Sizing & Status of Public Infrastructure Development in India: Tracking Pooled Opportunities in Future Market

Tracking the Present Scenario for Public Infrastructure Segment in India

India is on the verge of development, the choices that India would make now to facilitate its swelling population and speeding urbanization would highly impact the economic prosperity of the country. Hence adopting a correct approach for developing the infrastructure base of the country would be of high importance. Moreover, for a country like India along with creating new and modern infrastructure, maintaining the existing one is a biggest challenge and is of utmost significance too.  In addition to this, in order to be at par with the rapid industrialization and urban expansion the need for developing the public infrastructure has hit the priority list of the Indian government.

Huge investments have been planned to enhance the quality of public infra, which majorly includes roads, rail and major construction intensive segments in the country, which in turn defines better living for the people of a country and reflects inclusive growth. It is pertinent to note that the public infrastructure segment in India is projected to witness an investment of about USD 400 Billion by the end of 2017, which is massive. Moreover, of this total projected tune nearly 50% of the investments are expected to route in via private channels, making the total opportunity size for the private folks to be of USD 200 Billion by 2017. The upbeat scenario, that the public infrastructure industry has currently observed in India has not only widened market space for the domestic players but is also likely to provide a level playing field to the foreign giants.

It is significant to note that the global companies are impended to invest an amount of USD 120 Billion to beef up the development of urban infrastructure in the country. The roads and rail segment are likely to witness maximum investments of the total planned funds to be raised for the cumulative public infrastructure domain. Moreover, both the domains are  likely to be the first to witness the action plans of the government under the umbrella of public infrastructure.

exhibit-01-snapshot-of-public-infrastructure-in-india-vis-a-vis-asia-pacific-2016-_eninconperspectives-com

It is pertinent to note that both the roads & rail segment in India is likely to route about USD 30 Billion of cash flows by 2017, of which nearly 75% is to be raised from “Public Private Partnership” mode. With strong intent of the government to focus more on encouraging the private participation into the infra domain, the segment is likely to witness a growth of 20-25% in the investments with assuring quality infrastructure. More than 150 highway projects worth INR 130 Billion has been planned for 2017 of which nearly INR 80-90 Billion to be undertaken by the private players. In addition to this, an investment of INR 200 Billion has been targeted for the rail corridor facilitating high-speed trains, expansion and construction of new metro tracks, rail tracks, stations/ junctions etc. Also, the government is very much inquisitive to sign SPVs with the states in order to develop the regional rail stretch, which may pump up loads of investment opportunities. Recently, the government of Gujarat has signed one such SPV to expedite state’s rail projects incurring an investment of about INR 80-90 Billion.

exhibit-02-1

Evaluating the Business Case for Value Chain Players in Public infrastructure Segment of India 2016

With increasing PPP practice in the public infra domain, wide business opportunities across the infra value chain exists for the private players. It is pertinent to note that a subsequent increase of more than 25% has been witnessed in the PPP propositions in the entire public infra space. Not only the domestic players even the foreign giants are projected to gain maximum by investing into the public infra domain in India. Given below in Figure 2.10 is the opportunity case for the value chain players in the infra space.

exhibit-03-opportunity-pie-for-key-value-chain-players-in-road-railways-smart-cities-overall-public-infrastructure-of-india-2016_enincon

Tracking the Pooled Opportunities in Public Infrastructure Segment

In the current decade, India’s success story is set to enter a new era of inclusive growth. While it might take a longer time to experience fully inclusive growth, but the recent initiatives taken by the state governments are projected to be highly fruitful in the future course of time.  The government’s strong intent for upgrading the country’s basic infra needs together with the “Make in India” impact has fueled the participation of many of the states in bridging the public infra availability gap in the country. Hence huge opportunities lies for the private players to invest into the segment.

exhibit-04-key-hotspots-for-the-public-infrastructure-investments-in-india-2017

Several initiatives across the public infra domain be it, roads, bridges, highways rails, smart cities, mass transit, industrial corridors and other major construction intensive segments have been taken by the government to improve the existing standards of these facets. Development of Delhi-Mumbai Industrial Corridor (DMIC), Gujarat International Finance-Tech City (GIFT), strengthening mass transit network across the nation, developing freight corridors etc all offer platter full opportunities for the private players into the public infra domain. It is pertinent to note that the total planned investments in the GIFT are estimated to be USD 11 Billion , whereas the DMIC offers an investment opportunity to the tune of USD 90 Billion, which is massive. Apart from these, the Ahmadabad-Mumbai High Speed Rail Corridor (AMHSRC) is likely to attract an investment to the tune of USD 11.2 Billion. Given below in Figure 2.11 are some of the key states which could be the hotspots for the future course of investments into the public infra domain.

exhibit-05-announced-investments-in-key-states-under-road-highway-segment-by-2017_eninconperspectives-comexhibit-05-announced-investments-in-key-states-under-road-highway-segment-by-2017-part-2_eninconperspectives-com

To read more related articles and in get in touch with the author and read more related articles  here

*The views expressed in this article are solely those of enincon perspectives and do not necessarily represent those of Enincon LLP.

Leave a Reply