the expected arrival of 10 million foreign tourists by 2010, the federation said.

Foreign tourist arrivals reached 4.45 million in 2006, a 13.5 percent rise over the previous year, according to provisional figures published on the Web site of the tourism ministry.

The industry is also asking for a review of fringe benefit tax on the corporate sector on spends in hotels and restaurants and a higher floor area ratio in Delhi and the National Capital Region, the federation said.

"With a higher floor area ratio, the total number of rooms in a hotel would go up," the analyst said.

India eases sharing rules for wireless operators

NEW DELHI, April 1 (Reuters) - India on Tuesday allowed telecoms operators to share transmission systems, radio access networks and antennae and simplified the approval process for building mobile towers.

But radio spectrum, or air waves used for wireless networks, cannot be shared.

Telecoms operators in India were earlier permitted to share only passive infrastructure such as mobile towers, buildings and power backup facilities.

Sharing infrastructure reduces the operating costs and capital expenditure of wireless telecoms operators, allowing them to maintain margins in a competitive market that has call rates as low as 1 U.S. cent a minute.

"The guidelines are aimed to reducing the input costs on telecom access providers... (and to aid) reduced tariff and increased tele-density in rural areas," the telecoms ministry said in a statement.

Independent companies will be able to build towers without tie-ups with telecoms operators, the ministry said. Firms will also be automatically granted technical clearances for towers except for those within seven kilometres of airports.

"This move will significantly bring down the cost of rolling-out telecom network infrastructure, resulting in lowering of tariffs and increase in telecom penetration," a spokesman for Tata Teleservices, India's No. 5 mobile operator, said.

India's top mobile phone firm, Bharti Airtel Ltd , has said it is open to sharing all of its infrastructure.

Bharti Infratel, its tower unit, has about 20,000 towers and has 42 percent in Indus Towers, a joint venture with Vodafone Plc- controlled Vodafone Essar and Idea Cellular that has about 70,000 towers.

India sees 1 trln rupee investment in port, shipping

NEW DELHI, April 9 (Reuters) - India expects to double port capacity to 1,500 million tonnes by 2011/12 and would require 1 trillion rupees investment in the port and shipping sectors, federal shipping secretary A.P.V.N. Sarma said on Wednesday.

The port sector would require investment worth 550 billion rupees while shipping and inland waterways would need another 450 billion rupees by 2015, he told reporters after a business conference.

India's Planning Commission estimates that the infrastructure sector will require investment of $500 billion between 2007/08 and 2011/12, which is key for the economy to sustain an average 9 percent growth.

"We will require one trillion rupees investment by 2015 (in ports, shipping and inland waterways," Sarma said.

But a cash-strapped government is looking for greater private role in infrastructure building and has been inviting foreign players to pour in more money and bring in their expertise in Asia's third largest economy.

CONGESTED PORTS, SURGING TRADE

"There is tremendous room for private sector to participate. We have got a lot of response from foreign players for the port sector," Sarma said.

Sarma said cargo handling volume in 12 major ports in India was at 520 million tonnes, while smaller ports contributed another 260 million tonnes during 2007/08.

"We are expecting a 12-15 percent growth in 2008/09."

The government aims to double capacity in major ports to 1,000 million tonnes by 2011/12, and raise it to 500 million tonnes for smaller ports, he said.

Raising port capacity and speedy cargo handling is crucial for India to sustain high growth in exports and imports.

India's trade minister said last month exports are expected to grow by more than 20 percent to $155 billion. Imports grew at a faster pace of 30 percent and stood at $211 billion in the first eleven months of 2007/08.

FEATURE-Mumbai's bid to be global finance hub laden with hurdles

MUMBAI, April 23 (Reuters) - With one of Asia's largest slums, congested streets and sometimes startling whiffs of human waste, Mumbai may not be everyone's first choice for a world-class financial centre.

Yet that is exactly what India hopes it will become in the next decade as it rises to the challenge of financing one of the world's fastest growing major economies after China.

"I think we are where China was with a lag of maybe 10 years," K.V. Kamath, chief executive of ICICI Bank, India's largest private bank, told a conference recently.

"That is the catch-up time that we need to build various structures whether they are financial or whether they are real ... to provide the sort of momentum that we need."

Formerly known as Bombay, Mumbai is a bustling port on India's west coast. Home to 17 million people, it is already a base for two stock markets, their watchdog and the central bank.

The city which overlooks the Arabian Sea is the face of old and new India: bullock carts toil alongside shiny sedans, shanties slope from walls near glazed offices, and sea vistas take your breath away with the low-tide stench of sewage.

But India's central government envisages a time when Mumbai will be a gleaming financial hub not too far removed from London, Dubai and Singapore.

To this end it has appointed a panel to study ways of turning Mumbai into the sort of place where a high-rolling banker might want to live.

Democratic government, a vast and growing economy, a large English-speaking workforce and a time zone overlapping Asia and Europe all work in the city's favour, although markets need to be liberalised and the financial and legal system must improve.

But financial reforms are nothing compared to the Herculean task of revamping Mumbai's infrastructure and housing, an initiative that will probably cost tens of billions of dollars.

HERCULEAN TASK

With its pockets of faded British colonial grandeur, Mumbai is beset by infrastructure problems: debilitating traffic, a lack of housing, poor water delivery, with some homes served simply by water trucks, and an unreliable power system that results in routine power cuts in the suburbs.

Even the geography of the city, a series of islands joined by reclamation, works against it. Space is at a premium and the city is getting increasingly cramped as an estimated 300 poor families arrive each day in search of work.

The city's infrastructure is rusty and overloaded. Six million people a day cram into -- or on top of -- its battered commuter trains.

Efforts are underway to modernise the infrastructure, but observers say the massive sums of money involved are just a drop in the ocean.

The Municipal Corporation of Greater Mumbai has budgeted 18 billion rupees ($450 million) to upgrade roads and bridges and 29 billion rupees to improve water supply this fiscal year.

"Our journey on urban investment is just beginning," Ramesh Ramanathan, founder of the group Janaagraha, which pushes for civic reform, told a conference recently.

"These numbers are insignificant ... compared to the true amount of money that will have to be invested in infrastructure over the next 15 to 20 years," he said.

Officials are tackling some issues: corporation figures show 19 billion rupees allocated to widen century-old storm drains after about 1,000 people died in severe monsoon floods in 2005.

Sanjay Ubale, secretary of special projects for the state of Maharashtra, of which Mumbai is the capital, says 250 new trains are on the way.

Last year, a law that controlled urban land holdings was scrapped, potentially freeing large areas for development.

High-rises increasingly dot the skyline and a second international airport is planned for the city's outskirts.

DEMOCRACY, BUREAUCRACY

Further progress is hampered by miles of red tape and the housing shortage is not helped by a 1947 rent control act, that keeps rents for long-time tenants far below modern-day market rates and makes it difficult to get people out. So while a well-to-do family may live in a three-bedroom apartment in a choice part of town for just 250 rupees ($6.25) a month, newcomers are likely to pay 800 times that sum at $5,000 or more -- similar to rentals in London or New York.

"Mumbai has been plagued by draconian urban regulations for the past 50 years," said Alain Bertrand, an urban development expert who previously worked for the World Bank. "(We must) find an equitable solution to get out of rent control."

For the less well-off, there are plans to tear down one particular shantytown, Dharavi, a thriving slum considered to be one of Asia's largest, and resettle families in high-rises. Many slum residents are opposed as they fear losing their livelihood.

"It's impossible to arrive in Mumbai and offer any solutions because everything is paled by the complexities of the problem," Ramanathan said.

Authorities aim to attract $39 billion in private investment and Ubale says firms are interested in bidding for projects such as a light rail system in the north of the city.

But implementation is fraught with problems. Bureaucracy, land acquisition and perhaps most importantly finding a fair solution to rehouse displaced people, estimated at 57,000 in the case of Dharavi alone, are a few of the obstacles.

"It's not just a question of funding, but of executing projects on time and maintaining them properly," federal Urban Development Minister S. Jaipal Reddy said.

Despite all the challenges ahead, ICICI's Kamath is upbeat on Mumbai's progress towards becoming a world-class centre.

"It may not happen tomorrow, but it is inevitable," he said.

hkskyline, you seems the only person in this thread. lol

hkskyline, you seems the only person in this thread. lol

Well, at least there's the 2 of us. :)

India urged to copy China at Asian Development Bank meeting
Sun May 4, 1:10 AM ET
AFP

India must boost infrastructure spending and reform its labour market as China has done if it wants its economy to grow as fast as that of its Asian neighbour, participants at the Asian Development Bank's annual meeting in Spain said.

"The Chinese manufacturing success story has a lot to do with a physical infrastructure that is better," said economist Bibek Debroy, who has studied both economies, of New Delhi-based think tank Centre for Policy Research.

In 2005 Indian spending on infrastructure was equivalent to 5.9 percent of its gross domestic product compared to 14.6 percent for China, according to India's Infrastructure Development Finance Co. chief executive Rajiv Lall.

But just over half of the funding for China's infrastructure projects came from state-owned enterprises, a model which he said could not be copied by India, he added.

"China has very peculiar and unorthodox institutional arrangement," he said.

Debroy said China has also benefited from reforms of its labour market carried out in the mid-1990s which allowed for the greater use of contract workers.

"China has a very flexible labour market, India's labour market is very rigid," said Debroy who prepared a study comparing China and India's labour markets for the ADB.

"Labour market reforms in India are very often talked about but are rarely implemented," he added.

China's economy grew 11.9 percent in 2007 compared to growth of 9.4 percent for India that year, according to Standard & Poor's.

While India attracted a record 24.6 billion dollars in foreign direct investment in the fiscal year to March 31, China captured 74.7 billion dollars of foreign investment in 2007.

Non-metros can serve as software hubs - study

MUMBAI, May 5 (Reuters) - Tier-II and Tier-III cities in India offer a lot of scope to serve as operational hubs for software companies, a study said on Monday.

About 15 Tier II cities can challenge the leaders, which include the four metro cities, Hyderabad, the National Capital Region and Pune, the study conducted by the National Association of Software and Service Companies and management consulting firm A.T. Kearney said.

"The Indian IT- BPO sector has been a frontrunner of economic development in select cities. We now see the time as being right to spread this development to a new set of locations, provided the requirements of the industry can be met," Nasscom chairman Ganesh Natarajan said in a statement.

The comprehensive study which covers and assesses 50 locations across India suitable for setting up software operations is expected to serve as an input for state goverment and other planning agencies for attracting investments.

"The development of only a few select set of cities has put severe pressure on the infrastructure, costs and also increased migration of resources," said Nasscom President, Som Mittal.

There was a lot of potential in the next set of locations if the right steps are taken now, he added.

The locations were analysed on the basis of talent pool available, infrastructure, social environment, business enablers, government support and cost of operations.

India's $90 bln industry corridor on track-minister

NEW DELHI, May 13 (Reuters) - India's ambitious $90 billion industrial corridor project is on track, and rising prices of steel and cement will not hamper work, the junior industry minister said.

The project spanning the capital city of New Delhi and the financial hub of Mumbai is being built with Japanese help on the lines of the Tokyo-Osaka industrial corridor.

It includes high speed rail freight lines, power plants to supply an additional 4,000 megawatt, three new sea ports and six airports, 12 new industrial clusters, 10 logistic parks and agricultural hubs.

"I believe that between October and December, the trial runs of the electric tractions between Mumbai and Pune should be completed," Ashwani Kumar told Reuters in an interview.

"Depending on the results of the trial runs, the matter will then be pushed full steam ahead so that we achieve the target date of 2012 for the first phase."

Kumar said he did not expect rising prices of steel, cement and other metals and building materials to hamper the process, adding that the total cost may rise to $92 billion which should not matter.

Japanese and German companies were among those that have showed interest in the project, he said.

Kumar said the government was actively involving private and foreign players for improving India's infrastructure, which would require $500 billion by 2012, and provide the trigger for growth in Asia's third-largest economy.

"We are encouraging domestic, private and government, investment in infrastructure under public-private partnership mode. We are also actively wooing foreign investment and technology in the infrastructure sector."

India's March infrastructure output up 9.6 pct y/y
Thu, May 15 01:21 PM

NEW DELHI (Reuters) - India's infrastructure sector output grew 9.6 percent in March from a year earlier, faster than a downwardly revised 7.1 percent in February, government data showed on Thursday.

Output rose an annual 10.5 percent in March 2007, and in the 2007/08 fiscal year it rose 5.6 percent from a year earlier.

The infrastructure sector accounts for 26.68 percent of India's industrial output that rose 3.0 percent in March from a year earlier, its weakest pace in six years.

New airport in India's silicon valley faces snags
Fri, May 23 05:40 PM

BANGALORE (Reuters) - The new international airport in Bangalore may not have opened yet, but industry leaders in India's Silicon Valley are already complaining that it is too small and too far away.

The privately-built airport, which is due to open on Saturday, is about 35 km (22 miles) from the city centre, at the end of a road that already routinely gets jammed with traffic. The older state-run airport, closer to the city, is due to close.

"Seventy-five percent of Bangalore's air traffic is business travel, and if it takes four to five hours to get to the airport and come back to the city, how can you do business?" said Kiran Mazumdar-Shaw, chairman of India's top biotechnology firm, Biocon Ltd.

The Bangalore City Connect Foundation, an association of business leaders in the city, says city authorities should renegotiate with Bangalore International Airport Ltd (BIAL), the new airport's owners, and keep the old one open.

Siemens Project Ventures has the majority stake in the airport. Other shareholders include India's Larsen & Toubro <LART.BO>, Unique Zurich Airport, the federal government and Karnataka state, of which Bangalore is the capital.

"We need an international-quality airport and we are not saying don't open the new airport, but let's also utilise the infrastructure that is already there," said M. Lakshminarayan, the chairman of Bangalore City Connect.

STRUGGLING WITH A BOOM

India's airports are struggling to cope with a boom in the civil aviation sector, which is growing at more than 25 percent a year, mainly due to rapidly rising incomes and the launch of many budget airlines.

The government has started awarding contracts to private companies to modernise some of the country's state-run airports that lacked basic facilities and were unable to handle the growing number of passengers.

Overhauling India's creaking infrastructure is an urgent priority as the country grows. But, in Bangalore at least, some worry that privatisation has been badly planned.

About 5 million people flew in and out of Bangalore when the government signed the pact with BIAL in 2004. Now the figure is 10 million, and likely to reach 15 million in a couple of years.

"Things have changed dramatically in the last three to four years. We feel the new airport will outstrip its capacity very soon," said T.V. Mohandas Pai, a board member at Infosys Technologies <INFY.BO>, India's second largest software services exporter.

But Albert Brunner, the chief executive officer of BIAL, says the new airport can cope.

"We can easily handle 14 million passengers at our airport. So, these allegations are baseless," he said. "Nevertheless, we want to be a world-class airport, and for that reason immediately after the airport opening we go into the next expansion phase."

Revamp of 16 non-metro airports by 2008

New Delhi June 10, 2008, 5:19 IST

As many as 16 non-metro airports out of the 35 taken up by the Airports Authority of India (AAI) will be completely developed by the end of 2008.

The AAI has taken up modernisation of 35 non-metro airports across the country. The target date for the completion of the modernisation process is March 2010. Non-metro airports include those apart from Delhi, Mumbai, Kolkata, Chennai, Bangalore, and Hyderabad.

According to figures from the civil aviation ministry, airports across the country which will have undergone completion include Ahmedabad, Amritsar, Guwahati, Jaipur, Udaipur, Thiruvananthapuram, Mangalore, Aurangabad, Khajuraho, Nagpur, Visakhapatnam, Trichy, Varanasi, Dehradun, Imphal and Pune.

The modernisaion of these airports includes construction of a new terminal building or upgradation of the existing terminal in these airports. The work also includes extension of runway, building of parking bays and aprons wherever necessary.

The AAI's total investment in the modernisation of these 16 airports comes to around Rs 1,840 crore. The construction and modernisation of terminals, which is the major chunk of the work, will constitute around Rs 1,360 crore.

The AAI is spending a total amount of Rs 12,434 crore on development of airport infrastructure according to the Eleventh Five Year Plan.

"While the passenger and flight-handling capacity of the airports can increase by 50-100 per cent depending on whether a new terminal is being built or the existing one is upgraded, the overall capacity of the country will increase by 5-10 per cent since these airports account for very little of the total air traffic in the country," said an industry expert.

Five companies have been shortlisted for modernisation of the Rajasansi International Airport in Amritsar. The shortlisted companies are Reliance Energy, Larsen & Toubro, Fraport AG, Tata Infrastructure, and Lanco Infrastructure.

Apart from the 35 airports taken up for modernisation, the AAI will invest around Rs 490 crore to develop 11 smaller airports like Akola, Belgaum, Cooch Behar, Gondia, Surat and Srinagar. All these airports are also projected to be developed by the end of 2008. Smaller airports like Srinagar will get an integrated terminal for international operations by next month.

Apart from that, the AAI has also taken up cityside development of 24 of the 35 airports through public-private partnership. Bids for qualification have been received for Amritsar and Udaipur airports. The Vizag airport will be the next in line to be out for bids.

As new India builds, desperately wanted: civil engineers, thousands of them
Fri, Jun 6 02:44 AM
The Indian Express

As the country builds or upgrades over 68,000 km of national highways, more than 35 airports, two dozen of the biggest railway stations, countrywide freight corridors, a whole new hospitality and housing industry, it's faced with a critical roadblock: an alarming dearth of civil engineers, the skilled professionals who are needed to put each building block in its precise place.

Industry experts estimate that India faces a shortage of over 70,000 civil engineers each year. Not surprising, when you have just one in ten IIT students opting for the civil engineering discipline and only 200 of the 1700 engineering colleges approved by the All India Council for Technical Education (AICTE) offer the course.

All IITs taken together graduate barely 500-600 civil engineering students and estimates are that not more than a total of 10,000 civil engineers are created in India per year. In fact, between a third and a half of all civil engineering undergraduates either drop off that stream soon after college and take up the more lucrative IT sector. That explains why private engineering colleges have either been reducing civil engineering seats or just shutting down this department over the last few years.

How civil engineering lost the battle over the last two decades is a story of how bricks and mortar lost their glamour to clicks - the IT boom, fuelled by a growing army of footsoldiers in computer science and electronics reduced civil engineering to an "old economy" discipline.

With heftier pay packets and global opportunities offered by the IT industry, an entire generation of engineering students/aspirants switched over from traditional engineering disciplines to the newer ones. In this churning, civil engineering finally ended at the bottom of the student's wishlist while computer science, biotechnology and electronics engineering raced up. Even those who would get civil engineering in an IIT, for example - based on their rank in the joint entrance examination - were dropping out if they got computers at a lesser-reputed college.

"So the demand steadily dropped and colleges started to shut down the civil engineering departments. Most of them replaced it with IT/electronics or communication courses that offer higher salaries. Of the total 1700 engineering colleges, just some 200 would probably be offering civil engineering as a discipline," says Prof Harish C Rai , Advisor, Engineering & Technology Bureau, AICTE.

K A N Prasad, Director General, National Construction Academy points out how in Hyderabad itself, of a total 50 colleges barely seven offer Civil Engineering. "Students are attracted to the IT industry instead as the salaries they pay is so much higher than one can expect in civil engineering. While this has been the scenario for a really long time, it changed only recently after the national highway development programme and JNUURM schemes came in along with a huge demand for civil engineers in the Middle East. So now while there are hiked pay packets, it will be some time before there are new civil engineers to take these up", says Prasad.

The effect of the shortage is being felt across the infrastructure sector and is affecting both the progress and quality of construction. Consultants and contractors alike are complaining about the lack of engineers and more importantly, the lack of "good engineers."

"Skills imparted to a civil engineer are unique and critical. Basically the skills related to structure and design are common between civil, mechanical and aerospace engineers. However, construction on land involves a good understanding of concrete, building material, reinforcement rods and so on and only civil engineers are equipped with this skill," says Ravi Sinha, professor at IIT Mumbai's Civil Engineering department. "Various construction technologies are also something only a civil engineer knows...While a civil engineer can easily move into the mechanical and other engineering disciplines, the latter cannot walk in so easily into his professional domain."

Result: a windfall for retired civil engineers, especially those from the government, including defence services and PWDs. In fact, several top construction firms have re-employed ex-servicemen to head important projects or supervise construction. A private firm recently filled up its entire board with ex-CPWD/PWD engineers paying them six times more than their last pay package. The result was a turnover that rose 15 times over in a year.

"The value of experienced civil engineers is high at present. While there are few newcomers, the ex-CPWD/PWD or army engineering corps officials are quickly being absorbed by the construction industry. With their volume of work experience, ability to understand and function with the government bidding process and an enabling private sector environment in place, these officials perform spectacularly well and can easily head and handle big projects", says Sanjeev Ralhan, Co-ordinator, Builders Association of India (BAI).

Many government sector civil engineers have also taken voluntary retirement to move over to the private sector of late. So it falls in place when Indian Roads Congress (IRC) officials say that 30-40% of civil engineering posts across the government sector are lying vacant including at the National Highways Authority of India (NHAI) that is at the forefront of the massive highway upgradation exercise.

For the 35 civil engineering vacancies at the Army's Chennai-based Officers Training Academy (OTA) in Chennai this year, not a single candidate was found good enough to make it to the merit list.

Few students means few faculty and few resources - the vicious circle, experts say, shows up in the quality of the civil engineering course too. Industry experts say that there is also a wide gap between what is being taught at most private engineering colleges in the country and what contractor/employers are looking for.

With all new infrastructure projects now follow the Public Private partnership (PPP) models on Build Operate Transfer (BOT) basis and many with international funding, civil engineers today need to come equipped with a new set of skills.

