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Indian Infrastructure Industry: an overview

September, 2013


“The link between infrastructure and economic development is not a once and for all affair. It is a continuous process; and progress in development has to be preceded, accompanied, and followed by progress in infrastructure, if we are to fulfill our declared objectives of generating a self-accelerating process of economic development”, said Dr. V. K. R. V. Rao, a noted Indian economist.

There are no second thoughts to the fact that a country’s infrastructure development is directly proportional to its economic growth and vice versa. Spanning from roadways to airways, ports to airports and power production facilities, the Indian infrastructure segment is the thrust for the development of the nation and hence enjoys intense attention from top-grade policy makers of the country.


The Indian Government is very particular about the development and maintenance of India’s huge road network; more so because number of vehicles in the country has been growing at an average rate of 10.16 per cent per annum over the last five years. Thus a need for efficient and world-class road network becomes inevitable for smooth transitions of goods and services.

The administration awarded about 2, 000 km worth of new road construction contracts in FY13.

Foreign direct investment (FDI) received in construction development sector from April 2000 to July 2013 stood at US$ 22.44 billion, according to the Department of Industrial Policy and Promotion (DIPP).


  • The Indian Railways generated total approximate earnings on originating basis of Rs 44,260.16 crore (US$ 7.08 billion) during 1st April 2013 to 31st July 2013 as against Rs 39,969.24 crore (US$ 6.39 billion) during the corresponding period last year, registering an increase of 10.74 per cent. While the total goods earnings increased by 9.20 per cent, total passenger revenue earnings shot up by 12.70 per cent.
  • The revenue earnings from other sources amounted to Rs 1,307.87 crore (US$ 209.11 million) during 1st April 2013 to 31st May 2013. The total approximate numbers of passengers booked during 1st April 2013 – 31st July 2013 were 2, 810.33 million.

  • The cumulative FDI inflow into the railways related components sector stood at US$ 351.26 million from April 2000 to July 2013, according to statistics released by DIPP.


  • India’s 12 big ports, which account for about 58 per cent of the total cargo shipped through the country’s ports, handled 137 million tonnes (MT) of goods in the first quarter of FY14.
  • Container cargo volumes at these 12 ports stood at 1.87 million standard containers during the reported quarter, according to data compiled by the Indian Ports Association (IPA).


  • In a bid to strengthen partnership with India in the energy sector, France is keen to form ventures with industry in the renewable energy sector, particularly solar energy in the state of Tamil Nadu. The State, a leader in clean energy with more than 7, 930 mega-watt (MW) of renewable energy, has a dedicated solar energy policy to encourage exploitation of the renewable energy.
  • Meanwhile, the State of Rajasthan is ready to get the largest single-location solar plant in the world with an outlay of Rs 30, 000 crore (US$ 4.8 billion). The 4, 000-MW power plant project, to be led by Jaipur-based CPSE Hindustan Salt Ltd, will be set up near Sambhar lake, about 70 km from Jaipur.


  • Total domestic passengers carried by the scheduled domestic airlines between January and May 2013 were 25.998 million, as against 25.808 million during the corresponding period of previous year thereby registering a growth of 0.74 per cent, revealed the statistics from Directorate General of Civil Aviation (DGCA).
  • No-frill carrier IndiGo lead in terms of market share with 29.7 per cent of the pie, followed by Jet Airways-Jet Lite combine at 25.3 per cent, Air India Domestic at 19.2 per cent, Spice Jet at 17.5 per cent, and Go Air at 8.3 per cent for the month of July 2013.
  • The air transport (including air freight) in India has attracted FDI worth US$ 456.84 million from April 2000 to July 2013, as per the data released by DIPP.

Infrastructure in India: Key Developments

  • Dubai-based DP World has been awarded a contract to develop the Jawaharlal Nehru Port Trust (JNPT)'s Rs 600-crore (US$ 95.97 million) container terminal in Navi Mumbai. DP World is a leading marine terminal operator and its Indian subsidiary Nhava Sheva would be building this standalone container handling facility under this 17-year concession agreement.
  • The new development, to be executed on design, build, finance, operate and transfer (DBFOT) basis, is expected to ease congestion at JNPT.

  • IL&FS Transportation Networks Ltd, one of India's biggest road builders, has recently signed a US$ 300 million contract to build a six-lane highway. The project will link an eastern industrial zone (having heavy-duty traffic) to mining districts such as Dhanbad, the nation's coal capital.
  • Meanwhile, Russian Railways has expressed interest in the electrification of India’s immensely huge railway network, which is undergoing a major revamp scheme. Sergei Pavlov, Chief Executive of Russian Railways subsidiary RZD International, has revealed that the company is keen on Indian market in terms of electrification and track reconstruction. He stated that over 2000 kilometres of railway lines are getting electrified every year.
  • Apart from Russian Railways, Uralvagonzavod Research and Production Corporation is also vying for cooperation with Indian railways. Oleg Siyenko, chief executive of Uralvagonzavod, has said that the company is ready to cooperate with India on the joint development and manufacturing of railway carriages, setting up of production facilities for machinery parts and units and establishment of assembly lines using the latest technology.

  • India's first ever aviation university, the Rajiv Gandhi National Aviation University at Rae Bareli in Uttar Pradesh, will start imparting training to aspiring pilots, aircraft engineers and cabin crew in September 2014. The educational entity is a Government organisation that has been developed to acknowledge the industry's chronic talent shortage.
  • The university will induct 1, 000 students by 2018 and eventually, all flying schools in India will get affiliated to this university.

Government Initiatives

  • The Indian Government plans to earmark US$ 1 trillion for the development of infrastructure over 2013-18. To attract investments in the sector, it has modified its policies so that developers no longer have to wait for clearance from forest authorities to commence construction. Another supportive policy came from the central bank wherein it reclassified loans to road builders as secured loans rather than unsecured loans, which would give more comfort to banks to lend to projects.
  • Meanwhile, Shipping Minister GK Vasan has indicated that the Government will soon decide upon the new tariff guidelines for major ports in India, which is expected to provide autonomy to the port terminals to fix market linked tariffs. The draft tariff guideline is awaiting feedback from stakeholders.
  • The ministry has also set itself a target for FY14 to award 30 port projects involving an outlay of about Rs 25,000 crore (US$ 4 billion).

    These projects, 19 of which will come under public-private partnership (PPP) mechanism, will build an additional capacity of 288 million tonnes per annum (MTPA). The Government had awarded 32 projects worth Rs 6, 765 crore (US$ 1.08 billion) in FY13 which will add a capacity of about 137 MTPA.

  • Furthermore, Mr K.C. Venugopal, Minister of State for Civil Aviation, has recently informed Rajya Sabha that 17 new airports have been proposed for construction during the 12th Five Year Plan.
  • The details of the proposals have not been disclosed yet.

Road Ahead

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, said Mr Ajit Singh the Minister for Civil Aviation. He further stated that 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$ 0.01601 as on September 25, 2013

References: Media Reports, Press Releases, Press Information Bureau, Department of Industrial Policy and promotion (DIPP).