Last Updated: June 25, 2015
Chairman & CEO, Barclays Asia-Pacific
Updated: March, 2015
CONSTRUCTION EQUIPMENTS SECTOR REPORT | March, 2015
A key driver of the economy, Infrastructure is highly responsible for propelling India’s overall development. The industry enjoys intense focus from the top officials of the Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. This sector includes power, bridges, dams, roads and urban infrastructure development.
The Indian power sector has an investment potential of US$ 250 billion in the next 4-5 years, providing immense opportunities in power generation, distribution, transmission and equipment, according to Mr Piyush Goyal, Union minister of coal, power and renewable energy.
The total approximate earnings of Indian Railways on originating basis during April 1, 2014 to December 31, 2014 were Rs 114,656.13 crore (US$ 18.42 billion) compared to Rs 101,856.45 crore (US$ 16.37 billion) during the same period last year, registering an increase of 12.57 per cent.
The total approximate earnings from goods during 1st April 2014 – 31st December 2014 were Rs 77,161.55 crore (US$ 12.4 billion) compared to Rs 68,776.35 crore (US$ 11.05 billion) during the same period last year, registering an increase of 12.19 per cent.
Meanwhile, the number of export and import containers moving through major ports in India expanded 7.34 percent year-over-year from April to October 2014, as a result of the Modi Government’s efforts to make port development a major priority.
Foreign direct investment (FDI) received in construction development sector from April 2000 to January 2015 stood at US$ 24,028.19 million, according to the Department of Industrial Policy and Promotion (DIPP).
India is witnessing significant interest from international investors in the infrastructure space. Many Spanish companies are keen on collaborating with India on infrastructure, high speed trains, renewable energy and developing smart cities
The Indian Government is taking every possible initiative to boost the infrastructure sector. Some of the steps taken in the recent past are being discussed hereafter.
The Reserve Bank of India (RBI) has notified 100 per cent foreign direct investment (FDI) under automatic route in the construction development sector. The new limit is effective 2 December 2014, RBI said in a notification on its website.
Recently, the Government has relaxed rules for FDI in the construction sector by reducing minimum built-up area as well as capital requirement and liberalised the exit norms. The Cabinet has also approved the proposal to amend the FDI policy.
India and the US have signed a memorandum of understanding (MoU) in order to establish Infrastructure Collaboration Platform. The document showcases the relationship between both the Governments which intend to facilitate US industry participation in Indian infrastructure projects to improve the bilateral commercial relationship and benefit both the Participants' economies. The MoU’s scope envisages efforts in the areas of Urban Development, Commerce and Industry, Railways, Road Transport and Highways, Micro Small and Medium Enterprises, Power, New & Renewable Energy, Information and Broadcasting, Communications & Information Technology, Water Resources, River Development and Ganga Rejuvenation.
Indian port sector is poised to mark great progress in the years to come. It is forecasted that by the end of 2017 port traffic will amount to 943.06 MT for India’s major ports and 815.20 MT for its minor ports.
Along with that, Indian aviation market is expected to become the third largest across the globe by 2020, according to industry estimates. The sector is projected to handle 336 million domestic and 85 million international passengers with projected investment to the tune of US$ 120 billion. Indian Aviation Industry that currently accounts for 1.5 per cent of the gross domestic product (GDP), has been instrumental in the overall economic development of the country. Given the huge gap between potential and current air travel penetration in India, the prospects and possibilities of growth of Indian aviation market are enormous.
Exchange Rate Used: INR 1 = US$ 0.016 as on March 24, 2015
References: Media Reports, Press Releases, Press Information Bureau, Department of Industrial Policy and promotion (DIPP).
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
India has the third largest road network in the world spanning over 3.3 million km.
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