Says R P Arora, General Secretary, Builders Association of India: "We do not find soundly trained people, especially newly trained people. At engineering colleges, the syllabus is yet to reflect the new trends and technology being used. Colleges are not equipped with faculty good enough to teach these."

Jagpal Singh, Consultant, Punj Llyod Ltd, and a board member of the Construction Industry Development Company (CIDC) agrees with Arora. "We are facing a shortage of good engineers. Those being churned out are either not up-to-date or not committed."

Engineering teachers say this has a lot to do with AICTE-approved engineering colleges. "Most of the private colleges are governed by the very rigid AICTE curriculum in which updating is a very tedious process. So while it is difficult to get changes through in the first place, the faculty in these colleges is also opposed to changes in curriculum because many are not suited to teaching upgraded versions," says an IIT civil engineering professor.

Experts say that the only way to break the vicious circle is when campuses realise the shortage and industry brings in higher salaries comparable to other engineering disciplines. This is already happening, say engineering professors. "Given that civil engineering today is so dependent on new technology of materials and computer-aided design," says an IIT civil engineering professor, "students don't feel that they are somehow cut off from what's the latest in engineering. The current shortage has to be addressed through a variety of ways but the most positive news is that today, there is a market and we know there will be one tomorrow as well."

India needs to attract foreign infrastructure developers that could build the roads fast and setup tolls to pay for this.

This would benefit corporate infrastructure companies worldwide and their investors while the same time benefit Indian economy.

Everybody wins this way.

India needs to attract foreign infrastructure developers that could build the roads fast and setup tolls to pay for this.

This would benefit corporate infrastructure companies worldwide and their investors while the same time benefit Indian economy.

Everybody wins this way.

They are doing just that. Most of the Interstate highways in India are built by foreign contractors. And, they do charge tolls for most of the highways. That's the only way they can maintain them.

India Plans 310 Billion Rupee Spending to Build Northeast Roads

India plans to invest about 310 billion rupees ($7.2 billion) by 2012 to build roads in the nation's northeast, improving connectivity with the states bordering China, Myanmar, Bangladesh, Nepal and Bhutan.

The government will also build airports and railway links to all state capitals of the region, Prime Minister Manmohan Singh said, inviting private investment in the region.

``Infrastructure deficiency remains a major concern of the government,'' Singh said in New Delhi today, while releasing the Vision 2020 document for the region. ``Our government has made connectivity and infrastructure the cornerstone of regional development in the northeast.''

The states of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura are included in the so- called ``special category of states,'' as they are economically and socially underdeveloped. Insurgency and poor market access have kept away private investment from the area.

Singh called for peace and development in the region, which is home to rebel groups including the United Liberation Front of Assam and the National Democratic Front of Bodoland. More than a thousand residents and militants were killed last year in the fighting, according to federal government statistics.

``For too long has violence been the dominant recurrent theme of discourse for the northeast,'' Singh said. ``It shall now be development.''

http://www.bloomberg.com/apps/news?pid=20601091&sid=aBV0lGcUflkI&refer=india

They are doing just that. Most of the Interstate highways in India are built by foreign contractors. And, they do charge tolls for most of the highways. That's the only way they can maintain them.
===========
Better late than never. But it is shame they could not do it by themselves. At least they do not have problems with population. India is not like the oilshieks.
But it is good that it is done.

Coal-based power must for India's energy needs: IFC
Indo Asian News Service
Sat, Jul 19 04:21 PM

Ahmedabad, July 19 (IANS) To meet its growing energy needs, India will have to continue to rely on coal-fired thermal power plants for quite some time to come, the International Finance Corporation (IFC), the World Bank's private sector lending arm, says.

Explaining the rationale behind its decision to extend a 20-year tenor loan of $450 million to Indian energy major Tata Power for its $4.24-billion Mundra ultra-mega coal-based thermal power project in Gujarat, the IFC has said on its website that given India's energy needs, generating electricity only from renewable sources is not a viable option for the country.

Hence, despite the IFC's marked emphasis on renewable energy, it decided to fund the Mundra power project 'because of the demonstration effect that the successful realization of this project will have on India's energy sector and investors,' the IFC's website says.

If India is to sustain its current growth of 8-9 percent a year, it needs to add about 160,000 megawatts in generation capacity and build associated transmission and distribution infrastructure in the next decade, the IFC website says. Demand will also increase as many households benefit from the government's accelerated rural electrification program. 'Clearly, India needs much more power in a short time frame to continue its economic development,' IFC says.

'While the government is seeking to increase generation of electricity from renewable sources, India still must rely on thermal sources to meet the growing demand. Gas-based power is not a viable alternative to replace coal-based power on such a large scale. Not enough natural gas is available in India, and the power it generates is too expensive for the country's industrial or domestic use,' the website points out.

Regarding wind-based power, the website says 'wind power still has limited reliability,' and 'its higher cost of generation makes it unsuitable for meeting large-scale demand.'

On solar power, the website says that although IFC is seeking economically viable ways to develop solar power, the rapidly evolving technology is still unable to 'efficiently store solar energy and use it for base load operation, particularly at the scale required to meet India's needs.'

Moreover, 'the cost of solar is also much higher than that of coal-fired power,' the website says adding that 'a solar thermal project which could generate the same amount of electricity as the Mundra project would require at least $2.9billion per annum in subsidies to match the Mundra Project's tariff,' the website says.

Given this scenario, 'IFC is supporting thermal power projects that have better greenhouse gas and environmental performance than the average in India, as a way to help the country meet its large need for more electricity,' the website says.

The website points out that the Tata Power Mundra project will be the first private sector power project in India which will use the supercritical boiler technology making it the most energy-efficient coal-based thermal power plant in India. IFC's participation will boost investor confidence and help other such projects in India, the website claims.

Japan to give India loans worth nearly one billion dollars
5 August 2008
Agence France Presse

Japan will lend 970 million dollars to India for the year to March 2009 to support a host of infrastructure projects, its foreign minister said on Tuesday.

India has been the largest recipient of low-interest Japanese loans in the past five years, visiting Foreign Minister Masahiko Komura said in New Delhi.

Last year, Japan provided more than two billion dollars in loans to India, according to officials of the Japanese Embassy in New Delhi.

The loans are designed to help the construction of a new subway in southern Chennai city, a road and a power plant using biomass as fuel, among other projects, the embassy said.

Wow thanks for providing so many updates hkskyline. lots on interesting articles in this section..and it looks like the government is realizing where its priorities should be.

^ Very much welcome.

India govt approves 10 road projects for $2.5 bln

NEW DELHI, Aug 11 (Reuters) - India's government on Monday approved 10 road projects to be build with the help of private firms at a cost of 105.07 billion rupees ($2.5 billion), the finance ministry said in a statement.

The projects, spread over eight states, are part India's plan to significantly improve its infrastructure at a cost of $500 billion over the five years to the end of 2012.

($1=42.2 rupees)

Hi
How kilometers have India motorways ?

And another question how India and china do to be conected each others by infrastructures because i don't see they could construct a hundreds kilometers single tunnel under the Himalaya :ohno:

They are doing just that. Most of the Interstate highways in India are built by foreign contractors. And, they do charge tolls for most of the highways. That's the only way they can maintain them.

Actually, the interstate Highways are built by the Indian National government, but the Loan for this came from the swiss bank.
Atleast I think so.
The National Highways Authority of India is a government set up body.
It's the primary motivator of the Highways as well as many flyovers and bridges in India.
The tolls are collected to repay the swiss bank in a 30 year period.

Leading neo-liberal organizations advocate that India spend money to improve its infrastructure but simultaneously support mass privatization and limited government spending as the keys to economic progress.

I guess they advocate that most of India's infrastructure be privately owned. Making money is more important than the public good I see.

And relying on coal-fired power plants is a death knell for avoidong serious climate change. When the Ganges and Yangtze run dry because the glaciers in the Himalayas disappear, maybe then India and China will realize the error of their ways.

New Delhi airport aims to open Asia's longest runway soon
21 August 2008
Agence France Presse

The New Delhi airport said Thursday it planned to soon open Asia's longest runway after conducting a successful test take-off and landing.

Officials hope the runway will ease huge congestion at India's second busiest airline hub, an official said.

The 4.43-kilometre (2.7-mile) strip is "the longest in Asia," said the spokesman for the Delhi International Airport Ltd., beating Kuala Lumpur International Airport's 4.12-kilometre runway.

Officials carried out "a trial take-off and landing by an Air India aircraft without any passengers," airport official Arun Arora told AFP.

"The tests were successful. The date for starting commercial operations will be announced soon," Arora said.

The new runway will nearly double the airport's peak-hour capacity from 35-40 aircraft landings and take-offs to about 75. The two currently operational parallel runways handle nearly 700 flights a day.

"The hovering time -- which has come down with measures like rapid exit taxi-ways that allow planes to move away from the runway faster, and reducing time between two flight take-offs -- is still about 20 minutes," said another Delhi airport official who did not wished to be named.

"We hope the new runway will cut it down further," he said.

Other problems -- including cancellations or delays due to poor visibility in winter and waterlogging in the monsoon -- will also be solved thanks to the new runway, officials said.

"The runway is equipped with a state-of-the art instrument landing system at both ends that will allow landing even when visibility is as low as 50 metres (yards)," Arora said.

New Delhi, host of the 2010 Commonwealth Games, is also sprucing up infrastructure to allow carriers like Emirates, British Airways and Air France to operate Airbus's flagship A380 on routes to the Indian capital.

India infrastructure investment may slow, won't stop

MUMBAI, Sept 17 (Reuters) - A widening global financial crisis does not pose a threat to infrastructure funding in India, although risk-averse investors are likely to be more selective in the short to medium term, CRISIL Research said on Wednesday.

India's five-year economic plan up to 2012 aims at drawing $500 billion of investments to upgrade its infrastructure such as roads, ports, power and railways to achieve a 9 percent average annual growth rate.

While this will provide significant opportunities for infrastructure service providers, builders and equipment suppliers, there are also challenges from issues related to policy, financing and project execution, CRISIL Research said.

"We haven't seen a policy reversal, but the challenges for execution are in the increasing size and complexity of projects," said Sachin Mathur, head of CRISIL Research, a unit of ratings agency CRISIL, which is majority-owned by Standard & Poor's.

"On the funding side, there is cost escalation and tighter resources. It's not so much a question of availability of funds as rising risk aversion," he said.

Investment in eight key sectors, including power, oil and gas, telecom, roads and ports is likely to grow more than two times in the five-year period from 2007/08 to $390 billion, CRISIL Research said, compared with the previous five years.

Telecom, oil and gas and railways may be seen as less risky for investors as confidence in execution of projects is higher, Mathur said.

But sectors such as airports or urban infrastructure may be considered more risky as there may be delays from land acquisition and other issues that threaten execution, he said.

Despite a general election scheduled for next year, government investment in infrastructure is not expected to slow, Mathur said, while private investment, which makes up a third of funding now compared to 22 percent five years ago, will rise.

"Especially in sectors such as telecom, oil and gas, transport and power, there is more private sector financing, and there are more options now, like private equity," he said.

But funding was likely to get concentrated in the hands of larger players who have the scale and demonstrated the ability to execute mega projects, he said.

"Despite a short- to medium-term risk, we expect investment flows to stay healthy because of the irreversibility of the reforms process, because of the certainty of demand and rising confidence in execution of projects," he said.

India raises overseas borrowing limit for some firms

NEW DELHI, Sept 22 (Reuters) - India on Monday said it would allow local infrastructure companies to bring in more funds that had been borrowed overseas, a move which could see more capital come into the country and ease pressure on the rupee to weaken.

However, analysts said the global credit crunch meant the government's move to increase the limit on repatriated overseas borrowings to $500 million from $100 million for infrastructure companies was unlikely to spark an immediate rush of inflows.

The central bank approved the proposal on Monday evening, saying the measures would take effect immediately.

The rupee <INR=IN> hit a two-year low of 46.99 per dollar last week, according to Reuters data. It has recovered since then, helped by central bank intervention, closing at 45.45/46 on Monday.

"It will ease some funding needs of infrastructure companies and reduce their cost of borrowings as interest rates remain firm in India," said D.K Joshi, principal economist at domestic rating firm Crisil.

But he added it would be difficult for companies to raise funds from abroad easily.

"There is a credit squeeze globally."

The finance ministry said it raised the annual limit on borrowing for the companies in the infrastructure sector to $500 million from $100 million because of huge funding requirements, particularly for meeting rupee expenditure.

The ministry said the rules required borrowings in excess of $100 million to have a minimum average maturity of 7 years.

The interest rate spread, the rate above LIBOR at which infrastructure companies can borrow, was raised to 450 basis points from 350 basis points, the ministry said.

"From a psychological point of view, it is stronger for the rupee. With the world credit markets looking bad, I don't think this money is there for India," Harihar Krishnamoorthy, treasury head at Development Credit Bank said.

"Indian spreads have gone up and liquidity dried up. The results will show after the global stress wears off," he said.

The Reserve Bank of India (RBI) announced last week it would increase banks' access to funding to counter any liquidity problems after the upheaval on Wall Street. It also said it would sell dollars to augment supply in the foreign exchange market.

"We need to attract more capital. India runs minimal risk of a surge in inflows in the near term," said Shubhada Rao, an economist with Yes Bank.

"The rupee has depreciated significantly in the past few weeks and these measures will help in some upward correction."

India infrastructure investment may slow, won't stop



India must heavily increase their infrastructure spending just to cope with growth. A reduction is a fatal sign for development. :ohno:

ADB gives 71 mln dlr supplementary loan to India water project
14 October 2008
Agence France Presse

The Asian Development Bank (ADB) has approved an extra 71 million dollars for an urban water project in India to cover costs after became held up, the Manila-based lender said Tuesday.

It extended a 181 million dollar loan in March 2005 for the project in Madhya Pradesh state to build water and sewerage systems in the cities of Bhopal, Gwalior, Indore and Jabalpur.

But delays in awarding contracts, the appreciation of the Indian rupee and price increases drove the cost of the project up.

"Without the additional funding, the project in its original scope cannot be completed, and the integrity of the urban infrastructure system for water supply, sewerage, and waste disposal will be severely undermined," ADB economist Hiroyuki Ikemoto was quoted as saying.

More bad days ahead for Indian realty, infra-Deloitte

MUMBAI, Nov 5 (Reuters) - India's realty and infrastructure sector would see more bad days in the next 6-9 months and that would knock off 2-2.5 percent off the country's economic growth, a senior official of consultancy firm Deloitte said.

There is a pile-up of inventories in the real estate sector and infrastructure will face funding funding problems as investors such as private equity and venture capital firms stay away, Principal Economist Shanto Ghosh said on Wednesday.

"Our impact so far has been largely felt on the financial sector of the economy. I think we have still not seen the worst days in the real sector of the economy," he said.

"That trickling down which has been happening in the U.S. over the last 3-6 months has still not happened in India yet, so I think there is going to be some trickling down to the real activity of the economy over the next few months."

There could be further outflow of foreign funds from India if any new crisis in other areas of financial services such as credit card default erupts, he said on the eve of the release of a report on the financial crisis and its impact on India.

Foreign funds have pulled out around $12 billion so far this year. "Bad news percolates faster and the impact is much bigger than good news," he said.

However, the rebound would happen much faster in India as it is much more insulated and has strong fundamentals, he said adding the global rebound should start happening from the first quarter of 2010.

PM asks Oman to invest in Indian infrastructure sector


MUSCAT: Grappling with economic slowdown as a result of global financial crisis, Prime Minister Manmohan Singh on Sunday asked energy-rich Gulf
countries to invest their surplus funds in the nation's key infrastructure sectors.

Asia's third largest economy is looking at boosting spending to prevent the economy from going under.

"I would call upon captains of Oman's industry and financial companies to invest surplus liquidity into key infrastructure sectors in India. We are determined to create a hospitable climate for investment, particularly foreign investment from friendly countries like Oman," Singh said addressing Omanese business community here.

The global financial crisis is likely to slow the pace of economic growth in India to 7.5 per cent in the year ending March 31, 2009 and it may record a rate of between 7 and 7.5 per cent next fiscal. The growth rate comes on back of 9 per cent acceleration in 2007-08 fiscal.

"Against the background of the current international economic and financial situation, I suggest there is an even greater need for us to join hands to shape counter-cyclical growth strategies by focusing on real economy," he said.

"India and Oman are well placed to convert this challenge into an opportunity. We count on you to be the architects of this magnificent change," he added.

The two nations yesterday evening signed an agreement to set up India-Oman Joint Investment Fund with an initial seed money of USD 100 million, that would eventually go up to USD 1 billion, for investments in infrastructure, tourism, health, telecom, utilities, urban infrastructure and other sectors.

"Our infrastructure financing needs are estimated to be USD 500 billion in the next five years," he said.

How open are the Middle East sovereign wealth funds to investing in India? It seems a logical choice given the close distance and large potential.

India approves 21 road projects - finmin

NEW DELHI, Dec 8 (Reuters) - The Indian government in November approved 21 highway projects to be built with private funding and are estimated to cost 283.03 billion rupees, the finance ministry said in a statement on Monday.

Since January 2006, a government panel has approved 87 infrastructure projects worth 898.91 billion rupees, the ministry added in the statement.

On Sunday, the government announced an economic stimulus package that included duty cuts on a range of manufactured products and an extra spending of 200 billion rupees in the 2008/09 fiscal year.

Centre to give Rs 5k-cr boost for rural roads
16 December 2008
The Economic Times

NEW DELHI: In yet another pre-election booster to improve rural connectivity and infrastructure spend, the government is likely to announce a new package for rural roads by providing an additional Rs 5,000 crore package, under the government's planned programme, according to a senior government official.

The extra allocation will be made under the government's existing Bharat Nirman programme, which has special outlays for development of rural infrastructure. The increased outlay would seek to cover smaller villages under its expanded form.

The changes would mean that all villages with a population of 500 or more people and hills and tribal areas with a population of 250 people would be provided with roads. The current scheme covers only villages with a population of 1,000 people and hills and tribal areas with 500 residents. The additional spending would be over and above the recently announced Rs 20,000 crore economic booster spend in plan expenditure of the government.

At present, the rural road programme involves construction of all weather roads, connecting 60,800 villages with a total investment of about Rs 1,75,000 crore.

It has been felt that the recently announced stimulus package for the infrastructure sector has not done enough for rural India. While the government is committed to improve rural infrastructure under the flagship Bharat Nirman programme, rural roads would be given additional funds to cover larger number of habitations, the government official said. "The expanded plan with the changes would be announced later this month, " the official said.

Improvement of rural infrastructure has also been mentioned in the national common minimum programme (NCMP) of the ruling United progressive Alliance (UPA) government. With general elections round the corner, the government is looking at showing tangible results in rural centres too.

The new package for rural roads is also being considered due its poor implementation in the past. The government targeted to cover every village of over 1,000 population (500 in case of hills and tribal areas) will all weather roads by the end of FY09.

In all, about 80,500 projects were cleared for construction of new roads and upgradation of existing ones. However, till the end of November 2008, only 60% of the new road construction and about 40% upgradation work has been completed.

"With the proposed changes in habitation clause, the completion target for the rural road programme would be extended by two years to march-end 2011," said the official. The new road construction under the rural roads programme involves construction of 1,90,000 km of roads with an investment of Rs 1,75,000 crore. This would connect 60,800 villages.

The upgradation work involves 24,500 projects, covering 1,15,000 km of roads with a total investment of about Rs 48,000 crore. The problems in rural roads follows delays in the government's national highway development programme (NHDP) where most stretches have overshot their targets.

Govt seeks House nod for extra funds for rail projects

NEW DELHI, Dec 18 (Reuters) - The federal government sought parliamentary approval on Thursday for an extra spending of 17 billion rupees in the year to March to speed up ongoing projects of Indian Railways during the 2008/09 fiscal year.

In a statement, the railways ministry said the additional funds would be used for "accelerating the progress of various railway projects" including those which have been categorised as national projects.

In October, Railways obtained Parliamentary approval for additional spending of 5.26 billion rupees, over and above 299.39 billion rupees budgeted for 2008/09.

Indian Railways have drawn up plans to upgrade rail infrastructure and buy new wagons at a cost of 375 billion rupees.

Rlys tie up funds for dedicated freight corridor

The railways are likely to secure a loan of Rs 37,200 crore from multilateral institutions, including the World Bank and the Asian Development Bank (ADB). The amount is expected to take care of the construction of about 76 per cent of the proposed 2,739-km dedicated rail freight corridor (DFC).

The project is expected to augment the capacity of railway network to handle the large increase in freight traffic over the coming years. The DFC would enable freight trains to run at 80-90 km per hour, compared with the present speed of 25-30 km per hour.

The Japan International Cooperation Agency (JICA) has already committed a loan of Rs 18,000 crore at an interest rate of 0.2 per cent for funding the 920-km stretch between Rewari and Vadodara on the proposed western dedicated freight corridor. The final agreement between the JICA and the railways is expected in the first quarter of 2009-10.

Meanwhile, the World Bank has given its approval in principle for a loan of Rs 12,000 crore for the 730-km Mughalsarai-Khurja section, while the ADB has shown an interest in lending Rs 7,200 crore to finance the 430-km stretch between Khurja and Ludhiana. Both these stretches fall on the proposed 1,256-km eastern freight corridor between Ludhiana and Howrah.

“The rate of interest at which the World Bank and the ADB will advance these loans is likely to be 5.5 per cent. We have already started the process of negotiations with these institutions and a final agreement will be signed by the end of 2009,” said a senior official of Dedicated Freight Corridor Corporation of India Ltd (DFCCIL).

