Infrastructure in any country plays a vital role for the economy’s growth and development. The Indian economy is getting bigger and better with every passing year. And needless to say, Infrastructure will contribute significantly to the country’s overall development. Nearly all the infrastructure sectors will provide excellent opportunities for investments, with roads, railways, ports, power and airports being the major attractions.
India has the second largest road network in the world with a road length of 4.24 million km. Also, India's road density is among the highest in the world with 1.29 km of roads per sq. km of area. India's national highways and expressways constitute about 1.67 per cent of the road length, and the percentage of paved roads is 49.3 per cent. Moreover, India's road freight volumes are increasing at a compounded annual growth rate (CAGR) of 9.08 per cent coupled with the boost in the population of vehicles (all types) at a CAGR of 10.76 per cent. In order to cater to such burgeoning needs, road length is increasing at a CAGR of 4.01 per cent.
Also, owing to rapid increase in motorisation and urbanisation, the Indian Government is leaving no stone unturned to enhance the road network. As a result of the initiatives taken, the total road length in India has increased eight times over the past four decades.
Indian Railways transports 2.65 million tonne (MT) of freight and 23 million passengers every day.
The Indian Railways generated revenues of Rs.101, 223.95 crore (US$ 18.63 billion) during April-January 2012-13 as against Rs 84, 083.74 crore (US$ 15.47 billion) during the corresponding period last year, registering an increase of 20.38 per cent. While the total goods earnings increased by 24.76 per cent, total passenger revenue earnings shot up by 11.05 per cent.
The revenue earnings from other coaching amounted to Rs 2, 617.19 crore (US$ 481.57 million) during April-January 2012-13. The total approximate numbers of passengers booked during April 1, 2012 – January 31, 2013 were 7, 150.60 million compared to 6, 910 million during the same period last year, showing an increase of 3.48 per cent.
The cumulative foreign direct investment (FDI) inflow into the railways related components sector stood at US$ 258.26 million from April 2000 to December 2012, according to statistics released by the Department of Industrial Policy and Promotion (DIPP).
Ports
With 187 minor ports and 12 major ports in the country, Indian shipping sector is poised to make great growth in the coming years. Shipping continues to be one of the most efficient modes of transportation in India, especially when it comes to bulky goods and long distances. While the Indian Government has allowed 100 per cent FDI in the sector to promote higher capital inflows, it has also embarked on the public-private partnership (PPP) route for modernisation and expansion of the Indian ports.
The national maritime agenda drafted aims for an expansion of total port traffic from current 800 million tonnes (MT) to about 2, 500 MT by 2020. Alongside, the agenda projects total capacity, of all ports together, to raise from current 900 MT to 3, 130 MT.
To achieve the desired results, Indian shipping ministry is making all the possible efforts and funding. It has decided to invest Rs 73, 793.95 crore (US$ 13.58 billion) for development of various projects in the sector during the 12th Five year plan. According to the plan, the annual capacity of major ports would expand to 1229.24 MT by the end of March, 2017.
Power
- East Coast Energy Ltd is setting up a thermal power plant by employing state-of-the-art technology at Kakarapalli in Srikakulam district. It intends to begin generation by March 2015. The project will have two units of 660 megawatt (MW) each. The super-critical technology used would reduce the emission of greenhouse gases by about 6.5 per cent
- Essar Power has commissioned the first phase of 600 MW, of its 1,200 MW Mahan power project. The plant has been integrated with the grid and has begun generating power. The Mahan facility in Madhya Pradesh will be Essar’s eighth operational power plant, which will have 3,910 MW of generation capacity. The second unit at Mahan is expected to commence commercial operations during the first quarter of FY14. The first unit of Mahan project entails an investment of US$ 1.2 billion and is the company’s third coal-fired power project
Aviation
Total domestic passengers carried by the scheduled domestic airlines in November 2012 were 5.02 million (465, 000 higher than those carried in October 2012). The number of passengers carried by domestic airlines was 53.4 million between January-November 2012.
