Infrastructure in India

  • The Index of Eight core industries—crude oil, petroleum refinery products, coal, electricity, cement, steel, fertilizers and natural gas—having a combined weight of 37.90 per cent in the Index of Industrial Production (IIP) stood at 149.1 in January 2012. During April-January 2011-12, the cumulative growth rate of the core industries was 4.1 per cent. The infrastructure sector accounts for 26.7 per cent of India's industrial output. The Planning Commission has projected that investment in infrastructure would almost double at US$ 1,025 billion in the 12th Plan, compared to US$ 514 billion in the 11th Plan. Of the US$ 1,025 billion, 50 per cent is expected to come from private sector, whose investment has been 36 per cent in the 11th Plan. India's infrastructure sector will require US$ 1.7 trillion investment in the next 10-years. With a view to streamline and simplify the appraisal and approval process for public private partnership (PPP) projects, a Public Private Partnership Appraisal Committee (PPPAC) has been constituted.

    Sector Fact

    India has...

    • F12 Major Ports
    • 454 airports and airstrips in India
    • Fifth largest electricity generation capacity in the world
    • Fourth largest rail network in the world

    Investment Opportunities

    • India is attracting the highest number of unlisted, closed-end funds that focus on a single country, making it the most preferred choice among emerging markets. India is expected to require around US$ 1 trillion worth of infrastructure investment over the next five years.
    • Infrastructure PE funds investing in India can choose from sub-sectors such as power, telecom, roads and ports. As per one of the report 74 per cent of India-focused funds will invest in greenfield projects, 84 per cent in brownfield assets, and 42 per cent will buy out the stakes of other PE funds.

    Investment Policy Updates

    • FDI up to 100 per cent under the automatic route is permitted in exploration activities of oil and natural gas fields, infrastructure related to marketing of petroleum products, actual trading and marketing of petroleum products, petroleum product pipelines, natural gas/LNG pipelines, market study and formulation and Petroleum refining in the private sector. This will be subject to the existing sectoral policy and regulatory framework in the oil marketing sector and the policy of the Government on private participation in exploration of oil and the discovered fields of national oil companies
    • FDI up to 49 per cent is permitted under the Government route in petroleum refining by the Public Sector Undertakings (PSU). This should not involve any divestment or dilution of domestic equity in the existing PSUs
    • FDI up to 100 per cent under the automatic route is allowed both in setting up new and in established industrial parks