As part of the World Bank funding programme, DFCCIL has appointed a consortium of consultants which includes Parsons Brinkerhoff India, Halcrow, Wilber Smith and Lee Associates for system design, finalisation of bid documents and supervision of the construction of the 300-km Khurja-Kanpur section on the eastern dedicated freight corridor.

“We have already submitted the draft pre-qualification document for design and build contract to the World Bank. The bidding process for the same is likely to commence by March 2009,” said the DFCCIL official.

Meanwhile, a technical assistance team from the ADB has held consultations with senior members of the Railway Board and DFCCIL. Following this, the ADB has proposed to provide technical assistance for undertaking a feasibility study of the Ludhiana-Khurja section.

A JICA report has estimated the total cost of constructing both western and eastern freight corridors at Rs 37,218 crore.

The debt-equity ratio of the project has been decided at 2:1. The railways will bring in the equity part.

“The commitments from multilateral institutions are a little higher than the estimated requirement. Since the project will be implemented over the next six years, there is always a chance of cost escalation. In such a scenario, it will be easy for them to lend more without going through the approval process,” said the DFCCIL official.

Source: http://www.business-standard.com/india/news/rlys-tiefunds-for-dedicated-freight-corridor/21/06/345282/

Govt approves road improvement projects worth Rs4,802.95 cr

New Delhi: The government today approved various road improvement projects worth Rs4,802.95 crore, spanning 639.75 km in Orissa, Madhya Pradesh, Maharashtra, Tamil Nadu and Andhra Pradesh.
The Cabinet Committee on Economic Affairs gave its nod for four-laning of Panikoili-Keonjhar-Rimouli, Rimouli-Roxy- Rajmundra and Chandikhole-Duburi-Talcher stretches in Orissa totalling 402 km to be executed with an estimated cost of Rs2,989.27 crore under National Highways Development Programme (NHDP) phase-III A on build operate, transfer (BOT) basis.
CCEA approved four/six laning of Madhya Pradesh/ Maharashtra Border-Dhule section and six-laning of Pimpalgaon-Nasik-Gonde section of National Highway-3 under NHDP phase-III A on BOT basis.
The Committee also gave it nod for two-laning of paved shoulder of Karaikudi-Ramanathapuram section of NH-210 in Tamil Nadu NHDP phase-III. The 80-km project is estimated to be executed at a cost of Rs530.33 crore.
The CCEA also approved four-laning of Armur-Adloor-Yellareddy section of NH-7 in Andhra Pradesh under NHDP phase-III on BOT basis. The 60.25 km project is expected to be completed at a cost of Rs531.67 crore.
All the projects will be developed by the National Highways Authority of India (NHAI) through private sector concessionaires who will be selected by NHAI following two-stage bidding process, Minister for Science and Technology Kapil Sibal said here.

Livemint

New Delhi 2010 Games will overshoot budget, says chief

NEW DELHI, Jan 6 (Reuters) - Higher construction costs will force the 2010 New Delhi Commonwealth Games to go over budget, organising committee chairman Suresh Kalmadi said on Tuesday.

"We would be slightly increased because of the steel price increase and other things," he said at a news conference after a venue inspection. "That is before the government (for their consideration)."

Government figures last month estimated expenditure at around 79 billion rupees ($1.6 billion). It included money spent on infrastructure and on the 2008 Commonwealth Youth Games.

The Commonwealth Games Federation (CGF) raised concerns in November over the slow pace of work, which forced the November World Badminton Championships to be shifted to Hyderabad.

Kalmadi said he was confident the various stadiums would be completed well before the Games, scheduled from Oct. 3-14, 2010.

"Most of the infrastructure would be ready by December," he said. "From March 2010 onwards, we hope to have test events."

The CGF has also raised concerns that action over the athletes' village could throw the future of the event in doubt, with a petition opposing the project on environmental issues pending before the nation's highest court.

"The matter on the village has gone to the Supreme Court," Kalmadi said. "But there is no stay (order) and work is going on as per schedule. We're confident it will be sorted out."

CGames: 'Melbourne ready' if Commonwealth pulled from India
17 January 2009
Agence France Presse

Melbourne is ready to step in and host the 2010 Commonwealth Games if the event is pulled from New Delhi, a report said Sunday.

The four-yearly Games, featuring 71 teams from Commonwealth countries, are due to be held in the Indian capital from October 3-14, 2010, but concerns remain over construction of its sporting and transport infrastructure.

Building delays have already forced this year's world badminton championships to be shifted to the southern city of Hyderabad.

In November, Commonwealth Games Federation co-ordination committee chairman Austin Sealy said India could miss out on hosting the Games if a dispute over the construction of the athletes' village was not resolved.

The Melbourne Age, citing senior sports officials, said the Victorian state government had discussed contingency plans to host the event which it last held just three years ago.

One of the officials, who declined to be named, said that while Melbourne had not been asked to step in, "if things don't improve (in Delhi), we will."

Another official added that if Delhi was unable to host the Games, Melbourne would likely be asked to do so.

"It would be an obvious thing to do. Melbourne had it last, so they know we've got the infrastructure and facilities," the official said.

But Lalit Bhanot, general secretary of the Delhi Games organising committee, bristled at the suggestions.

"There is no possibility of a shift in venue for the Commonwealth Games and there is no reason to do it," he told the newspaper.

"I don't know why this issue comes up. There should not be one percent of doubt about Delhi staging the Games."

Games-New Delhi seeks Commonwealth Games lifeline

NEW DELHI, Jan 22 (Reuters) - New Delhi's local government has sought heavy federal funding to complete projects for the 2010 Commonwealth Games, raising fears the economic meltdown could bite into the event.

The state government in the Indian capital, due to stage the games from Oct 3-14 next year, has said it had run out of extra funds to keep infrastructure work going.

"The government has no extra funds to spend next fiscal," Delhi state finance minister A.K. Walia told the Times of India on Thursday.

The local administration has sought around 50 billion rupees ($1.02 billion) from the federal government to finish various Games-related work taken up by public bodies, the paper said.

"Of the total money required, the state has sought rupees 500 crore (5 billion rupees) this year for the games and about rupees 2,000 crore (20 billion rupees) each for the next two fiscals," Walia told the paper.

He blamed a sharp revenue dip caused mainly by a decline in duty collection, as a result of a real estate value slump caused by the economic meltdown.

The event's organising committee chairman Suresh Kalmadi said a fortnight ago that the Games would overshoot its budget due to higher construction costs.

However, he had expressed confidence the various stadiums would be completed well before the Games.

The event, seen as a big advertisement for India's rapid economic growth, has been dogged by slow progress of work as well as a court petition over the location of the athletes' village.

Government figures in December estimated expenditure for the games at around 79 billion rupees ($1.6 billion).

It includes money needed for infrastructure and the sum spent on the 2008 Commonwealth Youth Games.

Several private builders -- some of them had taken up hotel projects -- were in trouble and the company building the Games village has sought government assistance to complete the project, the CNN-IBN channel reported on its website. ($1=48.98 rupees)

India OKs 3 infra projects for 20.6 bln rupees

NEW DELHI, Jan 22 (Reuters) - India has approved three infrastructure projects to be implemented by private firms with government assistance, amounting to 20.6 billion rupees, a finance ministry statement said on Thursday.

The projects, which include construction of container terminals at ports in Tamil Nadu and Goa, were approved by the Public Private Partnership Approval Committee, the statement said.

India aims to attract up to $500 billion investment in the infrastructure sector by 2011/12 to maintain its high growth.

Since 2006, the committee has approved 94 infrastructure projects worth 947.84 billion rupees.

All this CWG infrastructure problems is dissappointing!

Cabinet clears infra projects worth 334 bln rupees

NEW DELHI, Jan 29 (Reuters) - India's Cabinet has approved infrastructure projects, including a metro rail network in the southern city of Chennai, estimated to cost 334 billion rupees in total, a government spokesman said on Thursday.

The Cabinet Committee on Economic Affairs approved the widening of about 1410 km of highways.

The spokesman said private firms would be roped in for these road projects, expected to cost about 182.38 billion rupees.

The cabinet also approved the first phase of the Chennai Metro Rail project, covering about 45 km at a cost of 146 billion rupees, he said.

The project is held by the Chennai Metro Rail Corporation Ltd, an equal joint venture between the federal and state governments.

The government plans to raise 70 percent of the funds required for the metro project, expected to be completed by 2014-15, through debt.

It is likely to earn a total revenue of 4.36 billion rupees in its first year of operation, he added.

India has stepped up its spending on infrastructure as part of its efforts to stimulate an economy sagging in the wake of the global economic slowdown and high borrowing costs.

Last year, Indian authorities announced a stimulus package worth 200 billion rupees, a cut in factory gate duty rates by 4 percentage points and in key interest rates by 350 basis points.

FEATURE-Games-New Delhi's preparations criticised

NEW DELHI, Feb 26 (Reuters) - India's hopes of using the 2010 New Delhi Commonwealth Games to showcase its capital have hit fresh trouble with a parliamentary committee saying not enough has been done to prepare for the expected influx of visitors.

Affordable hotel rooms looked likely to be in short supply in the city, the committee told organisers, who are already facing criticism for delays in preparations for the Games.

"There appear (to be) utter lack of coordination, determination and sense of urgency amongst the agencies engaged in providing facilities to the tourists who will be visiting India in connection with the Commonwealth Games," said the panel on transport, tourism and culture in a report issued this week.

It said it was dismayed that the Delhi government had not sent its proposals to the tourism ministry until November and urged authorities to improve road and air links and security for tourists.

The report was a new blow to organisers of the October 2010 Games, who are already having to cope with the credit crunch, delays in building work and environmental protests.

Sports Minister Manohar Singh Gill last week compared the slow build-up to a big, lavish Indian wedding.

"I use an absurd analogy...this is India and we've weddings, monsoon weddings, the Indian style," he said at a business forum. "Till the previous evening we will run around...then stand together the next day and sing wedding paeans.

"Next October is not that far away," he said. "The schedules are something to watch, we (the government) certainly do. Although it started late, we're working hard. They will make it."

BUDGET REVISION

The Games were initially seen as a great opportunity for India to demonstrate its growth into a modern nation and its place as an economic rival to China but those hopes have dimmed.

Government figures in December estimated Games expenditure at around 79 billion rupees ($1.6 billion), including money spent on infrastructure and on last year's Commonwealth Youth Games.

Preparations have been hit by the financial meltdown, however. Private builders have sought funds from the Delhi government, who in turn have sought federal help and the initial budget faces revision.

"The cost estimates were done one-and-a-half years ago and all of them are undergoing revision," V.K. Verma, director general of the Games said. "The government is very aware there should not be any compromise."

In November, the Commonwealth Games Federation (CGF) raised concerns over the slow pace of work, which forced this year's World Badminton Championships to be moved to Hyderabad.

The Commonwealth boxing championships, originally due to be held in December in New Delhi, have been postponed until February or March next year because of delays in building the venue.

The Games village being built on the banks of the Yamuna, one of India's major rivers, is the subject of a legal case after a petition raised environmental concerns.

"New Delhi could lose the right to host the 2010 Commonwealth Games if organisers are forced to shift the athletes' village from its present location," the CGF said in November.

TEST EVENTS

Despite the problems, organisers remain upbeat.

"The organising committee is confident all the competition venues and Games village would be completed as per the target dates set for completion," vice-chairman Randhir Singh said on Tuesday.

"At most of the training venues work has already started while at the remaining (venues), work will be started shortly, but everything will be completed in time," he told a news conference at the netball venue under construction.

"We're all fighting hard to make sure we are making the right programme to hold a great Games," he said. "One or two things were left behind but there is ample time to catch up."

Test events are planned for between February and June next year, before a dry run of the Games in August.

Games officials said the parliamentary report was based on old data and might not entirely reflect the present situation.

"It is for the government, I think they will manage things," Singh said. "The Delhi government has said everything will be completed, it is a legacy issue for the government. Everyone is free to say what they want."

Port sector revival held up on funds crunch

MUMBAI, March 25 (Reuters) - Expansion and greenfield projects at Indian ports have almost ground to a halt as an economic slowdown has choked investment into the sector, which holds great potential as a growth driver, industry players said.

A fund shortage has delayed expansion at several Indian ports, raising concerns of higher time lags and congestion after an expected traffic revival in June, they added.

"Apart from 2-3 terminals coming up in 3-4 major ports, other projects are expected to face delays," said Manish Sharma, director at consultancy firm KPMG.

Among these are JSW group's captive port on India's eastern coast, Reliance Industries' Rewas project on the west coast, besides a few others in south India.

Much of the estimated 558 billion rupees needed to revive the sector was expected to come from private players. However, this is unlikely due to longer gestation period, tighter credit and a sharper-than-expected drop in economic growth, analysts said.

India is expected to grow around 7 percent in FY09, its slowest in six years, with even slower growth seen next year.

However, cargo traffic is expected to see a revival in June, but the country's 12 major ports -- which saw volume drop over 8 percent in April-Feb 2009 compared with last year -- are not equipped to handle it, analysts said.

"A scenario where capacity additions are put on hold, while cargo volumes pick up in due course could potentially lead to the recurrence of extreme port congestions in the future, similar to those witnessed in the recent past," KPMG's Sharma said.

With its strategic location straddling major trade routes and a long coastline that boasts a port every 20 miles, India's port sector was expected to be a major driver of trade and economic progress, but has not managed to deliver so far.

Even during the last 2-3 years, when trade was at its peak, India's largest container port, Jawaharlal Nehru Port Trust (JNPT), had a waiting period of up to 10 days.

Port of Singapore, in comparison, took just about half a day.

Capacity utilisation in India is also abysmal with three-fourths of its 200-odd ports being defunct or seasonal.

"There is a need for deeper draught ports and services such as bunkering, coastal shipping, connectivity and hinterland development," Bhavesh Gandhi, executive vice chairman of Pipavav Port, said at a conference in Mumbai recently.

Major ports -- which handle 7 million twenty foot equivalent units of container cargo compared with about 29 million by Port of Singapore -- are expected to see 7.7 percent volume growth each year till 2013/14, government data showed.

HOPE FLOATS

The public-private partnership model will help boost growth in the sector, Gandhi added.

Of late, corporates have started to invest in traditionally state-owned ports on a build-operate-transfer basis for 25 to 50 years to cash in on India's growing trade, but lacked the desired momentum, industry officials said.

AP Moller Maersk <MAERSKb.CO>, General Electric , Singapore's PSA International, UK-based 3i Group have already invested heavily in new and existing port projects.

In the current scenario, these companies and also other domestic players now stand to benefit from cheap land and construction costs, which should help speed up development in the sector, analysts and port officials said. "This slowdown is an opportune time for capacity expansion by existing ports due to lower cost of construction as well as equipment and significantly less market risk," a spokesman at Mundra Port & SEZ said.

Slowdown, political uncertainty hit India infrastructure

MUMBAI, May 12 (Reuters) - One of India's most ambitious infrastructure projects, an $325 million eight-lane bridge running through the sea off Mumbai, opens next month after negotiating a maze of bureaucracy, courts and street protests.

Ten years in the making, the 5.6 km-long (3.5 miles) Bandra Worli Sea Link, aimed at easing the financial capital's legendary traffic jams, is a symbol of the neglect of India's infrastructure and the challenges such mega projects face.

Budget overruns, disputes between the state and private contractors and protests and litigation by residents and fishermen concerned at the environmental impact and loss of livelihood all but killed the project.

As India gets set to usher in another coalition government vulnerable to the competing pulls and pressure of regional groups after elections this month, the task of building a world class infrastructure on par with China seems even more challenging.

"We've had a massive under-investment in infrastructure in the last few decades and the result is blindingly obvious to anyone," said Anu Madgavkar, a partner at McKinsey & Co.

"There's no magic wand that will make our infrastructure problems disappear in a couple of years; even if we go full steam ahead, we'll just about prevent the situation from deteriorating further," she said.

At least the Mumbai sea link will see the light of day; dozens of other projects across the country face an uncertain future because of a combination of political instability and the worst financial crisis in decades.

FINANCIAL CRISIS

India estimates it needs $500 billion by 2012 to upgrade its overwhelmed airports, potholed roads and inadequate utilities.

Easing regulations and a booming economy had drawn eager local and foreign investors to the table, but just as it seemed the public-private partnership model would ease India's infrastructure woes, the financial crisis turned the tap off.

"Response from the private sector has been muted and there is a rise in risk aversion around the world. So long as the downturn persists, India faces hurdles making much-needed improvements to its infrastructure," said Moody's.com economist Sherman Chan.

Infrastructure projects, being capital-intensive, long in duration and exposed to economic cycles, are particularly vulnerable to a slowdown, with several in Asia failing or hit by delays and corruption during the crisis a decade ago.

Add to that India's underdeveloped capital market and tussles over subsidies and land ownership, and the task is tougher.

"We still have a socialist mindset: we think the government has to provide everything, and that too at subsidised rates," said Nitin Zamre, a director at CRISIL's infrastructure advisory.

"Subsidies on water and power are politically sensitive areas, and the government is not willing to let go entirely."

But with a fiscal deficit of around 10 percent of the GDP, government finances are not in good shape and there are constraints in managing and executing infrastructure projects.

Both the ruling Congress party and the main opposition Bharatiya Janata Party have promised to tackle the problem.

The Congress wants to build rural Internet connectivity while the business-friendly BJP talks about investments in highways and clean energy.

"In the short term, until a new government is in place, we're in for a bit of a lean period as far as implementation of projects goes, but it is in the interest of the new government to quickly ramp up," said Madgavkar.

Commonwealth Games: India working to secure 2010 Games, says chief
20 May 2009
Agence France Presse

Security is the prime concern ahead of next year's Commonwealth Games in New Delhi due to the tense situation in the region, organisers said on Wednesday.

"We have to satisfy the Commonwealth Games Federation (CGF) on the security aspect and I am confident we can do that," organising committee chairman Suresh Kalmadi told local media.

"Security is a very important aspect of the Games and we need to have more communication with the CGF on that."

Security concerns in South Asia have grown after 166 people were killed in militant attacks in Mumbai last November, and gunmen ambushed the bus carrying the Sri Lankan cricket team in Pakistan in March.

Seven Sri Lankan cricketers were injured in the incident, forcing the International Cricket Council to abandon plans to hold a part of the 2011 World Cup in Pakistan.

The CGF and Indian organisers have said that security for the Commonwealth Games, featuring athletes from 71 nations and territories of the former British Empire, will be on par with last year's Beijing Olympics.

"The CGF had sent a couple of delegates to check on the security," said Kalmadi. "They have given a report for us to follow up on.

"The scenario in all our neighbouring countries also worries them, so we have to give them a lot of comfort on security."

Organisers are looking at the October 3-14 Games next year to showcase their ability to stage major sporting events with an eye on hosting the Olympics by 2020.

Kalmadi admitted there were minor delays in construction of two venues, but promised to have all infrastructure ready six months ahead of the event.

"It took us a while to procure mandatory approval for some infrastructure projects," he said. "That led to a delayed start, but we have now managed to catch up and most venues will be ready in time for the Games."

Kalmadi said the CGF executive board were satisfied with the progress during a visit to New Delhi earlier this month.

"The CGF executive inspected the venues and expressed satisfaction with the way the infrastructure was coming up," he said.

"We need to maintain the momentum, and the organising committee will keep monitoring the execution of infrastructure contracts."

New Delhi is only the second Asian city to be awarded the Commonwealth Games. The Malaysian capital of Kuala Lumpur hosted the 1998 event.

INTERVIEW-India IL&FS Investment may launch city infra fund

MUMBAI, June 25 (Reuters) - IL&FS Investment Managers is considering raising a fund to invest in India's overstretched city and social infrastructure in 2010, the head of the country's oldest private equity firm said on Thursday.

Archana Hingorani, who manages $2.5 billion, said the key ingredients for the development of core infrastructure such as highways, ports and power plants were in place but water, sewage, healthcare and roads in cities were crumbling.

"We could look at a fund for city infrastructure sector, may be in 2010. We are very clear there are opportunities, but have we structured a potential fund for it? Not yet," she said told Reuters in an interview.

The urban and social infrastructure fund would be feasible to start at around $200 million, Hingorani said.

The firm also hopes to raise another $200 million for an Asia infrastructure fund it runs with Standard Chartered by September to take the size to $800 million, she said.

IL&FS, which manages seven funds including two real estate funds worth $1.4 billion, also plans to launch funds in 2010 as most of the money would have been committed, she said.

ANALYSIS-India's infrastructure hopes may hit funding roadblock

MUMBAI, June 26 (Reuters) - India's hopes of launching much-needed road, port and power projects may be deflated by a funding squeeze as government finances are constrained, long-term domestic money is scarce and battered overseas investors and lenders watch from the sidelines.

If starved of the spending, India's overburdened infrastructure is bound to hinder the country's efforts to return to an economic growth rate of 9 percent a year and hurt its goal to become the fastest growing major economy in the world in 2010.

Asia's third-biggest economy needs $500 billion for its infrastructure over the five years to 2012, the government has estimated. About 30 percent of that is expected from private funds, as the government tries to contain a widening fiscal deficit.

Developers tend to raise equity financing through founders or overseas investors and borrow funds for short to medium terms from financial institutions. But money flow is tight these days.

"We have to seek alternative ways to raise capital," said Jai Mavani, head of infrastructure at consultancy KPMG, adding that the big pool of domestic savings must be tapped. "We have some of the highest savings rates in the world," Mavani said.

According to some estimates, household savings in India in 2007/08 was around 7.3 trillion rupees ($150 billion), from a population of 1.1 billion. Most of that is in low-risk bank deposits, insurance policies and pension funds, all of which are heavily regulated.

Infrastructure projects require capital that is willing to be committed for decades, and projects can carry substantial execution and financial risk.