The air transport (including air freight) in India has attracted FDI worth US$ 448.40 million from April 2000 to December 2012, as per the data released by DIPP
Infrastructure in India: Key Developments
- ABG Shipyard is planning to invest Rs 5,000 crore (US$ 920.02 million) to build a greenfield shipyard along the Gujarat coastline. The company has submitted the corresponding proposal to the State Government. The project, to be executed in three phases, will be the company’s third facility in Gujarat and is likely to generate jobs for about 4, 500 persons. ABG also plans to expand its facilities at Dahej and Magdalla in three phases, with an estimated capital infusion of Rs 2,000 crore (US$ 368.01 million)
- Recognising the needs of physically challenged persons, the Indian Railways might introduce Braille stickers in trains to make travelling easier for them. The final details for the initiative are under process and might get introduced in the Rail Budget 2013-14.
Braille is a writing system which enables visually challenged and partially sighted people to read and write through touch. The Railways has also decided to provide special arrangements in all mail and express trains to facilitate comfortable travelling for such passengers
- IVRCL Ltd has inked a memorandum of understanding (MoU) with the Haryana Government for the development of Rai Malikapur-Kharak road corridor. With an aim to enhance the north-south connectivity, the Rs 1, 605 crore (US$ 295.31 million) -project corridor will cover a stretch of 151 km of Rai Malikapur close to the Rajasthan border up to Kharak corridor.
The project is expected to achieve financial closure by July 2013 and it will take around 30 months to be executed
- Recently, the Foreign Investment Promotion Board (FIPB) has cleared Malaysian low-cost carrier (LCC) AirAsia's proposal to form a budget airline in a joint venture (JV) with the Tatas and Telstra Tradeplace at an initial outlay of Rs 80 crore (US$ 14.72 million). The proposal will head to the Directorate General of Civil Aviation (DGCA) for the necessary license after which the JV can commence its operations.
Once approved, AirAsia India will be the first real action after the Government in 2012 allowed foreign airlines to invest in their Indian counterparts
Government Initiatives
The Indian Government has earmarked US$ 1 trillion for investment in the development of the country’s infrastructure.
The Shipping Ministry has decided to aggressively pursue port development in India and has set an ambitious target to award 42 such port projects for a total worth of Rs 15,000 crore (US$ 2.76 billion) in 2013. These new ports will add a capacity of 250 MT, informed G K Vasan, the Shipping Minister. The ministry intends to achieve a capacity of 3, 200 MT at Indian ports by 2020 and around 2, 600 MT of it all is planned by 2016-17.
Meanwhile, India and Spain have inked an MoU on Technical Co-Operation in the Field of Railway Sector. As per the agreement signed, both the countries will co-operate and exchange information in the areas of High Speed Railway, upgradation of speed of passenger trains on existing lines, improving safety of train operations, modernisation of Rolling Stock, construction and maintenance technologies for fixed infrastructure (Track, Bridges, Tunnels, OHE, Power Supply Systems, Signaling and Telecommunications) and other cooperation in railway related technology developments.
Additionally, the Union Cabinet has recently approved proposals for two highway projects entailing an outlay of over Rs 5, 000 crore (US$ 920.02 million). One project proposal, to be executed in Bihar, would be implemented with financial assistance from Japan, while the other is to be executed in Odisha.
Road Ahead
Cargo traffic at major Indian ports is expected to grow by 4 per cent in 2013-14, according to a study by the Centre for Monitoring Indian Economy (CMIE). The study states that the major reason behind the upsurge would be an increase in the cargo volumes of commodities including petroleum, oil & lubricants (POL), container, coal and fertilisers. Hence, cargo traffic handled by major ports is anticipated to increase to 568.5 MT in 2013-14 from the 546.4 MT estimated for 2012-13, said the report.
Alongside, a recent study has stated 18,637 km of expressways need be built by the end of the 13th Five-Year Plan period, i.e. 2022. Infrastructure development (for expressway projects alone), on such a massive scale would require about Rs. 450, 000 crore (US$ 83 billion), according to the study.
Meanwhile, the Government, under NHDP-VI, has already given the nod for constructing four expressways of more than 1, 000 km length at a financial outlay of Rs. 16, 680 crore (US$ 3.07 billion). The administration is contemplating on public-private partnership avenues for these new developments.
Exchange Rate Used: INR 1 = US$ 0.01839 as on March 11, 2013
References: Media Reports, Press Releases, Press Information Bureau, Department of Industrial Policy and promotion (DIPP).