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Tuesday , 26 October 2021

India: Guiding growth through Infrastructure development

Institutional Investors including Sovereign Wealth Funds, Pension Funds and Private Equity are becoming very active players in the Indian Infrastructure growth story. Investing in infrastructure assets, characterized by longterm contractual arrangements and regulation, is a means to reduce portfolio risks through diversification, and to access higher risk-adjusted returns for institutional investors. These investors also expect infrastructure to provide additional benefits, such as inflationlinked returns and long-term stable cash flows. Institutional Investors have increasingly participated in the financing, building and operating of infrastructure through public-private partnerships. The aggregate value of global infrastructure investments reached its highest level in 2016, with $413 billion invested. Investor appetite for infrastructure has grown steadily since the global financial crisis.

The progressive PPP framework in the country has attracted various institutional investors to include India in their infrastructure allocations. Additionally, India now offers a very mature secondary market for exits which adds to the attraction of the market. Canadian pension funds are a case in study. Canada represents nine percent of the total universe in respect to assets under management and is home to some of the largest and most experienced infrastructure investors. Five major Canadian investors (Brookfield, CPPIB, Fairfax, CDPQ and PSPIB) have invested about $20 billion in India focussing on National Highways, Airports, Real Estate and logistics assets. To date, these investors in aggregate control over 1000 kms of National Highway concessions, one airport, multiple logistics assets and a significant chunk of commercial real estate in the country. All these funds have directly or indirectly established their presence in India and with dedicated teams which are growing very fast.

India as Technology Market for Investors

India is home to 1.35 billion people using 800 million mobiles and driving 30.92 million vehicles climbing fast on global World Bank ranking in Ease of Doing Business in recent six years from 142 to 63 and aiming to be 50th next year and top two in coming 3-4 years. Today, India is rated as one of the most attractive investment destinations across the globe with corporate tax reduction as the rates are now lower than that in China and most Southeast Asian countries.

After the implementation of ‘Demonetization and GST’, the government has been continuing with major reforms for foreign investors in sectors like AI, IoT, Automation, Big Data, Robotics, Blockchain, Smart Cities, Cloud Computing by introducing emerging technologies in application for making people’s life easy and bringing accountability in governance along with transparency in Circular Economy, Green Economy, Computed Economy and Digital Economy.

Economic growth for long-term prosperity shows that a circular economy path to development could bring India annual benefits of Rs 40 lakh crore (US$ 624 billion) in 2050 compared with the current development path – a benefit equivalent to 30% of India’s current GDP.

Abhijeet Sinha National Director, Ease of Doing Business

As compared to Asian countries, by adopting renewable sources of energy like hydroelectric, electric mobility, nuclear energy, bio-fuel cells etc., India is converging its fossil fuel economy to green economy with a continuous reduction in crude oil import. In the year 2020, India aims to launch its first and one of the longest (500 km) in world E-Highways between Jaipur- Delhi- Agra. Besides, the government of India has already announced to convert Mumbai-Pune Expressway, Ahmedabad-Vadodara Expressway, Bengaluru-Mysore, Bengaluru- Chennai, Surat-Mumbai Expressway, Agra-Lucknow Expressway, Eastern Peripheral Expressway, Delhi-Agra NH2 Expressway, Hyderabad ORR Expressway and five connected highways into E-Highways in the coming years.

Post implementation of GST, bank accounts involving 35,000 companies are being monitored and the Ministry of Corporate Affairs (MCA) also struck off around 2.24 lakh companies which were inactive for two years or more.

India is the second-fastest digitizing economy amongst 17 leading economies of the world. It can create up to $1 trillion of economic value from the digital economy in 2025.

EoDB 2020 is focused on bringing Sustainable Development on Center Stage and to make traditional Indian Economy self-dependent in Energy, Mobility with evolving Digital and Circular Economy ecosystems. It brings new financing tools for emerging techs like Hybrid Annuity Model (HAM) and Annuity Hybrid E-Mobility (AHEM) to build infrastructure and provide mobility and digitalization for all sectors to transform.

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