"It's a new animal," said Nitin Bhasin, analyst, Nobel Group, an equity advisory firm for institutional investors. "The money is in the system but regulations have to be made more conducive."

WEAK SECTOR, WEAKER BOND MARKET

The government has announced extra spending of 200 billion rupees and cut tax rates as part of stimulus packages to boost growth, which widened the fiscal deficit to 6.2 percent of GDP in FY09 against the previously targeted 2.5 percent.

Neither India's banking system nor the domestic institutions have the money to finance India's infrastructure needs, and corporates want to tap retail money.

The firms want pension funds to invest up to 15 percent of their money in infrastructure projects and await cues from the approaching budget to be announced on July 6.

Bankers say the foreign currency market is unwilling to extend long-term funds. Meanwhile, there is a reluctance among investors to pick up long-maturity bonds, such as those issued by infrastructure companies, in an illiquid bond market, on expectations yields will rise later.

"Ideally, you would expect the bond market to be the best vehicle for meeting infrastructure investment requirements. You get access to long duration money and all infrastructure assets are long gestation," said S. Nanda Kumar, a Fitch Ratings analyst.

Since a lot of India's infrastructure projects are in the early phases of construction, their assigned ratings are too low for bond market investors, such as banks, pension and mutual funds and insurance companies, to be able to invest in them.

The low ratings reflect the risks infrastructure projects pose, including construction and completion, high indebtedness and susceptibility to cash-flow volatility.

"There has to be innovation in terms of financing," said Amitabh Das Mundhra, director of Simplex Infrastructures Ltd , arguing that the risk factor declines over an asset's life. Simplex builds roads, power utilities and sewage systems.

"It's not a liquidity issue. It's the viability issue people need to address," he said.

Under contract terms for newer projects, companies are responsible for design, execution and funding. In return, they have control over the asset for a few decades to reap rewards, before handing it back to the government, the original owner.

Builders want longer concession periods and better terms to attract debt and equity financing for 15-30 years' tenure that infrastructure favours and is especially needed for the latest round of bidding for large build-operate and transfer (BoT) projects.

OVERSEAS MONEY

Debt-burdened developers have been looking to the equity markets to raise funds, although many market insiders say the window for equity-raising is open only to the strongest players.

GMR Infrastructure , a stakeholder in New Delhi's international airport, one of the busiest in the country, managed to attract just over half the $1 billion it is hoping to raise during an investor roadshow this month, banking sources said.

So far, private equity firms have not put any money into construction this year and invested just $160 million in 2008, Thomson Reuters data showed.

"The government has put a lot of restrictions and that, sometimes, the private equity funds and (foreign) pension funds are not comfortable with," said Vishwas Udgirkar, executive director at PricewaterhouseCoopers India.

He said infrastructure developers will be constrained until they can find more sources of funding.

"Unless and until they can tap more avenues for raising equity, it's difficult for them to go after more projects," he said.

India needs funds, policy for infrastructure

NEW DELHI, July 2 (Reuters) - India's efforts to revamp its creaking infrastructure are constrained by shortage of long-term finance and policy initiatives are needed to speed up projects, the government said in a report on Thursday.

In an economy survey, ahead of an updated budget on Monday, the government said it was a "challenging task" to achieve $500 billion investment the Planning Commission estimated was needed over five years to 2012 to upgrade the country's overburdened roads, airports and other facilities.

Foreign borrowings for infrastructure projects fell to $6.92 billion in the fiscal year ended in March from $10.2 billion a year before, the survey said.

Equity offerings by private-sector infrastructure companies slumped to 147.2 billion rupees ($3 billion) in 2008/09 from 870.3 billion rupees a year earlier, it said.

The infrastructure sector has come into focus following a slowdown in the economy, which grew 6.7 percent in 2008/09 in its weakest pace in six years and well below the 9 percent and more seen in the previous three years.

Even when a project achieved financial closure further delays were caused by disputes over land acquisition, raw materials and capital goods shortage, environmental issues and inadequate availability of skilled workers, the survey said.

"These problems have wide ramifications," it said. "There is no option but to address them systematically as timely implementation of projects is critical for ensuring their financial viability," it said.

National Highways Authority of India (NHAI), which builds, maintains and manages highways, could receive bids only for 22 projects in 2008/09 as the bidders indulged in "cherry-picking" for want of funds, a NHAI official told Reuters in April. ($1= 47.8 rupees)

Indian infra a stronger theme post-budget: Kotak

MUMBAI, July 7 (Reuters) - Indian infrastructure has emerged a stronger investment theme post-budget on plans of higher government spending and improved external funding environment, a top strategist at India's Kotak Group said on Tuesday.

Alroy Lobo, who oversees about $2 billion as chief strategist and global head of equities for the asset management arm of the group, said he also favoured consumption given India's demographic advantage and thrust on spending in rural areas where most of its people live, but infrastructure remained his top bet.

"Infrastructure is clearly the bet I would like to place on," Lobo told Reuters in an interview.

"If you look at the infrastructure programme, they have seen massive increase in expenditure," he said, referring to the budget unveiled on Monday.

In his budget speech, Finance Minister Pranab Mukherjee promised greater flexibility to government-run Indian Infrastructure Finance Co. to fund projects and asked state governments for speedy implementation of projects.

The budget allocated 128.87 billion rupees for urban infra, 87 percent higher than a year-ago, and provided 39.73 billion rupees for housing and basic amenities to the urban poor.

It also raised spending for national highway development programme by 23 percent over 2008/09, set aside 10 billion rupees for irrigation projects and aimed to increase investment in infrastructure to more than 9 percent of the GDP by 2014.

"Even if you assume slippages and you assume it's not 9 percent but 8 percent, the sector is going to grow at a very strong pace in excess of 20 percent," Lobo said.

"Which industry will give you sustainable growth story of 20 percent plus?" asked Lobo, whose firm holds shares such as Larsen & Toubro and Bharat Heavy Electricals .

He said the segment had contracted significantly in 2008 on fears a funding crunch would derail infrastructure projects.

Now, the pressure had eased and external commercial borrowing market revived, giving hopes that many projects, which were still on the drawing boards, will start getting executed.

"There is ample global liquidity which is wanting to find a place to rest," he said, adding Indian would be a major gainer given a strong government and easing geopolitical risks.

He said both the equity and bond markets over-reacted to the budget on Monday, with shares dropping nearly 6 percent and bond yields rising the most in three months, mainly due to projected fiscal deficit of 6.8 percent and higher borrowing programme.

But Indian shares' valuations look fairly attractive, Lobo said, adding he expected a major rebound in earnings for local firms in financial year 2011.

"When you look around the world, we are in a natural sweet spot and now we have got a very strong government," Lobo, one of whose infrastructure funds was among the world's top 100 performing stock funds in quarter to June, said.

Wagon makers demand infra push, more trains

MUMBAI, June 30 (Reuters) - India's wagon makers have demanded speedy execution of rail infrastructure projects, clearing pending proposals for private participation and more passenger trains in the upcoming budget.

India's rail budget, which allocates funds and announces reforms for the sector, is to be announced on July 3 by Mamata Banerjee, the newly-appointed rail minister.

"The Indian Railways need to ensure an increased contribution of the rail sector towards infrastructure creation and enhancing the growth pace of the Indian economy," the Associated Chambers of Commerce and Industry of India (ASSOCHAM) said.

The railway's outdated technology, poor condition of its stations and increased competition from roads are some of the impediments blocking the growth pace of the Indian economy, ASSOCHAM said in a budget recommendation in June.

India's economy grew 6.7 percent in 2008/09, its weakest in six years, well below 9 percent rates of the last three years.

The world's second-fastest growing major economy is on a drive to improve its creaky infrastructure and boost rail connectivity between industrial hubs and major ports.

With a 63,327-kilometre long network, the railways forms an integral part of Indian life, transporting over 18 million passengers and over 2 million tonnes of freight daily.

While work on the west and the east dedicated freight corridors, spanning about 2,800 kilometres, has started, company officials said there is scope for a southern passage too.

"The railways now should look at the south, south-east and south-west corridors. There is huge cargo available, which is moving by road, which the railways must target," AK Vijay, vice president, commercial, Texmaco Ltd , said.

Currently, roads carry about two-thirds of the country's total cargo, while rail carries just a third, Vijay said, adding, "This total lopsiding in freight movement has to be corrected."

SECTOR DEMANDS

Wagon makers such as Titagarh Wagons , BEML and unlisted firm Jessop expect a boost in spending on long-distance, faster passenger trains and new metro rails at India's growing cities, to help gain orders.

They also demanded orders from the railways to be placed up to two years in advance to help planning for long-term production and to ensure timely deliveries of wagons. Currently, the railways places orders annually.

Rail operators, on the other hand, want stability in haulage charges to enable long-term contracts and reduce turnaround time, officials said.

"Frequent changes (in rates) cause problems for us. It's not possible to pass on all the charge (to users)," Sachin Bhanushali, president of Gateway Rail Freight Ltd, a unit of Gateway Distriparks , said.

Arshiya International and Sical Logistics Ltd also have licences to run container trains in a market dominated by state-run Container Corp of India.

India to ease rules for road project investments

MUMBAI, July 10 (Reuters) - India aims to reform policy and ease investment rules for infrastructure projects in an effort to attract capital to rebuild and expand its overburdened road network, the road transport minister said on Friday.

The government hopes to reduce the likely gap between planned and actual investment by ensuring more financial participation and through measures to improve the risk-return equation for private players, Kamal Nath said in a meeting with investors and bankers.

"The lack of roads, and in the larger context, all of infrastructure, is a major challenge to our economic reform programme," the minister said.

The National Highways Authority of India will seek bids for 6,563 kilometres of road projects in the next two quarters costing 604.8 billion rupees ($12.4 billion), its chairman told Reuters on Friday.

India has a road network of about 3.4 million km (2.1 million miles), of which about 70,000 km are national highways.

Nath said the government expected to add 12,000 kilometres of roads this year at a cost of 1 trillion rupees ($21 billion), and said preference would be given to the toll model for new roads.

Nearly 60 percent of the new roads are planned on the toll-based model, he said.

"We should look to toll roads as far as possible. We should look to build up specialised tolling companies, as in Europe," he told reporters at a press conference after the meeting.

Earlier this week, Nath told Reuters the government had earmarked $20 billion a year for road building and expected foreign investors to fund half of this.

In its annual budget this week, the government raised funding for national highways by 23 percent, and provided for state-run India Infrastructure Finance Co Ltd to refinance bank loans for long-term infrastructure projects.

India's road expansion program has been hampered mainly by lack of access to funds, but other structural problems have also stymied investment, including the process of offering and bidding projects.

Nath said the government was also looking at improving documentation to keep investment attractive, and has already taken steps related to streamlining land acquisition.

"We have decided to award bids only once possession has been taken for 80 percent of the land, and notifications have been issued for the balance 20 percent," he said. ($1= 48.7 rupees)

28 arrested in India for protesting power outages
15 July 2009

LUCKNOW, India (AP) - Police fired rubber bullets and arrested 28 people for allegedly setting fire to government property during a violent protest against power outages in northern India as it reels under a heat wave, an official said Wednesday.

Three people were injured in the firing at protesters, who set on fire a state-owned utility's electricity transformer and a truck on Tuesday in Gorakhpur town, Uttar Pradesh state, said Surendra Srivastava, a police spokesman.

He said 11 people were arrested in Gorakhpur for blocking roads and disrupting traffic over complaints that homes have been getting power for only three hours a day.

Another eight people were arrested in Mahoba, another town in the state, for allegedly beating up government workers at a power supply center, Srivastava told The Associated Press. Other arrests were made in the state capital, Lucknow, and three other towns.

Those arrested were charged with rioting and attacking government workers, punishable by up to three years in prison.

Uttar Pradesh, home to 180 million people, is India's most populous state and one of the poorest. Its inadequate energy infrastructure has been unable to cope with the high demand for electricity as temperatures have peaked above 104 degrees Fahrenheit (40 degrees Celsius) in recent days.

The power shortages have left people without air conditioning or fans -- and, in some cases, without water, as electric pumps failed -- for hours each day.

Also Tuesday, angry protesters set some government buildings on fire in Amethi, a town represented in India's Parliament by Rahul Gandhi, the son of the ruling Congress party chief Sonia Gandhi. Traders, attorneys, teachers and students joined the protest.

Delay in monsoon rains by three weeks or more in northern India has hit power generation with water levels dropping in several dams.

"The Uttar Pradesh state gets 5,400 mega watts of electricity against its requirement of 6,200 mega watts. The paucity of 800 mega watts is leading to frequent power cuts," said Shailendra Dubey, an executive engineer with the Uttar Pradesh Power Corporation Ltd.

India faces chronic power shortages amid growing demand, spurred by its rapid economic growth, and a lag in building new power stations.

India needs $70 bln investment in roads - minister

NEW DELHI, July 17 (Reuters) - India will need to spend $70 billion on building roads over the next three years, Transport Minister Kamal Nath said on Friday, as it looks to infrastructure spending to stimulate demand and boost the economy.

Nath, speaking at an investors' conference in Singapore, said $40 billion of that could come from private investors, with a quarter of that coming for foreign investors. His comments were released by his office in New Delhi.

Nath had previously said he wanted foreign investors to fund as much as half of the $20 billion a year earmarked for road building.

India has a road network of about 3.4 million km (2.1 million miles), of which about 70,000 km are national highways and has set up a target of building 20 km of roads per day.

Coal fires up India's farmers against new power plants
1 August 2009
Agence France Presse

Rajni Ramakan Patil has a message for the energy companies that want to build coal-based power stations on the land that she and two generations of her family have farmed for more than 50 years.

"Even if you give us gold, we won't leave this place. This is our land," she said.

Rajni and five other families from the village of Poinad cultivate a small parcel of land on the flat and fertile plains near the coastal town of Alibag, about 130 kilometres (80 miles) south of the western city of Mumbai.

The land, used for sowing rice crops and growing vegetables like okra and white onions, is among 8,500 acres (3,400 hectares) earmarked for the construction of four giant thermal power plants.

Activists opposed to the development fear it could destroy the livelihoods of thousands of people in the area, pollute the clean air and soil and create health problems among the poor farmers and their families.

"They only know how to sow, how to manage fields, how to harvest, how to fish," said Satish Londhe, who is spearheading the villagers' fight against the proposals.

The situation in the lush foothills of the Western Ghats mountain range embodies the problem facing India: how does it meet the increasing demand for energy as the country's population explodes and economic growth continues.

According to the International Energy Agency, more than half of the world's energy demands by 2030 will come from India and its fellow emerging economic powerhouse China.

But while China was reportedly building two new power stations per week, India's energy infrastructure has struggled to keep pace with rapid growth.

Some 400 million people currently lack regular electricity and even where it is available power cuts can be daily occurrences.

Maharashtra Energy Generation Ltd, a unit of India's largest private utility firm Reliance Energy Ltd, Tata Power and the other companies involved in the proposed plants say the 7,700 megawatts produced will ease supply problems.

The villagers and environmentalists supporting them accept the need for more electricity but question whether coal is the answer.

With concern about high levels of greenhouse gas emissions from the burning of fossil fuels, they want renewable energy, which currently supplies about 25 percent of India's electricity, to be given greater priority.

According to Greenpeace India, wind, solar and tidal power could provide up to 35 percent of the country's power by 2030, with less environmental damage and social consequences.

"People don't want the project," said Vishnu Mhatre, a medical doctor who runs a clinic near the proposed power plant sites. "They want change but they don't want pollution.

"They want electricity but electricity can be provided by wind or other renewables."

But India -- the world's third-biggest producer of electricity from fossil fuel -- appears set on coal, which at present provides just under 55 percent of the country's power.

The ministry overseeing the industry maintains that coal will continue to take "centre stage of India's energy scenario" in the years to come, calling it a "unique ecofriendly fuel service to (the) domestic energy market".

Retired Admiral L. Ramdas, a former chief of the Indian naval staff, lives in Alibag with his wife, Lalita, who sits on the board of directors of Greenpeace International.

He called for more use of wind power and energy storage and described the potential displacement of thousands of farmers at a time of chronic food shortages in some parts of rural India as a "crazy, crazy situation."

The fight between India's fabled "common man" and at least two of its biggest corporate beasts might seem unevenly matched, but there is a precedent for a victory against the odds.

Proposals for another power plant in the southern state of Karnataka were shelved after popular protests.

"Even a project delayed is a limited victory," said Ramdas. "We will carry on. We will wear them out. They won't wear us out."

India to continue reforms for higher growth-finmin

NEW DELHI, Aug 4 (Reuters) - India will continue reforms to get back to a higher growth trajectory of at least 9 percent at the earliest and encourage state-run firms to sell stakes through public offerings, the finance minister said.

Asia's third largest economy was hit hard by the global crisis and expanded by 6.7 percent in 2008/09 (April-March), its slowest pace in six years and much lower than growth rates of 9 percent or more recorded in the previous three fiscal years.

A government survey last month said India needed to make sweeping reforms including removal of fuel subsidies, and speed up infrastructure development to attain 7 percent growth in 2009/10 (April/March).

"...it should be clear that the process of economic reforms that began in the early 1990s will continue in right earnest so that the economy is back on the path of 9 percent plus growth at the earliest," Pranab Mukherjee told industrialists on Monday.

IDFC eyes new fund, valuations a challenge

MUMBAI, Oct 6 (Reuters) - India's IDFC Private Equity, an arm of Infrastructure Development Finance Co Ltd , could raise its fourth fund for large infrastructure projects in late 2010, although rising valuations are a challenge for deals, a top executive said on Tuesday.

IDFC Private Equity, India's largest infrastructure-focused fund, has spent about 40 percent of IDFC Private Equity Fund III, which was closed in May 2008 after raising $700 million, chief executive Luis Miranda told Reuters in an interview.

However, it has not done any deals in a year as valuation expectations have shot up, he said.

"We could be back in the market 15 months later, by end 2010, for a new fund," said Miranda. "Today, if I were to raise a fund, it would be around $700 million."

"There are tremendous investment opportunities. The challenge is valuation," Miranda said.

India's benchmark stock index <.BSESN> has risen 75 percent so far this year, raising the valuation expectations of Indian entrepreneurs looking for partners and investors.

Many firms have raised funds via stake sales or initial public offerings as the market has surged. Share sales have raised more than $15 billion this year, most of it in recent months.

"One of the significant challenges is the stock market," said Miranda.

"Certainly, valuations are so high and investor appetite is so strong that people will say, 'I'd rather list my company rather than being stuck with a stupid private equity company on my board trying to tell me how to run the company'."

INVESTMENT EXITS After being unable to exit investments last year as the stock market slumped by more than half, the firm was now working on about half a dozen "liquidations", either full exits via trade sales or initial public offerings of shares, he said.

Ashoka Buildcon, an IDFC-backed construction company, has filed an application for a stock market listing, he said.

"We are comfortable with the pace of the investment. We have done four deals, which has been slower than before but it has been larger sums of money," said Miranda.

"What have been not been comfortable is the work we have been spending on our portfolio companies. We thought we would have 8 liquidity events in 2008, but we ended up with zero," he said.

He said the firm was spending more time improving the operations of companies it had invested in, saying they had to learn to survive in the medium term to take advantage of the long-term potential of India economic growth.

IDFC Private Equity has investments in 26 Indian companies, its website showed. Miranda said those that were focused on exports or related services, such as port builders, had been hit hard by the global downturn and the fund would focus more on firms driven by domestic infrastructure needs.

Solar lantern lights up rural India's dark nights
22 October 2009
Agence France Presse

For more than 100 Indian villages cut off from grid electricity, life no longer comes to an end after dark thanks to an innovative solar-powered lantern that offers hope to the nation's rural poor.

While cooking, farming and studying after sunset were once a struggle using inefficient kerosene or paraffin lamps, the solar lantern now provides a cheap and practical source of light.

The simple device, which is charged during the day from a communal rooftop solar panel, uses between five and seven watts of power and has a battery that lasts up to eight hours.

It also boasts a socket for charging mobile phones and a hand crank for topping up the power.

Villagers pay between three and six rupees (six to 13 US cents) a day to rent the lantern under the "Lighting a Billion Lives" (LaBL) scheme, which was launched last year to promote solar energy as the environmentally friendly answer to India's energy shortages.

"I keep my shop open as late as 9:00 pm. All my fish get sold by that time," a fish seller in Govindorampur district in West Bengal state who uses the lamp told researchers.

He is one of those whose lives have been transformed by the first wave of 5,000 lanterns distributed across nine states in India.

The LaBL scheme, run by The Energy and Resources Institute (TERI) in New Delhi, plans to eventually put 200 million lamps into use.

Organisers say each lamp should work for ten years, saving between 500 and 600 litres of kerosene which would produce about 1.5 tonnes of carbon dioxide.

Government figures show more than 10,000 impoverished Indian villages have no access to grid electricity, but the solar revolution could also change middle-class lives in urban India, where energy demands have soared.

Power cuts are common even in the smarter suburbs of New Delhi, Mumbai and Kolkata as residents soak up fragile supplies with air-conditioning units, freezers and washing machines.

While per capita electricity use in India -- 704 kilowatt hours in 2007-2008 -- is far lower than the 8,000 kilowatt hours per capita in many industrialised countries, there is no sign of consumption slowing.

"There is something like 30 percent overdemand. There's significant undergeneration as it is, even if you don't electrify any more," said Joel Slonetsky, a researcher with LaBL.

One "green" solution to the outages is a solar-charged inverter for backup electricity during cuts.

"People have started realising the scarcity of power," said Chandra Sekhar, CEO of Solar India Solutions, which sells the inverters in the southern state of Andhra Pradesh. "They have become scared so they don't mind spending an extra little."

Sekhar said most of his clients belong to the "domestic middle-income group" and they choose to shell out between 3,000 to 6,000 dollars for the solar inverters that work as well as traditional ones.

"Right now the technology is at a stage where we can say that it stands side by side with conventional electricity," said Ajay Prakash Shrivastava, president of the Solar Energy Society of India.

Increased efficiency and new materials mean the price of solar-powered equipment has been coming down for years, although initial installation costs are steep, said Shrivastava.

While the long-term benefits may be an incentive for some, he acknowledged that most people who have opted to use solar energy have done so out of necessity rather than a desire to be environmentally friendly.

"There are certainly people thinking in that direction," said Shrivastava. "But that group is not very large."

Slonetsky said although the Indian solar industry is constantly evolving, the options for domestic solar power use are still somewhat limited.

"It may just be a lag both in terms of consumer awareness and supply here." he said.

It is certainly not for lack of sunshine -- India receives a high level of solar radiation, equivalent to more than 5,000 trillion kilowatts or up to 3,200 hours of sun a year, according to government statistics.

The government hopes to harness this potential into 20,000 megawatts of solar power by 2020 as part of its National Solar Mission to promote renewable energy.

The plan envisions railway signals and water pumps eventually running on solar technology, but for now, villagers are content with the portable lamps that have made daily tasks such as cooking and cleaning easier.

"The lanterns have changed our position in society," said Ayesha Begum from Sahsoul village in the eastern state of Bihar.

Crisis? At India forum, it's back to business as usual

NEW DELHI, Nov 9 (Reuters) - After a year of global economic crisis and political limbo, investors in India are returning to business as usual -- this time with real hope that a new government might actually bring in needed financial reforms.

The word "reform" has been touted in India for years but if discussions at the World Economic Forum are anything to go by, Asia's third-largest economy may have turned a corner with its political will to help it reach 9-10 percent growth rates.

With the re-elected Congress-led government freed from the shackles of communist support, reforms from foreign investment in retail to recycling India's $400 billion in domestic savings to help fund infrastructure projects were seen as real possibilities.

Aside from 2005-2008 when India's economy expanded by more than 9 percent annually, the Asian giant has struggled to keep up with China's breakneck growth, hampered by infrastructure bottlenecks, red tape and an often plodding financial system.

"There is now political stability," said Saurabh Agrawal, head of investment banking for Bank of AmericaMerrill Lynch in India. "The government is making the right noises and it looks like there is political will."

Congress's May general election win, recent state victories and a weak opposition have freed the hands of reformists in the government, including Prime Minister Manmohan Singh.

"India is in a sweet spot," one senior banker said, as the centre of gravity over the last year has leaned towards emerging economies, while Western economies struggled to stay afloat.

"If you want a high rate of return, where would you invest? Europe? Brazil? Russia? China?" he added, referring each time to their economic or regulatory problems. "India does stand out."

Singh set the tone on Sunday, saying that clear signs of an upturn in the economy were laying the path for the expansion of long-term debt markets, deeper corporate bond markets, stronger insurance and pension sectors, and improved futures markets.

At a host of conference sessions, calls for reform resonated around the rooms -- foreign investment in universities, making highway concessional contracts better for private investors, changes to quicken court cases over contractual disputes.

Investors have also been buoyed by plans this week to sell stakes in profit-making state companies.

Many said they had heard all this before.

But there appeared genuine optimism that Singh and economic policymaker Montek Singh Ahluwalia, architects of India's ground-breaking market opening in 1991, now have the clout to fend off political pressures.

CUTTING THE KNOT

For many investors, financial reform could be the sword to cut the gordian knot.

India's savings rate is nearly 40 percent of GDP, but a restrictive and underdeveloped financial system means little is funnelled to capital markets to help fund, for example, the $20 billion a year the government wants to raise for highways.

Robert Morrice, chairman and chief executive of Barclays Asia Pacific, pointed out that around 40 percent of India's household savings was invested in physical assets like gold -- hardly the stuff of productive investments.

The government plans to introduce in parliament by December long-delayed bills proposing raising foreign stake limits in the pension and insurance sectors.

"To get 9-10 percent growth rates, India will need reform," said Kevan Watts, head of Bank of AmericaMerrill Lynch in India. "They have to ensure domestic capital flows into investments."

But participants warned that there were also far deeper problems to solve -- higher hanging fruits for a government apparatus that is notoriously slow and bureaucratic.

"Less than half of India has access to a bank account," said Kalpana Morparia, chief executive officer of J.P. Morgan in India. "It's not just about insurance and pensions."

Getting India's obselete infrastructure moving, and helping reduce growth bottlenecks, was for many the biggest challenge. The government has said it needs to spend $500 billion in the five years through 2012 on infrastructure.

But many question whether the Congress party, beholden to a rural base wary of change, can carry out bold reforms. And officials admitted there was little chance that India could emulate China's quick building of roads, ports and airports.

"We are not only the loudest democracy, but the rowdiest," said Kamil Nath, the transport minister.

:bash:India is stupid, it sends its labour and man power to UAE where they are proply utilised by the Emirates, record buildings growth and all, yet the same Indian labour cannot build thier own infrastructure in thier own country

"We are not only the loudest democracy, but the rowdiest," said Kamil Nath, the transport minister.


^^ this guy needs to STFU :mad: his democracy is rubbish and foul

^^ this guy needs to STFU :mad: his democracy is rubbish and foul

....?

Bankers seek concession for infra sector lending
14 January 2010

MUMBAI, Jan 14 (Reuters) - Union Bank of India said on Thursday bankers have sought concession for easing lending to the infrastructure sector at its pre monetary policy meeting with the central bank.

"The norms for infrastructure sector lending are a roadblock and we have sought some concessions," M.V.Nair, chairman and managing director, said.

"This I think will help long term lending to the sector," said Nair, who is also the head of the Indian Banks Association, the apex industry body for bankers.

Malaysia seeks more FDI from India
Nidhi Francis, Bloomberg UTV Published on Wed, Jan 20, 2010 at 19:28 IST

NEW DELHI: India’s first monorail in India will see its test run in Mumbai on January 26th. The mono rail cars are being made by Malaysia’s Scomi Group. Like Scomi, several Malaysian companies are investing in infrastructure projects. The Malaysian government is pitching in by signing a series of bilateral and multilateral cooperation agreements with India. Apart from infrastructure, Malaysian companies are interested in real estate, biosciences, ICT and transport sectors.

Malaysian companies are banking on the 500 billion dollar infrastructure projects planned by India. Currently 51 projects worth 2.3 billion in India are being implemented by Malaysian companies. Malaysian government sees the investment in the infrastructure sector to grow four fold to 10 billion dollars in the next two years. Major companies executing projects include Scomi, Bina Puri holding, Kensains Sdn Bhd and construction industry development board of Malaysia

Prime Minister Malaysia Najib Tun Abdul Razak, says, “Malaysian construction companies have a good tract record in the country. In the past five years they have completed projects worth 2.3 billion dollars and are currently working on projects of the same worth. We hope Malaysian involvement in India infrastructure projects will grow.”

Companies feel that the business climate in the country has improved in the past few years and the government’s resolve to speed up the implementation of infrastructure projects is a good sign.

Mohamed Feisal bin Ibrahi, executive chairman, Bina Puri holding BHD, says,“We have worked on highway projects in India and see a great opportunity to work more, we are waiting for more projects and certainly this decision by the government to undertake infrastructure projects will be good."

Redza Rafiq, chief executive, Koridor Utara, says,“Lots of opportunity in the infrastructure sector, we are keen to start projects in India."

India is the 6th largest source of FDI for Malaysia and Malaysian government hopes that more Indian companies will invest in financial services and knowledge sectors.

India may grow 8.5 pct in FY11 - Yes Bank

MUMBAI, Jan 21 (Reuters) - India may grow 8.5 percent in 2010/11 on increased infrastructure and rural spending and higher revenue that a proposed improvement of the tax system could generate, Shubhada Rao, chief economist of Yes Bank said.

The government's plan to divest stakes in public firms could add to the income streams, said Rao who expects the economy to grow 7.3-7.4 percent in the fiscal to March 2010.

"Higher spending in infrastructure projects, a systematic disinvestment program and the rolling out of GST (Goods & Services Tax) will be the key highlights of the FY11," Rao said.

Asia's third largest economy grew 7.9 percent in the quarter through September <INGDPQ=ECI> from a year earlier, shattering forecasts, as stimulus measures boosted demand and manufacturing activity surged.

Finance Minister Pranab Mukherjee said earlier in the month that the government was aiming to bring in GST in the second half of this year, although debates between federal and state governments are continuing.

The tax is expected to ease the burden of industry by replacing a multitude of levies such as excise duty, service tax and value-added tax.

Wholesale price inflation <INWPI=ECI> is expected to be near 10 percent year-on-year in March, mainly due to high food prices. However, prospects of better rabi output keep the likelihood of a reversal of trend in the food prices thereafter, Rao said.

The bank also sees sustained growth in the industrial output helped by strong domestic demand and improving conditions in global markets.

It expects the central bank to announce measures to tighten cash at the policy review this month and continue to use its monetary tools to fight inflation and inflation expectations.

"I expect the RBI to hike the cash reserve ratio (CRR) by 50 basis points at this policy and see hike in repo and reverse repo rates by up to 125-150 basis points by end-March 2011," Rao said.

The CRR -- the share of deposits banks must keep with the central bank -- is now at 5 percent and the key lending (repo) and borrowing (reverse repo) rates are at 4.75 percent and 3.25 percent respectively.

The bank added that its growth expectations are based on an assumption that the monsoon next year would be normal.

PLUS To Acquire 74 Per Cent Stake In India's Highway Concessionaire
January 22, 2010 21:57 PM

KUALA LUMPUR, Jan 22 (Bernama) -- PLUS Expressways Bhd on Friday entered into a share purchase cum shareholders agreement (SPSA) for a proposed acquisition of up to 74 per cent equity interest in Indu Navayuga Infra Project Private Limited for RM74 million.

Indu Navayuga is the concessionaire of the existing two lane portion from Km285 (near Padalur) to Km325 (near Trichy) on National Highway No.45 in Tamil Nadu, India.

The 25-year concession agreement, signed on May 30, 2006, includes widening the existing two lanes stretching to 38.55 kilometres into four lanes.

The existing shareholders are Navayuga Engineering Company Limited, Indu Projects Limited and Abhishek Developers.

"The project, being the last section of National Highway No.45, is currently 95 per cent completed. Out of the 38.55 kilometres, 33 kilometres have been fully completed.

"The company (Indu Navayuga) is working towards completing the remaining works by the end of first quarter 2010," Plus said in a filing to Bursa Malaysia.

It said the acquisition would be carried in two tranches with the first amounting to 49 per cent of the stake for RM57.3 million upon fulfillment of the conditions precedent and the project's full commercial operation while the balance 25 per cent for RM16.7 million on the third anniversary of the commercial operation.

"The acquisition is in line with PLUS's strategy for expansion into other markets particularly in India which is one of the group's focus countries for expansion.

"This acquisition signifies the group's serious intention to further grow in India, as well as taking a step towards becoming a premier global expressway group," it said.

-- BERNAMA

Bangalore tech zone witnesses planned urban growth
22 January 2010
The Economic Times

BANGALORE: Once a cluster of villages, it is now a concrete jungle with skyscrapers and traffic screeching on the roads. But the smileys are there: broad, new-laid roads lined with neat medians and streetlights - a welcome sight across Mahadevapura. With time, the villages of Gunjur, Varthur, Hagadur, Kadugodi and Hoody have transformed into major hubs of the new BBMP zone, barring a few interior locations.

THE PPP WAY

But change did not come overnight: much of it came about thanks to effective Public-Private Partnership, a majority of it triggered by the year-old Mahadevapura Agenda Task Force (MATF), inspired by the Bangalore Agenda Task Force (BATF). The few success stories here serve as lessons on infrastructure to even the old BBMP areas.

MATF was started soon after the assembly elections in 2008. The agenda: to involve residents in local area planning and development. "The initial four or five meetings of MATF were organized to understand problems and issues, and solicit suggestions from the people, besides getting senior officials from various civic and development agencies such as BBMP, BDA, BWSSB, Bescom, revenue, PWD, education , health, Lake Authority, sports and library departments.

These consultations soon shaped up into a comprehensive development plan for the entire zone, which was further categorized into short, medium and long-term projects. Detailed project reports (DPRs) were prepared by civic and municipal agencies and government departments. Then, several meetings were held with civic agencies for allocation of funds,'' explains MATF convener R K Misra.

PROGRESS UPDATE

The good news:

most of the short-term projects are already complete. Almost all the inner city roads have been strengthened and asphalted, door-to-door garbage collection is implemented, trees have been planted all along the roads and almost all major roads have streetlights that function.

MEDIUM-TERM PROJECTS

Include work on five major road corridors

Kundalahalli-Varthur Kodi-Hope Farm-Kadugodi (Whitefield Railway Stn., 8 km): The road stretch from Kundalahalli-Graphite India-Hoody Jn (5 km) is being developed into a model road. Tiled footpaths for these two 'zero-dust roads' is under progress, with cable ducts, bus bays and pedestrian crossings. These roads will soon be fitted with rain water harvesting pits at every 50 m in the roadside drain.

HAL-Marathalli-Kundalahalli : This road is part of the signal-free corridor, up to Vellara Junction via Air Force Command Hospital. BBMP tendering under progress, but halted due to model code of conduct.

Hope Farm-ITPB-KR Puram: Part of signal-free corridor up to Mehkri Circle via Ulsoor-Jayamahal . Again, BBMP tendering under progress, stopped due to model code of conduct.

Sarjapur Road from Iblur-Wipro HO-railway crossing: BBMP has estimated the work, funds are yet to be allocated.

Outer Ring Road - Iblur-KR Puram: Part of signal-free ORR project.

The Iblur flyover at Sarjapur Road junction is 50% complete. Another three flyovers between Iblur and KR Puram have also been tendered, and soil survey work is in progress. The BDA also plans to make this road 'dust-free' , laying interlocking blocks and planting shrubs on medians and footpaths.

UNFINISHED AGENDA

Kadugodi Railway Over Bridge (RoB):

The crude stretch of unfinished RoB stands disconnected over Whitefield station at Kadugodi. This RoB is part of the east-side

access to Bengaluru International

Airport (BIA), proposed by the Agenda for Bengaluru Infrastructure Development (ABIDe). Ironically, almost 45 km of the road stretch starting from K a d u g o d i Whitefield railway station up to the airport , via Budhigiri and Devanahalli, is almost ready, but this bridge is incomplete even after four years. The latest reason is that the contractor has run away as Railways refused to pay the additional cost. However, officials say new tenders have been called and people hope work will begin in February . Meanwhile, commuters at this junction have to contend with chaos and an hour-long jam at the railway crossing, with goods trains shuttling to the FCI depot nearby.

ITPB/Industrial Park Zone:

The most important industrial, hi-tech zone of Bangalore , it has been completely neglected by KIADB. The are broken roads, no footpaths or streetlights.

Pedestrian woes at Marathalli junction :

Increasing traffic has left pedestrians with very little foot room on roads. Physically handicapped and senior citizens struggle to cross the road through speeding vehicles. "It's sad that the city has skywalks at places where people don't use them. Here, we need them badly, but nothing has been done,'' complains a pedestrian, who has seen this area worsen with the years.

Power sector goes on hiring spree
24 January 2010
The Times of India

MUMBAI: The domestic power sector is on a recruitment overdrive. After raising a record Rs 27,000 crore via IPOs over the last two years, power companies are now mopping up talent to kickstart projects to boost generation.

India will have a peak-hour demand of 350 GW by 2020, roughly double the size now. The current five-year plan envisages addition of 78,000 MW. According to the Central Electricity Authority, the country will require a manpower of around 8 lakh to keep the growth engine of the power sector running over the next decade. The figures can overshadow the numbers from the IT sector, which plans to hire around 50,000 people this year.

S Padmanabhan, executive director, operations, Tata Power, said: ''The industry will require close to 40,000 engineers for core sectors such as electrical, mechanical and instrumentation every year since the average manpower-to-MW ratio in India is close to 0.75. We are planning to go for campus recruitments as well as hire from the industry. There is a deficit in terms of expertise and, hence, we train people.''

Tata Power has lined up investments of Rs 24,000 crore for its upcoming plants in Mundra, Maithon and Jojobera over the next three years. The gamechanger has been the entry of ultra mega power projects (UMPPs). Tata Power and Reliance Power are coming up with UMPPs with a combined generation capacity of close to 16,000 MW over the next five years. New players are pitching in too. Jindal Steel & Power, which has a current production capacity of 1,000 MW, plans to add another 4,380 MW thermal power and 6,100 MW hydro power capacity over the next five years.

IJM to gain from infrastructure jobs
Published: 2010/01/29

Macquarie Equities Research reiterated its buy call on IJM (3336) and raised the target price to RM6.00 from RM5.50 following a review of the company's prospects.

IJM is one of the broker's top picks in Malaysia, saying that the firm will be a key beneficiary of infrastructure spending, both domestically and in international markets such as India and the Middle East.

Potential catalyst to IJM's share price could be the award of the Besraya extension job in fourth quarter this financial year, new construction wins and successful property laun-ches.

"We see IJM as a beneficiary of India's aggressive road spending plans, given its track record. Recent press reports indicate the Indian government's plans for US$50 billion (US$1 = RM3.41) worth of road projects over the next two years.

"Any potential wins in India are positive for the company and would add to IJM's existing orderbook of RM4.4 billion. In total, we have assumed RM1 billion worth of new jobs in financial year 2010 and RM2 billion in financial year 2011," Macquarie said in a January 22 report.
In addition to potentially clinching key domestic projects via its construction division, IJM's building materials division, ICP (Industrial Concrete Product), may also benefit from the increased construction activity, it noted.

Reliance Infrastructure Targets 10% Of Total Road Projects - Report
28 January 2010
DOW JONES NEWSWIRES

India's Reliance Infrastructure Ltd. (500390.BY) expects to get 10% of the total road projects due to be awarded by the National Highways Authority of India this year, mydigitalfc.com reported Thursday, citing the company's chief executive officer, Lalit Jalan.

Changes to the request for proposals and qualifications have made it easier for developers to bid for projects, and will "have a positive impact on awarding of road projects," the Web site reported Jalan as saying.

Road minister Kamal Nath is due to award 12,000 kilometers of road projects this year, the Web site said.

INTERVIEW-Indian Energy says comfortable with FY analyst view
4 February 2010

BANGALORE, Feb 4 (Reuters) - Independent power producer Indian Energy Ltd is comfortable with analyst forecasts for the current financial year and will look at setting up more wind farms in India, Chief Executive Rupert Strachwitz said.

The India-focused wind farms operator expects the first three turbines at its Theni project in the southern Indian state of Tamil Nadu to contribute about 25,000 pounds to its earnings for the year ending March 31.

Brokerage Arden Partners expects the company to post a full-year pretax loss of 2.2 million pounds on revenue of 2.1 million pounds.

"Our focus is surely wind and surely India," Strachwitz told Reuters. "And we are now looking at Rajasthan and Gujarat."

Indian Energy's first wind farm, with a capacity of 24.8 megawatts, was at Gadag, near Hubli in the southern state of Karnataka.

"The commissioning (of the first three turbines of the Theni project) is ahead of schedule, only eight weeks since signing the contract," Arden Partners said. "This is positive news which underlines Indian Energy's interest in delivering its projects on time." The brokerage has a "buy" rating on the stock.

The company, which was listed on London's Alternative Investment Market last September, said it expects the first phase of its contract with turbine maker ReGen Powertech to cost about 923 million Indian rupees ($20.0 million).

Indian Energy signed a contract with ReGen in December for the construction of a 49.5 megawatt wind farm at Theni.

"ReGen is to deliver to us not only the physical turbines, but also to erect and construct the whole infrastructure of the wind farm, including the power of activation facilities," Strachwitz said. ($1=46.21 Indian Rupee)

BUDGET VIEW-Banks pitch for long term infra bonds, await cues

MUMBAI, Feb 10 (Reuters) - Indian banks await cues from the federal budget to assess fund raising needs and have sought the nod to float long-term infrastructure bonds with tax breaks, a plea unlikely to be met due to its fiscal cost, analysts said.

Finance Minister Pranab Mukherjee will present the federal budget on Feb 26.

Infrastructure projects require loans for 15-20 years, but banks do not have access to long-term funds. Most of bank deposits are for less than five years. Banks can raise five-year deposits eligible for tax deduction.

The debt capital raised by banks via tier II segment are leveraged to expand operations.

"All our resources (funds) are short term in nature. If we lend this for long term, there will be asset-liability mismatches," K. Ramakrishnan, chief executive of Indian Banks' Association, the apex industry body, told Reuters.

State-run banks would look at the timeline for government's re-capitalisation programme to assess fund raising needs, a banking analyst at a Mumbai-based brokerage firm said.

Banks seek to get a clear idea on growth sectors from budget and will frame fund-raising plans accordingly, the analyst said.

"They would be looking for indirect incentives that could help the economy grow and help boost demand for credit," said Amit N. Rane, senior research analyst at Angel Broking.

India, beset with power blackouts, crumbling roads and choked ports, has said it needs investments of $500 billion in infrastructure in the five years to 2012.

"Tax-free status would make the bonds attractive to subscribe to and help meet demand from banks to finance infrastructure," Ramakrishnan said.

"The fiscal cost for providing a tax break would make it a difficult wish for the finance minister to fulfill," said Rajagopal Ramanathan, banking analyst with Centrum Broking.

"That's all we have asked. It will help us fund infrastructure sector seeing good growth," said S. Raman, executive director at state-run Union Bank of India .

Indian bank loans rose 13.9 percent on year as of Jan. 15. Banks had an annual growth rate of 30 percent till 2008 before demand for funds shrunk. Corporate demand revival, primarily in infrastructure, is spurring loan growth with about 43 percent of the incremental lending coming from the infrastructure sector, analysts said.

Indian banks saw a modest-to-lower profits on year-on-year basis in the Oct-Dec quarter on slow loan growth and low treasury gains even as the sector expects credit demand to pick up in subsequent quarters, mainly from infrastructure sector.

Banks would also be keeping a watch on government borrowing plan in the federal budget as it would determine the quantum of funds for lending, Centrum's Ramanathan added.

BUDGET VIEW-Power cos seek easier imports, govt spend
22 February 2010

MUMBAI, Feb 22 (Reuters) - Indian power producers expect the federal budget to reduce duties on coal imports to top up scarce domestic coal supply in a country where more than half the power plants are coal-fired, industry players and analysts said.

"Power project owners expect a cut in the import duty on the coal, which is at 5 percent at present. This will significantly reduce their fuel bills," an analyst with a Mumbai-based brokerage said.

The move is expected to benefit importers including JSW Energy , Adani Power and Tata Power , Rupesh Sankhe, analyst at Angel Securities, said.

They also expect a higher spending on federal government's flagship schemes, namely Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) and Restructured Accelerated Power Development and Reforms Programme (R-APDRP), to spur growth in the power sector.

Excise duty, which was lowered from 12 percent to 8 percent under the stimulus package, could be raised by at least 2 percentage points to mop up additional revenue for bridging the fiscal deficit, a Mumbai-based analyst said.

But not many are overly worried about that.

"The case for investing in India's power infrastructure is extremely strong. So, partially withdrawing temporary benefits which were conferred under stimulus package, is not going to impact the industry very adversely," said Vardhan Dharkar, chief financial officer of KEC International .

Power project developers are eyeing an extension of income tax exemption under clause 80 IA beyond 2010-11, which analysts say is most likely, considering a 12 percent peak power deficit and a crying need for private investment in the sector.

A recent government panel report suggested the imposition of a 14 percent duty on imported power gear to safeguard interests of domestic gearmakers.

"There is a 15-20 percent disadvantage for Indian manufacturing. In order to give a level playing field, definitely there is a need for the duty to be put in," Murali Venkatraman, president of Indian Electrical and Electronics Manufacturers' Association (IEEMA) said.

But private power plant owners say domestic generation equipment are in short supply and a duty on imports will penalise them if they source from overseas. This will jeopardise India's massive capacity addition programme, they say.

New road funds to help lift India steel demand

NEW DELHI, March 3 (Reuters) - A push to expand basic services like power, housing and transport will boost India's annual steel demand by 10 percent in the fiscal year to March 2011, Steel Secretary Atul Chaturvedi said on Wednesday.

"Steel demand will continue to rise because a lot of emphasis has been put in the budget on infrastructure development," Chaturvedi told reporters on the sidelines of a conference.

In its federal budget announced last Friday, India proposed to invest 1.73 trillion rupees in infrastructure in 2010/11, a measure cheered by the steel industry.

India plans to build 20 kms of highways a day, up from less than 4 kms a day now, even though land acquisition problems and lack of funds have delayed construction in the past.

"We expect about 10 percent increase (in steel demand) from the current year's level," Chaturvedi said. In the current fiscal year, the demand would rise 9 percent, higher than the earlier estimate of 8 percent, he added.

Steel production in 2010/11 could be 65 million tonnes or more, compared with 60-61 million tonnes in the current year, he added.

Steel prices are seen rising on higher factory gate taxes announced in the budget and on brighter demand outlook.

"They (prices) have to go up," Chaturvedi said when asked whether local steel prices would rise.

At the same conference, Steel Authority of India (SAIL) chairman S.K. Roongta said prices of the metal had been raised after the budget by 500-600 rupees ($10.9-$13.0) per tonne.

State-run SAIL is India's largest steel maker. ($1=45.87 rupees)

India says needs to double infrastructure spending

NEW DELHI, March 23 (Reuters) - India's finance minister called on Tuesday for a doubling of infrastructure spending to $1 trillion in the five years to 2016/17, and said private sector firms would be allowed to sell special bonds to help pay for it.

Poor infrastructure is a long-standing roadblock to faster development in India, with choked roads and ports and inadequate power supplies acting as a brake on its economic growth.

The enormous funding needs cannot be met by overstretched banks alone and will require new sources of financing, Finance Minister Pranab Mukherjee told an industry conference.

Red tape and difficulties in acquiring land, along with an underdeveloped domestic bond market and wariness of overseas investors in committing to long-term, big-ticket projects have slowed infrastructure development.

The government has decided to allow private firms to issue infrastructure bonds, which will hopefully attract investments from big pension funds and other cash-rich firms, Mukherjee said. Issuance of these bonds, whose buyers can claim tax breaks, is currently limited to state entities.

"We have still not completely succeeded in exploiting the full potential of insurance and pension funds for deployment in infrastructure projects," Mukherjee said, without giving a timeframe for when the first such private bonds would be allowed to proceed.

"The availability of equity, both domestic and FDI (foreign direct investment), continue to remain an area of concern," he said.

The government has estimated the country needs $514 billion poured into infrastructure in the five years to 2011/12, the year when the economy is expected to expand an annual 9 percent. The bulk of this investment is seen coming from private sources.

Prime Minister Manmohan Singh told the conference India needed reforms to ensure increased resources for the sector and for more private sector participation.

"Our experience shows that private participation in infrastructure development is indeed a feasible proposition and can help expand infrastructure much faster than it would have relying only on public resources," he said.

The spending would help boost India's GDP growth into double digits, he said.

"We must aim at accelerating the pace of growth to about 10 percent per annum. This is the growth target we must work toward in the 12th five-year plan (2011/12-2016/17)," Singh said.

"It is not something that would happen automatically. We would need continuous improvements in our policy regime and our implementation process."

ANALYSIS-India surprises with big new coal ports
24 March 2010

LONDON/NEW DELHI, March 24 (Reuters) - The speed with which large, private, fully-mechanised ports are springing up in India is making coal producers and traders think again.

Suppliers had until recently doubted India could import the coal it will need because most of its ports were small and shallow, and government port expansions were running late.

The international perception of India's coal ports has been of a collection of mostly small, old, terminals which cannot take standard coal 150,000 tonne capesize vessels but are mostly limited to 50,000-75,000 tonne panamaxes or handysizes.

These small ports can take up to a week to discharge, are plagued by delays and have poor road and rail links to end-users.

But the slew of private ports under construction or expansion and their sheer size has taken the international coal market by surprise.

"We're going to have to revise our projections for Indian coal imports and look at the impact of the ports being built," said John Kearsey, head of research at ship brokers Simon Spence & Young.

India will need more imported coal to make up for its domestic shortfall for the next 20 years. In 2010-2011 India will import 81 million tonnes.

"Indian and Chinese coal demand is a significant driver behind our forecast for dry bulk demand growth over the next few years," said Will Fray, shipping analyst with London-based consultants Maritime Strategies International (MSI).

"Together we expect them to account for over 50 percent of global incremental seaborne coal imports over this period."

India is fully geared up to handle its coal import requirements by 2012, said a spokesman for the Adani Group, India's largest coal importers.

"Adani Group itself will have fully-mechanised capacity to handle close to 90 million tonnes of coal at various ports, including its Mundra terminal which will take 60 million tonnes alone," the spokesman said.

"Wow, if that's how much they're gearing up for imports we have to look at that market," a European utility source said.

Krishnapatnam Port in Andhra Pradesh is one of the new state-of-the art cape ports and will be able to take in more coal than South Africa's total 2009 exports by end-2011.

Gangavaram, also on the east coast, is already taking capes and will soon be able to import 35 million tonnes coal.

"The long-held dream of capesize discharging at India has now become a reality and volumes will continue to increase," said Stuart Frost of ship brokers Lorentzen & Stemoco.

NEW POWER PLANTS

"It's astonishing. Breathtaking. We went to Gangavaram in March and just could not believe it. They can already discharge capes and will eventually take in 35 million tonnes of coal a year -- just one port," one South African producer said.

These are two on a long list of ports being built by private firms in partnership with government, which will dramatically speed up India's ability to import coal open up the market to suppliers who need efficient logistics on the demand side.

"All the Indian ports are getting a facelift but there are a lot of excellent new ports such as Mundra, Reva, Gangavaram and Krishnapatnam which have worked their logistical connections right," said ports consultant Poul Jensen.

"Nobody believed they would do it but it's one of the reasons I think the coal market should be looking more at India and China - India needs coal, it's not just arbitrage," said one European economist and coal expert.

India is also building a host of state and private coal-fired power plants plus private merchant power plants which sell power to local industry on a spot basis and could need as much as 200 million tonnes of imported coal within the next several years to feed these.

"India is one of those markets where the projections going forward are not just empty projections," said Anjali Bhasin, a director of ship brokers Braemar Seascope India.

"Coal has to come in. There is a certain amount of power that has to be generated and these are power projects that are on track. Steel plants which are on track," he added.

India infrastructure is changing radically, said Ajay D'Souza, head of Mumbai-based CRISIL Research.

"The industry which was stagnating with no new investments or technological breakthroughs saw a radical change in the last couple of years and it will pick up more speed," D'Souza said.

The Indian government's aim is to expand major state ports to handle 1.5 billion tonnes of total cargo by 2012 but plans are behind target -- a gap being filled by the private sector.

India invites US investment in infrastructure as Geithner visits to boost economic ties
6 April 2010

NEW DELHI (AP) - India invited U.S. companies to invest in developing its infrastructure on Tuesday as Treasury Secretary Timothy Geithner and Indian leaders launched an effort to expand economic ties.

Geithner met with Prime Minister Manmohan Singh and took part in the first meeting of the U.S.-India Economic and Financial Partnership to promote trade and investment. The initiative is part of the Obama administration's efforts to forge closer relations with India, a fast-growing economy, the most populous democracy and a stable ally in a complex region.

"Deepening our ties with India is critical to the broader global effort to develop a framework for strong, sustainable and balanced growth and will facilitate more trade, investment and job creation in our two countries," Geithner said at a news conference with his Indian counterpart, Finance Minister Pranab Mukherjee.

Mukherjee said U.S. companies were invited to invest in projects in ports, roads and telecommunications, which he said could absorb up to $600 billion in foreign investment over five years.

"These are vast areas," he said.

The vice chairman of the Federal Reserve, Donald Kohn, and other officials are traveling with Geithner on the two-day visit.

U.S.-Indian relations are at a high point, thanks partly to the Bush administration's push to allow U.S. civilian nuclear trade with India. The Obama administration has used that as a foundation for improving ties and hopes of cooperation on Washington's priorities of combating terrorism and climate change.

The Indian government, elected last year to a second five-year term, says development of roads and other infrastructure is a priority and it plans to spend 1.7 trillion rupees ($37.9 billion) on it in the next fiscal year.

India's decrepit highways carry nearly three quarters of freight and passenger traffic. Government plans call for building 7,000 kilometers (4,400 miles) of highways a year to serve its booming growth. India allows 100 percent foreign investment in road development.

Geithner's visit started with a stop at a store in the capital, New Delhi, that offers mobile banking services, highlighting steps to expand Indians' access to financial services. He spoke briefly to a street vendor who irons clothes and is a customer of the mobile banking shop.

India's economy has surged in the past decade and is the second fastest-growing major economy after China.

India is a member of the Group of 20 nations, which brings together the wealthiest industrial countries and major developing economies such as China, India and Brazil. The G-20 was designated by President Barack Obama and other leaders at a summit last September in Pittsburgh as the top policy-setting group for the global economy.

On Wednesday, Geithner is due to travel to India's financial capital, Mumbai, and meet with Indian entrepreneurs and chief executives of leading companies.

July 31, 2010
India Digs Under Top of the World to Match Rival
By LYDIA POLGREEN
New York Times

http://graphics8.nytimes.com/images/2010/08/01/world/01pass-span/01pass-span-articleLarge.jpg
Brian Sokol for The New York Times

ROHTANG PASS, India — The name of this white-knuckle pass, one of the highest in the world, means “pile of corpses” in the Tibetan language. Every year a few dozen people die trying to cross these spiky Himalayan peaks.

For six months the road is snowbound, putting at the mercy of the elements tens of thousands of Indian troops posted beyond it in this remote but strategically important region along India’s long and disputed border with China.

In the past decade, as China has furiously built up its military and civilian infrastructure on its side of the border, the Rohtang Pass on the Indian side has stood as mute testimony to India’s inability and unwillingness to master its far-flung and rugged outermost reaches.

But now, India is racing to match its rival for regional and global power, building and bolstering airstrips and army outposts, shoring up neglected roads and — finally, decades after it was first proposed — building a tunnel to bypass the deadly Rohtang Pass.

In June, work started on the ambitious project, which will take five years and require boring five miles through the Pir Panjal range. Several other tunnels, which would allow all-weather access to Ladakh, which abuts the Tibetan Plateau, are also in the works.

“What India is belatedly seeking to do is to improve its defenses by upgrading its logistics,” said Brahma Chellaney, an analyst who tracks the India-China relationship at the Center for Policy Research in New Delhi, in an e-mail. “By building new railroads, airports and highways in Tibet, China is now in a position to rapidly move additional forces to the border to potentially strike at India at a time of its choosing.”

As a result, he said, “The Sino-Indian border remains more unstable than the Pakistani-Indian frontier.”

India and China are hardly enemies, but much of the 2,521-mile border they share is disputed or ill marked. The two countries fought a brief but bloody border war in 1962, and while these days they have, on the surface, a mostly cordial relationship, it is marked by tension over border disputes and the future of Tibet and its leader, the Dalai Lama, who lives in exile in India.

China’s push to develop its infrastructure on its side of the border — including an all-weather railway to Tibet that includes the world’s highest tunnel, at 16,000 feet — is viewed with considerable suspicion in India.

For much of its history India has regarded the Himalayas as a form of protection, not a barrier to be overcome, said Rajeswari Rajagopalan, an expert in India-China relations at the Observer Research Foundation in New Delhi.

“The Indian side has been very slow to develop the border areas,” Ms. Rajagopalan said. “They believed if you improved the infrastructure it would only allow the Chinese to walk into your territory. This was very foolish and naive.”

Three hundred miles of winding road lead from the town of Manali, through the verdant Kullu Valley, to Ladakh, an alpine desert that abuts the Tibetan plateau.

Tens of thousands of Indian Army troops are stationed among Ladakh’s barren peaks, and the region borders several potential trouble spots, including Aksai Chin, a region that India claims as part of its territory but that China administers. North of Ladakh is the Siachen Glacier, a river of barren ice that India and Pakistan have fought over intermittently since the 1980s. Both countries maintain outposts on the glacier, which sits at an altitude of 20,000 feet.

During the summer, thousands of trucks, laden with supplies to last the harsh mountain winters, rumble up the two roads that lead to Ladakh, from Manali and Srinagar, the summer capital of Indian-administered Kashmir.

The road from Ladakh to Srinagar is also closed in the winter, and because of its proximity to the Line of Control that splits Kashmir between India and Pakistan, Indian officials worry that the road can easily be cut, as it was in 1999, when the two countries clashed at Kargil.

Gurmeet Kanwal, a retired brigadier who runs the Center for Land Warfare Studies, a New Delhi research institution, said India could not afford to be cut off from its most vulnerable reaches half of the year.

“As long as we have these territorial disputes you cannot rule out another border conflict,” Brigadier Kanwal said. “We would like to make sure that we can deploy our forces in the right quantities in the right places.”

The tunnel has been on the drawing board for decades, said P. K. Mahajan, the chief engineer on the $320 million project. He first became involved as a young engineer in 1988, when he helped carry out a feasibility study, five years after the project was first proposed by Indira Gandhi, then the prime minister.

“It is only now that these projects are seeing the light of day,” Mr. Mahajan said.

The challenges of building a long tunnel in the rough environment of the Pir Panjal are enormous. The Himalayas are the world’s youngest mountain range. They shift and grind, still moving, expanding and shrinking.

That makes life tough for people like Thomas Riedel, a German contractor working at the north end of the tunnel. Because no one is sure what kind of rock will be found inside the mountain, the tunnel will be built using a painstaking method of blasting and digging, rather than the tunnel-boring machines that have revolutionized tunnel construction in recent years.

“Nobody can look inside the mountain,” Mr. Riedel said. “That is where we will find problems.”

Just weeks into what will be at least five years of digging, the workers encountered their first unexpected obstacle: a foot of snow. In June.

The tunnel will sit beneath more than a mile of snow-covered rock for much of its length. Ventilation will pose a huge problem.

People who live on the other side of the Rohtang Pass say the tunnel will transform their lives.

“For six months, we are prisoners,” said Chetan Devi, a schoolteacher who lives in a town beyond the pass. “In the winter, you have to risk your life to go to Manali.”

The tunnel will turn an ordeal of several hours, even in the summer, into a brisk 20-minute trip.

Virender Sharma, the chief government official in Kyelang, the main town of the Lahaul Valley, which sits between Manali and Ladakh, said that last winter 21 people died trying to cross the Rohtang Pass on foot. People were found frozen solid, he said, “sitting with rucksacks on their backs, water bottles at their sides, but they were dead.”

Winters in the Lahaul Valley are a miserable affair, he said.

“During summer, it seems very pleasant,” Mr. Sharma said. “In the winter, there is no light. No vegetables. No mail. Nothing to do in the evening. If there is an emergency, you are practically at the mercy of God.”

For the engineers building the tunnel, it is not merely a matter of logistics, but also a matter of national pride.

“Once this tunnel is complete, it will be an engineering marvel for the whole nation,” Mr. Mahajan said.

Hari Kumar contributed reporting.

Implementation is India infrastructure's main woe
By Jui Chakravorty

MUMBAI, Sept 29 (Reuters) - Frustrated with yarns of red tape involved in implementing infrastructure projects in India, companies and funds are calling for more private sector involvement to streamline the process and prevent problems that often delay projects by several years.

"Indian planning is basically very ambitious at all points of time but I think Indians lack in the execution cycle," Hindustan Construction Co Chief Financial Officer Praveen Sood told the Reuters India Investment Summit in Mumbai.

"India has a history of falling behind. I remember plans even 15 to 20 years back, they were lagging behind 30 to 40 percent, now they are lagging 10 to 20 percent. That is an achievement."

Infrastructure conglomerate HCC has built nearly 2,300 kilometres of roads in India, including high-profile projects such as the Mumbai-Pune expressway and the Bandra-Worli Sea Link in Mumbai.

Asia's third-largest economy plans to invest $1.5 trillion through the ten years ending 2017 to improve its crumbling infrastructure.

Even though companies are rushing in to take advantage of the growth, there is much skepticism about India's ability to speed up implementation unless the private sector takes on a larger role in the execution of projects.

The challenges to getting big projects completed were underscored by the chaotic preparations for the upcoming Commonwealth Games in New Delhi.

"Typically in India, execution does sometimes fail the plan. We are seeing it pan out in Delhi now," Godrej group chairman Adi Godrej told the summit.

"I think the best way to execute it (projects) better is to have a greater private sector participation where the private sector does get very involved in execution," he said.

"Wherever that has happened in India, where execution is left to the private sector, with a good regulatory mechanism that is also independent of the government, it has done exceedingly well."

Executives and fund managers told the Reuters Summit, which was focused on infrastructure, that land acquisition, permits to construct roads and approvals to build power plants were all major obstacles to growth in the sector and deterred foreign investment in the country.

Moreover, Indian bureaucracy stalled projects indefinitely, executives said.

"One of the issues that we see is, different departments of government have different views on the subject," said G.V. Sanjay Reddy, vice-chairman of the GVK group .

"I think to iron out these differences, it is very difficult to say whether it will take one month or whether it will take six months.

GVK is in the midst of redeveloping the Mumbai airport.

"Many of these projects get stuck because of the inability for us to predict the time that it will take to iron out differences in these complex issues," Reddy said.

POWER PLANTS, AIRPORTS

India aims to cut its power deficit to 6.5 percent in the fiscal year ending March 2012 from the current 13.8 percent, the head of the Central Electricity Authority said at the Summit.

Several executives said they would like to expand in the power sector, but expressed frustration at the land acquisition process in India, which is strewn with bureaucracy, environmental concerns and social problems such as farmer compensation.

Hurdles in land acquisition are often the first step in the project implementation process, followed by delays caused by layers of required approvals and restrictive regulations in sectors such as real estate, executives said.

Redeveloping existing airports and building new ones in a country where a burgeoning middle class is boosting demand for air travel could be a strong opportunity in India.

But privatisation was lacking in that sector and hurting its growth, said Anoop Seth, who spearheads AMP Capital's infrastructure investments in Asia.

"So all that you'll see is here is an equity churn but unless the government goes further down the road and starts privatisation of airports, we really don't see too much of incremental opportunity in that sector," Seth said.

AMP Capital, a unit of Australia's No. 2 wealth manager AMP , is planning to invest about $200 million in the Indian infrastructure sector over the next two years.

Godrej called for long-term regulations that were standardising across the real estate infrastructure sector. "They must not be case by case, because in India, case by case regulations lead to what we call suitcase by suitcase responses."

Q+A-Why is foreign direct investment into India declining?

NEW DELHI, Oct 5 (Reuters) - Foreign direct investment in India fell by nearly a quarter in the first seven months of 2010 and the much-publicised chaos around preparations for the Commonwealth Games has added to worries foreign firms could put off further investment.

A UN survey found investors ranked India as the second top-priority destination for FDI this year, replacing the United States, after China.

Following are some questions and answers on foreign investment flows into India.

WHY ARE FDI FLOWS IMPORTANT FOR INDIA?

India needs inflows to drive investment in infrastructure, a lack of which is often cited as restricting the country's economic growth.

Investment is also needed to expand capacity and technology in sectors such as autos and steel, as well as to offset a big current account deficit.

In 2009, India attracted $36.6 billion in FDI funds, equivalent to 2.7 percent of its gross domestic product. China attracted $95 billion, or 1.9 percent of GDP.

But foreign direct investment flows into India fell by over 24 percent in the first seven months this year to $12.56 billion, putting pressure on domestic investment to take up the slack.

WHY HAVE FDI FLOWS SLOWED DOWN?

The slow pace of policy reform that would further open sectors such as retail, insurance and real estate to foreign investment have acted as a deterrent.

Delays in framing a new land acquisition act, which would ease availability of land for industry, have also hurt FDI flows into infrastructure and other sectors.

FDI flows to India are likely to remain subdued in coming months as well, analysts said, given the shaky global recovery.

That's a contrast to flows of foreign funds into Indian stocks, which are on track to hit a record high this year. FDI flows into India, which held up reasonably well during the global financial crisis, are likely to total between $20 billion and $30 billion in 2010, economists say.

WILL THE COMMONWEALTH GAMES HAVE AN IMPACT ON FDI?

Negative publicity surrounding preparations for the Commonwealth Games, which opened in New Delhi on Sunday, could hurt sentiment among portfolio investors, but is unlikely to have a big impact on FDI flows.

A report by credit research agency Moody's Analytics said negative publicity around the Commonwealth Games could tarnish India's image as a foreign investment destination as it reflected poorly on India's capacity to handle big projects.

The games chaos may give multinationals considering expanding in India reason to think twice, Moody's Analytics said.

However, most major corporate investors are aware of the challenges of doing business in India and will focus on the longer-term opportunities in a country where the 1.2 billion population is growing at a rapid 8.5 percent a year.

WHICH SECTORS ARE FACING SLOWDOWN?

FDI flows in financial services, real estate and power fell as regulatory restrictions and strong domestic investment squeezed out some foreign bidders for high-return projects.

FDI flows to real estate declined to 6 percent of total FDI flows during the June quarter from 11 percent in 2009/10, while flows to the services sector fell to 11 percent from 17 percent.

However, FDI in telecoms, at about $1 billion during the June quarter, formed 16 percent of the total FDI funds during the period, up from 10 percent in the 2009/10 fiscal year.

Big foreign firms have had mixed success investing in India.

Vodafone paid $11 billion for control of an Indian mobile carrier but earlier this year booked a 2.3 billion pound ($3.64 billion) charge on its business due to fierce competition and the high cost of wireless spectrum.

South Korea's Posco has endured more than three years of delay for a $12 billion steel plant in Orissa state due to protests by farmers.

London-based Vedanta Resources said in August it had reached a deal to pay up to $9.6 billion for control of oil producer Cairn India .

HOW WILL A DECLINE IN FDI AFFECT THE CURRENT ACCOUNT DEFICIT?

The trade ministry forecasts that the current account gap will reach 3 percent of GDP this fiscal year, or about $46.4 billion.

Officials have said that India may end up with a balance of payments deficit this year given the rapid expansion in the current account deficit and fall in FDI.

If so, massive foreign exchange reserves of some $291 billion will be more than sufficient to fund the gap.

WHAT IS THE IMPACT OF FDI FLOWS ON MONETARY POLICY?

A fall in FDI inflows will keep the balance of payments under pressure and could undermine the rupee. If commodity and oil prices rise globally, a weaker rupee will add to inflationary pressures.

With fighting inflation is the central bank's top priority, any development that could push up prices will be carefully watched and play into its thinking on tightening monetary policy.

On the other hand, a wider deficit could lead to some liquidity tightness in the market, helping the central bank's five rate hikes so far this year be passed on more effectively.

Reliance Power, Shanghai Electric ink $8.3 bln deal
29 October 2010

SHANGHAI, Oct 28 (Reuters) - Indian billionaire Anil Ambani's Reliance Power inked an $8.3 billion deal with China's Shanghai Electric Group , a contract which both firms touted as the single largest business contract between the two nations.

Shanghai Electric will supply 36 coal-fired thermal power generation units to Reliance over three years, underscoring India's hunger for electricity as the nation looks to fix the frequent blackouts that have impeded economic growth.

India, which has one of the world's lowest power consumption per capita, has set an ambitious target of lifting its generation capacity to 100,000 megawatts during 2012-17 and plans to spend $1 trillion on infrastructure during the period.

"We see a potential for a gamut of co-operation between the two countries," Anil Ambani, chairman of Reliance ADA Group, told reporters at a signing ceremony in Shanghai on Thursday.

"India has vast needs for power and has one of the lowest power consumption rate per capita with no reliable steady source of power across the country," Ambani said.

Including previous orders, Reliance said it has signed around $10 billion worth of purchase orders with Shanghai Electric, adding it also signed memorandums of understanding with four major Chinese banks to cover the financing.

Shanghai Electric said it was also looking to set up a manufacturing facility in India as part of a strategy of expanding in India's fast-growing power market.

Zheng Jianhua, president of Shanghai Electric Power Generation Group, said the group was also in discussions with Reliance to supply equipment for other power sources, including nuclear and wind.

Shares in Reliance Power fell 2.4 percent by 1302 GMT, while Shanghai Electric, which has a market value of $17 billion, rose as much a 7.4 percent before closing up 0.2 percent.

COMPETITION CONCERNS

Supplies for power equipment and the telecom sector are two fields which Chinese companies have made major breakthroughs in the Indian market over the past few years, prompting some Indian businesses to voice competition concerns.

According to media reports, India's Association of Chamber of Commerce last year urged the government to levy an import duty on Chinese power equipment and accused the Chinese firms of offering very low prices under government subsidies.

Asked if the latest purchase from China would cause further discontent among Indian power equipment makers, Ambani said the rapid construction of power plants across the country meant most Indian firms already have their order books full.

"The scale of construction we're wanting to achieve is only possible with global outsourcing," said the 51-year-old Ambani, who arrived in Shanghai via his private jet.

Anil and his older brother Mukesh are among India's richest businessmen. They split a business empire inherited from their father Dhirubhai Ambani five years ago after disagreeing over ownership.

Shanghai Electric and Reliance Infrastructure already have a close working relationship. The two set up a $3 billion joint venture in 2008 to manufacture turbines and generators in India.

Shanghai Electric said in an earlier statement the deal will bring as much as $600 million in annual sales each year, or about 6 to 7 percent of its total revenue for 2009.

Skills shortage, governance present hurdles to India growth

NEW DELHI, Nov 16 (Reuters) - India's surging growth over the next few years will be capped by inadequate infrastructure, a severe skills shortage and poor governance, several executives gathered in the country's capital said this week.

High on the list of challenges listed by executives at the World Economic Forum's annual India Economic Summit was a skills shortage, as overseas companies have rushed to tap lower-cost talent at the same time local companies have ramped up employment to meet fast-growing domestic demand.

"The whole education-training space, to me, is an opportunity and challenge," General Electric's India chief executive, John Flannery, told Reuters on the sidelines of the event.

India's vaunted IT outsourcing sector, for example, has been forced to raise wages by 10 to 15 percent this year, in excess of headline annual inflation that stood at 8.58 percent in October.

"Here, I see insatiable need for skills in the marketplace. And I see the supply of that skilled labor is not up to the demand at this point," said Flannery, whose firm employs 13,000 people in Asia's third-largest economy.

The skills shortage spans all levels, from management to frontline operations, and all sectors, from IT to fast food.

"We have a billion people and we have a severe shortage of skilled manpower. So it's a paradox," Niren Chaudhary, who heads India operations For Yum Brands , owner of the KFC, Pizza Hut and Taco Bell chains, said on the sidelines of the WEF event.

"Finding the right quality and skilled manpower is a significant challenge, which multiplies exponentially the lower down you go into the organisation," he said.

Only 25 percent of about 450,000 annual engineering graduates in India are directly employable by technology companies, said Avinash Vashistha, chief executive of Tholons, an investment advisory and management consultant firm.

INFRASTRUCTURE, GRAFT

While companies are trying new ways to recruit and retain, including web-based tests that offer jobs immediately, the shortage is likely to worsen in coming years.

Hari Bhartia, co-chair of Jubilant Life Sciences and president of industry group Confederation of Indian Industries, said India's agricultural workforce of some 200 million will start to shrink.

"Going forward, people will move to manufacturing, services and other sectors. And that's where we'll have the biggest problem because only 10 percent of them go to college," he said.

Inadequate infrastructure will also curb growth in an Indian economy expanding at 8.5 percent, executives said.

India plans to double infrastructure spending to $1 trillion in the five years starting in 2012 to cope with frequent blackouts, and potholed and traffic-clogged roads. However, red tape and implementation delays often lead to missed deadlines.

Poor governance, which has delayed projects across healthcare, education and infrastructure and produced a steady stream of corruption scandals, was also high on the list of challenges cited by executives.

"For me, the single answer is good governance, which means better efficiency, less corruption," said Rahul Bajaj, chairman of Bajaj Auto and a member of the Indian parliament.

India's HCC rev to grow by 20-25 pct next yr

NEW DELHI, Nov 15 (Reuters) - Hindustan Construction Co expects to grow its revenue by 20 to 25 percent next year as it takes advantage of the massive infrastructure growth in India, its chairman said on Monday.

Speaking to Reuters in an interview on the sidelines of the World Economic Forum's India summit, Ajit Gulabchand also said HCC is looking to raise money for its infrastructure business as it plans to expand the unit's portfolio to up to $6 billion in five years from its current $1.2 billion.

Gulabchand said HCC is in talks with potential Indian and foreign financial partners to raise money for the infrastructure business.

India, the world's fastest-growing major economy after China, intends to double spending on roads, airports, ports, bridges and power over the five years starting in 2012 to $1 trillion, with half of that coming from the private sector.

HCC has been slow to build its infrastructure portfolio, compared with peers like GMR Infrastructure , GVK Power and Lanco Infratech , but is now trying to make up for lost time.

The Mumbai-based builder also wants to get into the business of owning and operating airports, Gulabchand said.

"There are many airports to be built...We are talking about Pune, Ahmedabad...tomorrow Lucknow can be very big," he said.

HCC, founded in 1926, has constructed nearly 2,300 kilometres of roads in India, including high profile projects like the Mumbai-Pune expressway and the Bandra-Worli Sea Link in Mumbai.

SEEKING OVERSEAS DEALS

Gulabchand said HCC, which bought a controlling stake in Swiss developer Karl Steiner AG earlier this year, is looking to buy more such companies overseas to gain access to their technological expertise for use in India.

"Construction technique is what we are buying. We are not buying assets to manage," he said.

Gulabchand also said he had no plans to sell a stake in any of the company's units despite efforts to raise money, but is looking forward to the initial public offering of developer Lavasa Corp, in which it owns a 65 percent stake.

Lavasa, which filed a draft prospectus in September to raise 20 billion rupees ($425 million), was expected to get regulatory clearance this month and hit the market next month.

Gulabchand declined to comment on when the that may happen.

"Once we get the clearance, we will sit down with bankers and decide when to hit the markets," Gulabchand said.

Lavasa is developing several hill townships near Pune in the western Indian state of Maharashtra. It is building two towns spread over a combined 4,900 acres, to be completed by 2013, and plans to expand to five towns occupying a combined 12,500 acres.

Lavasa is joining a crowded pipeline of property firms looking to tap the equity market to fund growth, though many have delayed their plans as high prices and rising mortgage rates have hurt demand in the once-booming Indian housing market.

India, U.S. eye $10 bln infra fund

NEW DELHI, Nov 8 (Reuters) - India and the United States could jointly set up a $10-billion infrastructure fund, the Indian trade minister said on Monday, an initiative that is seen key to quickening growth in Asia's third-largest economy.

New Delhi is mulling several funds to finance the overhauling of its rickety infrastructure that some analysts see as holding back India from matching peer China's double-digit growth rates.

"The (Indian) finance minister and the U.S. treasury secretary are directly discussing what modalities should be adopted to put in place an infrastructure debt fund," Anand Sharma told reporters.

"In principle, it has been agreed."

The infrastructure fund would involve private firms, he added.

India selects 37 companies to build solar power plants

NEW DELHI, Dec 14 (Reuters) - India has selected 37 companies to build solar power projects, as the country moves forward with an ambitious plan that seeks to significantly scale up production from near zero to 20 gigawatts by 2022.

Lanco Infratech , KVK Energy Ventures Pvt Ltd and Rajasthan Sun Technique Energy Pvt Ltd won bids for a maximum project capacity of 100 megawatts each, according to documents posted on the website of NTPC Vidyut Vyapar Nigam Ltd.

Under its Solar Mission plan unveiled last year, India is to produce 1,300 megawatt (MW) of power by 2013, an additional supply of up to 10 gigawatt (GW) by 2017 and the rest by 2022 at an overall investment of about $70 billion. [ID:nSGE69A10W]

India's top power producer NTPC Ltd , through its unit NTPC Vidyut Vyapar Nigam (NVVN), will lead the solar plan's initial phase via long-term contracts to buy the first 1 GW of energy from developers at 15.31 rupees per kilowatt-hour (kwh) for solar thermal and 17.91 rupees/kwh for solar module -- about eight times the cost of coal power.

One gigawatt is enough to power close to 1 million homes.

Once implemented, the plan would see output equivalent to one-eighth of India's current installed power base, helping the world's third-worst polluter limit its reliance on coal and easing a power deficit that has crimped economic growth.

Godawari Power & Ispat , Corporate Ispat Alloys Ltd and Megha Engineering and Infrastructure Ltd were also selected to build power plants with a capacity of 50 megawatts each.

Other selected bidders included Maharashtra Seamless Indian Oil Corp , Welspun Solar AP, a unit of Welspun Corp that has interests in steel and textiles, and Punj Lloyd Infra, a unit of engineering and construction firm Punj Lloyd .

India's Solar Mission plan is to make the use of solar-powered equipment and applications mandatory for hospitals, hotels and government buildings, and encourage use of solar lighting systems in villages and small towns with micro financing.

This drive to ramp up solar capacity may trigger a stampede of firms from Asia, Europe and North America, chasing a share of the business up for grabs and trampling over smaller domestic players. [ID:nTOE65902M]

First Solar , China's Suntech Power Holdings and along with Taiwan's Motech Industries are among companies expected to grab a piece of the pie as the country is highly dependent on imports of critical raw materials including silicon wafer used for solar cells and panels.

India's top solar players including Tata BP Solar, a joint venture of Tata Power and BP , and Moser Baer have also announced expansion plans.

Public-Private Road Projects Are Faster But Exceed Budgets by More
23 December 2010

This story has been posted on The Wall Street Journal Online's India Real Time Report blog at blogs.wsj.com/indiarealtime.

By Tripti Lahiri

According to a yet-to-be published study, which looked at delays and cost over-runs in public-private highway projects, when the private sector gets involved, roads are ready sooner but costs escalate more frequently.

In projects that exceeded initial spending estimates, costs escalated by 21% where there was private participation compared to 6% for projects carried out by the government alone.

The findings come from a follow-up research conducted by Delhi School of Economics associate professor Ram Singh, whose earlier work on infrastructure delayswe wrote about in May.

In the previous study, Mr. Singh looked at data on around 900 projects from 17 infrastructure areas, including power, roads and railways. He found that all together, these projects experienced cost increases that amounted to 54% of the total initial budget for these works. One reason for delays and cost over-runs: "contractual incompleteness."

This paper looked more closely at roads and railways projects, and also compared the performance of 50 highways built with private participation to 145 built without it.

A similar percentage of both types of highway projects saw time over-runsâ "about three-fourths of them. But public-private projects required comparatively less additional time, exceeding the initial estimate by 17% rather than 49% on average.

Mr. Singh said the reason private contractors get projects to completion faster is probably very simple: The contracts for these projects are often structured so that contractors won't begin earning toll or annuity revenue till the project are up and running.

"It incentivizes the contractor to avoid delays," he said.

But costs for public-private highway projects were more likely to come in higher than estimated. This applied to roughly three quarters of such projects, compared to 55% of regular, government-run projects.

For projects with cost over-runs, additional costs amounted to 21% of the initially estimated cost for private participation projects, versus 6% for the public ones.

However, the cost over-runs in the private projects are not necessarily negative, said Mr. Singh. He believes the use of better quality materials could be one of the factors driving up costs, at least for projects where the private contractor is responsible for both construction and maintenance.

"It makes better sense to provide better quality roads" to reduce the frequency of repairs which they would have to pay for themselves, he said. "It will disrupt traffic flow and revenue flows so they want to minimize that. In a public road, if you are a contractor you provide the minimum acceptable quality. Maintenance costs are not your headache."

Mr. Singh said government audit reports appeared to back this hypothesis, noting more quality problems in public projects than in public-private ones. But he said he plans to carry out further research to assess what other factors could also be driving up costs.

Wednesday December 22, 2010
More projects in India soon for local infrastructure companies
By MAZWIN NIK ANIS
http://biz.thestar.com.my/news/story.asp?file=/2010/12/22/business/7665855&sec=business

PUTRAJAYA: Malaysia is set to play a key role in meeting India's growing demand in infrastructure development with more local companies expected to be awarded jobs, particularly in the construction of roads and highways in the sub-continent.

This is made possible by yesterday's signing of a memorandum of understanding (MoU) between the two governments.

Prime Minister Datuk Seri Najib Tun Razak said the intention to forge the tie-up was mooted during his visit to India early this year and when Indian Prime Minister Dr Manmohan Singh visited Kuala Lumpur in October.

“The MoU marks the Indian government's recognition for Malaysia's capability and capacity in developing and managing infrastructure facilities, particularly on highway development and management.

“India is extremely satisfied with the role and work done by Malaysian infrastructure companies in their country and wants to expand economic relations with us.

“The signing of the MoU was a firm commitment by the Indian government to give additional work to Malaysian companies,” Najib told reporters after witnessing the signing of the MoU at his office.

Works Minister Datuk Shaziman Abu Mansor signed the MoU on behalf of the Government while India's Roads Transport and Highway Minister Kamal Nath represented the Indian government.

Malaysian companies have undertaken 74 projects in India with the value of RM14bil, (US$4bil) of which half or RM7bil came from road infrastructure projects.

India has embarked on a massive road construction programme where 7,000km of road of various kind are expected to be build annually.

“The Works Ministry will negotiate on modality, work distribution and payment methods with its Indian counterpart beginning January.

“I believe the signing of the MoU today will open a new chapter and opportunities for Malaysian construction firms to take part in infrastructure development projects in India,” he said.

It is anticipated that Malaysian companies have the potential to be involved in the construction of 1,000km of highway, estimated to worth about RM17.5bil.

Under the MoU, Malaysian contractors will be involved in building highways on new alignments that will directly link between major cities in India.

This differs from the previous involvement where contractors were given jobs to upgrade existing roads and highways.

Government ups focus on infrastructure growth

NEW DELHI, Feb 28 (Reuters) - India increased spending on infrastructure by 23 percent in Monday's budget and raised the limit for foreign institutional investors in corporate bonds for infrastructure, in a bid to overhaul the sector.

The pace at which India constructs power plants, highways and ports has for years lagged the demand of the world's second-fastest growing major economy, eating into growth and helped keep inflation uncomfortably high.

The government has of late talked up the need for spurring infrastructure growth and announced a $1.5 trillion spending splurge over a decade for the sector, though it has often fallen short of its funding and construction targets.

In his budget speech for the 2011-12 financial year, Finance Minister Pranab Mukherjee announced several initiatives -- some new and some long-pending -- and increased allocation on the sector to 2.14 trillion ($47 billion).

Top of the billing of new measures was a move to raise the limit for foreign institutional investors to invest in corporate bonds for infrastructure to $25 billion from $5 billion.

"For infrastructure, the budget is positive. You can argue it is not sufficient, but it's positive," said D.K. Joshi, principal economist at CRISIL.

"Given the number of requirements of the infrastructure sector you need to push it even harder, but at least the steps are positive."

The hike in investment limits and the announcement of long-promised infrastructure debt funds pushed up shares of firms such as engineering and construction firm Larsen & Toubro.

However, the corporate bond market may not see a large influx of foreign funds into infrastructure immediately, bankers said, due to a minimum tenure of five years for investment and lack of top rated infrastructure lenders.

"There is nothing much for the capital markets because we were expecting a major focus on sectors like infrastructure," said Ambareesh Baliga, vice president, Karvy Stock Broking Ltd.

"Though the budget does have measures such as creation of infrastructure debt funds, the focus is not as great as we had expected."

The government announced higher credit for infrastructure projects via the state-run India Infrastructure Finance Company Limited (IIFCL) and gave tax incentives to cold storage chains to drive construction of new facilities.

Losses from poor infrastructure shave off roughly 1-2 percent from India's GDP growth, economists estimate.

POWER TO DOMESTIC MANUFACTURERS

India has been at pains to keep pace with building power plants to plug electricity shortages. Domestic manufacturers have long balked at the increasing reliance on cheaper, Chinese-made power equipment that was bolstered by favourable import duties.

Mukherjee slashed duty on domestic power gear manufacturers such as Bharat Heavy Electricals Limited to make big-ticket plants more competitive against foreign brands, mainly from China, that have become assertive in the Indian market.

Caught between beefing up its local manufacturing industry and slashing power shortages, New Delhi has so far resisted pressure to impose hefty import taxes on foreign-made equipment for so called Ultra Mega Power Projects (UMPPs).

"It (the excise duty cut) will correct the anomaly that existed between Indian suppliers and international suppliers who get customs duty exemption on power equipment supplied to mega power projects and will create a level-playing field for both," said Vardhan Dharkar, CFO, KEC International.

India generates 811 bn units electricity in 2010-11

New Delhi, Apr 24 (PTI) India saw an electricity generation of 811 billion units in the last fiscal, marginally lower than the set target, primarily on account of shortage of coal and water.

The country, which needs enhanced infrastructure and power capacity to sustain high growth trajectory, had targeted an electricity generation of 830.8 billion units (BU) in 2010-11.

Latest figures from the Central Electricity Authority (CEA) show that power generation stood at 811.1 BU in 2010-11.

However, the figure represent a growth of over five per cent as against 768.4 BU achieved in 2009-10 financial year.

The statistics exclude generation from plants having capacity of 25 MW capacity.

In the last fiscal, the electricity generation from thermal power sources stood at 664.9 BU compared to the target of 690.9 BU.

"Growth of thermal generation was mainly restricted due to coal shortages, receipt of poor quality/wet coal, closure of some units in the Western region due to acute raw water shortage...," CEA said in its report.

According to the agency, coal-based generation was constrained due to just 92.6 per cent materialisation of the requirement of coal.

A capacity of 12,160 MW was added in the last fiscal after adding 9,585 MW in 2009-10.

On the other hand, nuclear and hydro plants exceeded their power generation targets in 2010-11. This was on the back of good availability of nuclear fuel and better monsoons.

"The nuclear generation (26.3 BU) achieved a remarkable growth rate of 41.04 per cent due to improved availability of nuclear fuel to the nuclear plants," CEA said.

As per its data, power generation from hydro plants also touched 114.3 BU in the last fiscal, a 10 per cent rise compared to 2009-10. The growth was due to revival of good monsoon after two successive years of deficient rainfall conditions.

The government''s working group on power, that includes representatives from the private sector, is looking at various issues related to the power sector such as ways to boost capacity addition.

The Planning Commission recently said the country needs at least 1,00,000 MW of new power capacity during the 12th plan period.

France wants greater investment in Indian infrastructure

New Delhi, May 13 (IANS) India-France cooperation in infrastructure and energy development is bound to increase, as the two sides forge greater partnerships and pledge more investments, says French Ambassador Jerome Bonnafont.

'There is tremendous interest in France in the Indian infrastructure sector and its development. Many companies do come to India and recently, many more came along with President Nicolas Sarkozy when he visited India last year,' Bonnafont told IANS.

According to the ambassador, investment in key sectors like infrastructure development and nuclear energy is bound to increase.

'Currently French investment in the infrastructure sector in India is around 10 million euros, which is continuing from 2008 to 2012. This figure is expected to go up exponentially in the coming time.'

He said this at a commemorative ceremony Thursday night where he conferred the highest French civilian honour 'Chevalier de l 'Ordre de la Legion d' Honneur' on leading Indian industrialists Rahul Bajaj of Bajaj Auto Ltd and Bharat Forge's Baba Kalyani.

'It was President Sarkozy's wish that we honour eminent personalities who have contributed to sustainable growth of industry and society in India,' Bonnafont said.

Bajaj, chairman of Bajaj Auto Ltd, said: 'It is indeed a great honour to receive this recognition. It is a great honour for the members of the Bajaj Group and a tribute to the spirit of entrepreneurship.'

Currently, both Bharat Forge and Bajaj Auto are in partnership with some French majors like engineering and energy giant Alstom and automobile major Renault for introducing new product lineups like nuclear power plants and entry level passenger vehicles.

The French Republic confers the 'Order of the Legion' on French and foreign nationals in recognition of their achievements in various fields of society, industry and social development. The award was instituted in 1802 by Napoleon Bonaparte.

Singh’s Port Plan Targets China’s 7 Days With $60 Billion: Freight Markets
http://www.bloomberg.com/news/2011-08-16/singh-s-port-plan-targets-china-s-7-days-with-60-billion-freight-markets.html
Aug 17, 2011

India aims to pour $60 billion into ports by 2020 under a drive to spur the fastest growth in more than two decades and ease bottlenecks stoking the highest inflation among major economies.

The target is part of Prime Minister Manmohan Singh’s planned $1 trillion revamp of choked transport and power networks to achieve faster expansion. The push must transcend a history of insufficient investment, which has left the world’s most populous democracy trailing a Chinese economy now more than three times larger.

“If there isn’t enough capacity, you lose time and it adds to cost,” said Leif Eskesen, a Singapore-based economist at HSBC Holdings Plc who worked at the International Monetary Fund. “India is poised for continued strong growth over the medium and long term, but further reforms are a must to bring sustained double-digit growth within reach.”

India’s clogged harbors put Thermax Ltd. (TMX), a power-equipment maker, at a disadvantage to Chinese rivals for obtaining raw materials and shipping goods.

“It takes 45 days transportation for incoming cargo for me and similar time when I send it to my customers overseas,” said M.S. Unnikrishnan, managing director of the company, which is based in the western city of Pune. “The Chinese can possibly do it in seven days.”

India’s prime minister is relying partly on investment by companies such as DP World Ltd. (DPW) and AP Moller-Maersk A/S to lift capability at ports to 3.1 billion tons by 2020 from 963 million tons in 2010. Achieving this objective would enable greater imports of items from electronics to oil, helping damp inflation by better feeding consumer demand. Deeper berths for bigger container ships also are pivotal to India’s attempt at galvanizing exports of items from clothes to cars.

Rival China

Singh is striving to rival China, the fastest-growing major economy, by achieving 10 percent annual gains in gross domestic product, compared with 8.5 percent in the fiscal year that ended March 31. India has grown at a 10 percent annual pace only once since 1953, in 1988-1989.

China’s gross domestic product, which was about the same size in 1980 as India’s $182 billion GDP, has swelled to almost $6 trillion after boosting investment, compared with India’s $1.7 trillion. About 76 percent of India’s 1.2 billion people live on less than $2 a day, according to the World Bank.

The South Asian nation’s attempt to address port-investment shortfalls stands to benefit builder Larsen and Toubro Ltd., according to Taurus Asset Management Co. Increasing cargo traffic makes Mundra Port & Special Economic Zone Ltd. a buy, said K.R. Choksey Shares & Securities Pvt. Ltd.

Under Construction

Port projects worth 103 billion rupees ($2.3 billion) are under construction or implementation, Ministry of Shipping figures show. They involve the government and private enterprise, and include a 35-billion-rupee liquefied natural-gas terminal at Cochin in the south and the 14.6-billion-rupee development of berths and a terminal in western Mumbai city.

Mumbai-based Larsen and Toubro, India’s biggest builder of power networks and airports, has climbed more than 9 percent during the last two years. Mundra, a cargo terminal on the west coast, is up 26 percent in the same period.

A global stocks rout this month hurt both shares, and the Bombay Stock Exchange Sensitive Index is down 18 percent so far this year. Indian equities are now attractively valued and Mundra is worth buying, said Deven Choksey, managing director at Mumbai-based K.R. Choksey Shares & Securities, which has $125 million in assets.

‘Substantial Performance’

Stock prices will recover, corporate-earnings growth will improve and “then you will see substantial performance by the infrastructure sector,” said Sadanand Shetty, a Mumbai-based fund manager at Taurus Asset Management, which has about $665 million in assets. At least five of the funds Taurus manages invested in Larsen and Toubro as of the end of July.

Investor concern that Europe’s debt crisis and a U.S. slowdown will derail global growth sparked the stocks slide. Even as such risks increase, capacity constraints in the Indian economy are fueling price pressures, forcing the Reserve Bank of India to fight inflation and protect purchasing power.

Prices climbed more than 9 percent in July from a year earlier for the eighth straight month. The RBI raised interest rates in 11 steps to 8 percent in July from 4.75 percent at the start of 2010, with food and oil also stoking costs.

Singh’s effort to take advantage of India’s ports potential is the latest chapter in a history of maritime commerce dating from as early as the third millennium BC, when boats sailed from the northwestern Indus Valley to Mesopotamia. The spice trade with India later helped feed the Portuguese empire, before leading to colonization by the British.

Trade Deficit

The nation has 13 major ports overseen by the central government and 187 smaller harbors, together accounting for 90 percent of Indian exports by volume, according to the shipping ministry. India imports more than it exports and had a trade deficit of almost $105 billion in the last fiscal year.

Some terminals are managed by foreign businesses, including APM Terminals, a unit of Maersk, Denmark’s biggest company. APM operates Gujarat Pipavav Port Ltd. and a terminal at the Jawaharlal Nehru Port in Mumbai. Dubai-based DP World, the world’s fourth-largest port operator, has terminals at five locations from Mundra in the northwest to Cochin in the south.

The push to add wharves and deepen drafts must overcome a legacy of inadequate investment in a nation that fell 10 places in the infrastructure ranking to 86th among countries in the World Economic Forum’s 2010-2011 Global Competitiveness Report. Spending on ports may amount to 406 billion rupees for the five- year period ending March 2012, less than half the original aim, according to the Planning Commission.

‘Problem Area’

“I am not sure about the ability to implement the projects,” said Laveesh Bhandari, a director of Indicus Analytics, an economics research firm in New Delhi. “I have no doubt that they will plan well, but execution and implementation will remain the problem area.”

Cargo handling is more than twice as costly as in Singapore and takes over four days on average compared with six hours in Hong Kong, research by India’s Department of Commerce shows.

Sufficient rail and road links to ports also are lacking, said Prakash Tulsiani, managing director of Gujarat Pipavav Port. The government should let terminals set tariffs rather than regulate prices, he said. Officials set fees for major harbors.

Even as obstacles remain, port investment is on course to jump 76 percent in the five years through March 2012 from 230 billion rupees in the previous five-year period, planning commission data show. India’s Maritime Agenda has set a spending goal of 2.77 trillion rupees by 2020.

Relax Labor Laws

Further overhauling regulations that deter investment and relaxing labor laws that make it difficult to hire and fire workers can add 2.5 percentage points of growth to Asia’s third- largest economy, Credit Suisse Group AG estimates.

Privately managed ports show the benefits of liberalization, said Vinayak Chatterjee, chairman of Gurgaon, India-based Feedback Ventures Ltd., which advises on construction projects.

“They are far more aggressive and dynamic and customer friendly,” he said. “Once allowed to implement and operationalize, they deliver. The bottlenecks seem to be at the policy level.”

India to Construct Seven New Ports for $7.6 Billion to Help Triple Exports
Bloomberg
Aug 23, 2011

India aims to construct seven new ports for 350 billion rupees ($7.6 billion) by 2017 to support the nation’s plan to more than triple merchandise exports.

“The government has to lead the way in creating port capacity given the growth in trade,” Rakesh Srivastava, joint secretary at the Ministry of Shipping, said yesterday in a telephone interview in New Delhi. “Private sector is welcome, but the government won’t give up its responsibility.”

About two-thirds of the funds for the new facilities will be raised from private sector, he said. APM Terminals, the container-terminal arm of A.P. Moeller-Maersk A/S, and Dubai- based DP World Ltd. (DPW) are among the companies that have invested in ports in India to benefit from a surge in trade.

The government has sent the proposal for the new ports to seven Indian states, Srivastava said without specifying a timeframe for starting the projects. The plan requires the states to set aside about 2,500 acres (1,011 hectares) of land for each harbor.

“More ports will definitely help remove trade bottlenecks,” said Rahul R. Pathak, principal consultant at Mumbai-based Mantrana Maritime Advisory Pvt., which provides consulting to shipping lines and port operators. “But the government has to ensure that they all don’t end up competing for the same basket of goods.”

India currently has 13 so-called major ports that are administered by the federal government. They together handled 561 million tons of cargo in the year ended in March 2010, according to official data.

The government plans to boost the major ports’ annual capacity to 1.46 billion tons by March 2020 from 616.7 million tons as of March, 2010, according to the shipping ministry. About 90 percent of India’s international trade by volume is carried through sea.

Asia’s third-largest economy aims to triple its merchandise exports to $750 billion by March 2017 from $225 billion last year, according to the trade ministry.

Fruit and vegetables rot as hunger stalks India
Associated Press
Tue, Aug 30, 2011

SOLAN, India (AP) — Sunil Sharma, a young tomato farmer in northern India, must navigate decripit roads, corrupt policemen and blazing heat to deliver his produce in an unrefrigerated truck to New Delhi's wholesale vegetable market.

India is plagued by malnutrition and soaring inflation, but it's not for lack of food. It is the world's second largest grower of fresh produce, but loses an estimated 40 percent of its fruit and vegetables to rot because of the kind of problems Sharma faces every week.

During one recent journey trucking tomatoes for himself and two other farmers to the capital, he was stuck for three days.

"Of the 350 crates of tomatoes I started out with, I could salvage only around 150 crates. The rest had turned to pulp," a despondent Sharma said.

Post-harvest food losses of the scale found in India are a problem throughout the developing world and translate into lower incomes for farmers and higher prices for consumers. Inflation is already undermining living standards across Asia with world food prices at record highs since December last year, according to the U.N. food agency.

In India, home to more than a third of the world's 150 million malnourished children younger than 5, food inflation reached nearly 10 percent in July.

"It's criminal neglect on the part of the government to allow this volume of wastage," says Biraj Patnaik, an adviser to India's Supreme Court on food policy. "Just cutting back on the waste would make such a dent in bringing down food inflation, making food more affordable, and hence, available to poor families."

At a busy New Delhi market, shop-owner Raj Kumar polishes his vegetables with a drop of oil on his duster. Shiny purple eggplants, bright green beans and golden lemons beckon middle-class shoppers.

But around the corner from Kumar's brightly lit shop lay the food that had arrived there wilted and rotten: a heap of beans turning gray, mushy eggplants and blight-blackened potatoes.

"I throw out vegetables every day. What can I do with them? Nobody wants these," he said.

Savitri Debi, a housewife with two teenage children, says she is shocked and angry at the mass of vegetables thrown away by shopkeepers.

"Vegetable prices keep going up and up. But look at the amount that is wasted," says Debi as she shopped for groceries. "It just makes me so angry that every day this place has mounds of rotten vegetables, when we can barely afford to buy potatoes."

The government, as well, has expressed horror and frustration at the rot. It has begun work on a strategy to cut post-harvest losses by building modern grain silos, cold storage warehouses and setting up farmers' markets in remote areas to link vegetable growers with retail outlets in the cities, Food Minister K.V. Thomas told The Associated Press.

Plans are also afoot to assign special — though not refrigerated — railway wagons to transport vegetables on a priority basis to modern warehouses, he said.

But for Ranvir Thakur, a farmer in the agriculturally rich Solan district of Himachal Pradesh 200 miles (320 kilometers) north of Delhi, the government's efforts seem all too far away.

"Growing vegetables in India is a risky business," Thakur said as he tried to find a buyer for a truckload of his almost table-ready tomatoes and capsicums at the bustling vegetable market in Solan.

"We face the risk of vegetables rotting at every stage — whether in the field, on the road, or in the markets," says Thakur, his weather-beaten face grimacing as he recalls recent losses.

The fetid odor of decaying vegetables hits the visitor to the 'mandi' or wholesale market in Solan nearly a hundred meters (yards) away from its massive gates. The mandi, the first point of sale for local farmers, was crowded with farmers, traders, commission agents and truckers surrounded by thickets of plastic crates stacked atop each other in shaky towers.

Hundreds of vegetable and fruit trucks reach the wholesale market each morning. Commission agents trawl the narrow alleys between the crates, looking out for the best bargains. Deals are struck, crates of vegetables— color-coded to indicate the owner— are auctioned in a high-decibel exchange and swiftly heaved onto trucks by a swarm of sweating musclemen.

Trader Balwant Singh says the paucity of refrigerated trucks means that delays at state border crossings, traffic jams, or the frequent landslides that clog hill roads can wilt and rot vegetables.

"There are only one or two trucks, belonging to private firms, that are refrigerated. The rest are open trucks, with tarps or plastic sheets for cover in case it rains," Singh said. "By the time we put up the tarps, the vegetables are soaked, and these begin to decay when we hit the heat and humidity in the plains."

Some believe allowing supermarket giants such as Walmart, Tesco and Carrefour to operate in India's multibillion-dollar retail market could succeed where the government has failed. They are keen to move in, sign contracts directly with farmers, use refrigerated transport and storage to reduce waste and bypass the middlemen.

Their entry so far has been blocked by government restrictions out of fear they will wipe out millions of small grocery stores in India. A government panel last month recommended allowing up to 51 percent foreign direct investment in multi-brand retail on condition that at least half the investment is made in back-end infrastructure such as cold storage chains and warehouses. A decision by the Cabinet could take several months.

Sharma, the young tomato grower, says the vulnerability of the farmers is exploited by road transport inspectors who demand bribes for trucks to enter neighboring states.

"The worst is when we enter Delhi. Police and transport officials hold up the trucks for hours at the toll gates till we pay up."

Sharma said he pays a bribe of 1,500 rupees ($33) for his truck every time he crosses into New Delhi on his way to Azadpur Mandi, one of Asia's biggest wholesale markets.

Spread over 90 acres in northern Delhi, Azadpur Mandi is a nerve center of India's fruit and vegetable trade. Trucks, cars, horse-carts and bicycle-driven carts are parked haphazardly in an ankle-deep mix of mud and putrefying vegetables.

Heaps of produce that is overripe and unlikely to withstand further transportation are tossed aside, crushed underfoot, or dumped in the mandi's overflowing garbage site.

When Sharma's truck arrives, a gang of loaders surrounds it. After a quick agreement, a trio of workers begins disgorging its contents. It's soon evident that delays have cost Sharma heavily.

"We'll barely recover the cost of hiring the truck. Such a large amount has spoiled," said Prem Singh, Sharma's trader at Azadpur Mandi.

India Plans $5.3 Billion of Highways as Jams Sap Growth
By Karthikeyan Sundaram - Jun 28, 2012 8:25 AM GMT+0800
Bloomberg

India may spend 300 billion rupees ($5.3 billion) tripling the length of its expressway network to ease traffic jams that are slowing trade, wasting fuel and sapping economic growth.

The country intends to add about 1,600 kilometers (1,000 miles) of roads with at least six lanes, Raghav Chandra, joint secretary at the Ministry of Road Transport and Highways, said in an interview on June 14. He didn’t give a timeframe for awarding construction contracts or for completing the projects.

The new highways, linking major cities, will have higher tolls than existing roads and fewer access points so trucks won’t get stuck at toll gates or behind queues of motorcycles, auto-rickshaws and tractors making local trips. India plans to build the network as it contends with congestion that costs $5.5 billion a year, according to a study by Transport Corp. (TRPC) of India and the Indian Institute of Management, Calcutta.

“This is the first step towards really improving traffic movement,” said Vishwas Udgirkar, a Gurgaon, India-based senior director for transport at Deloitte Touche Tohmatsu India Pvt. “India is way behind other countries in creating such infrastructure.”

India’s 6 million trucks now average 19.8 kilometers per hour because of jams, according to the study backed by trucking company Transport Corp. Washington D.C. has the slowest traffic in the U.S., with an average speed of 74 kilometers per hour, based on a 2010 study by TomTom NV. Faster trips could save Indian truckers as much 600 billion rupees of fuel a year, the Transport Corp. study said.

More : http://www.bloomberg.com/news/2012-06-28/india-plans-5-3-billion-of-highways-as-jams-sap-growth.html

Infrastructure is key to India's growth
Times of India
Feb 8, 2013, 10.30PM IST

MUMBAI: "The global economic realities had forced the construction and infrastructure industry into cautious optimism but its time to look forward to the future with confident optimism," this was the resounding message from M F Farooqui, secretary - department of heavy industry, government of India. He was speaking at the ICEMA - Indian Construction Equipment Manufacturers' Association's 'Conference on Infrastructure Development - Deliverables and Imperatives' affiliated with Confederation of Indian Industry (CII) in the financial capital of India, Mumbai.

"Government recognizes the synergy and strong correlation between India's growth story and the construction industry. In the 12th five-yeara-plan we are looking at 8% GDP growth rate and the construction industry has to play a key role. The industry is both the cause and effect of this growth as it gets the economy into a virtuous cycle where more investment in the industry leads to more job and growth of GDP thus growing the economy which then leads to more investment in the sector. It employs 30-35 million Indians directly and indirectly."

He informed the audience that in the 12th Five year plan, a trillion dollar i.e. 52 lakh crore has been committed to infrastructure and construction with seven and half lakh crore going in the first year increasing to 17 and a half by the fifth. He also said that the government is looking to increase the industry that is around 10,000 crore in size, to a compounded annual growth rate of around 35,000 crore by the second part of the this five year plan. To do this, he talked about a development council that will bring the govt. and private players together and lead the voice of the industry and govt. into the creation of policy.

"There are huge opportunities for the industry in the future. And there are huge challenges as well. The main challenge is the fragmentation of the industry that causes the voice of an industry extremely important for the growth of the nation, to be not audible. The other issue is technology upgradation and infusion of new technology. Project completion still takes more time than it does in other comparable countries. This delay is the single biggest bottleneck in the infrastructure industry. The next key challenges are technology and skill development," he added.

Glenville da Silva, President-Indian Construction Equipment Manufacturers Association (ICEMA) and Vice President Business Development Asia Volvo Construction Equipment said, "With growth comes a new set of issues and challenges. And if as an industry we do not take cognizance of this and take responsibility to act today, we will become the roadblock to the growth of the nation."

Vivek Bhatia, Principal, The Boston Consulting Group said, "India will be one of the most attractive markets and we must prepare to meet competition head on. We must reduce cost while also delivering a superior value proposition and offer new solutions and services."