Infrastructure to India

In mid-April Austrade in conjunction with KPMG launched a joint report on the Opportunities in Infrastructure and Resources in India which was followed by industry briefings. For information on the briefings and report, please see the following links.  

(Last updated: 22 Apr 2008)

Trends and opportunities

The market

India is one of the fastest growing economies in the world. Latest growth estimates project Indian GDP to grow at 8.7 per cent in 2007-08. This translates to an average growth rate of eight per cent over the last three years, a growth rate that makes India the world’s second fastest growing economy. While this growth opens up many opportunities for Indian companies, it also creates significant opportunities for Australian firms. The infrastructure sector in India, being the foundation for supporting economic growth, is very likely to witness huge investments over the next few years.

The Government of India has laid out elaborate plans for improving the power, ports, airports, roads and railway infrastructure. The amount of investment expected to flow into the infrastructure and resources sector over the next five years is estimated to be US$500 billion.

To get an estimate of the work required to be done in the near future in India, consider these examples:

• The combined port capacities of India are set to double in the next five years.
• An investment of about US$50 billion would be flowing in to develop the roads and highways.
• The power sector is set to receive investments to the tune of US$130 billion for creating significant capacity additions in the next few years.

The Indian Government realises that such massive infrastructure creation cannot take place without private sector and foreign participation. Consequently, the policy framework in infrastructure sectors today is much more conducive to private investment with many opportunities for Public Private Partnerships (PPPs).

However, there exists capability gaps specifically in the design, engineering and advisory work in the construction value chain as many Indian firms do not have sufficient expertise in executing large infrastructure projects with world class standards. This is an important opportunity for entry for Australian companies. Capability gaps apart, a healthy growth of about 15 per cent per annum in the infrastructure sector will create significant play for new entrants across the value chain even in areas where capabilities do exist within the market.

Opportunities

There are multiple opportunities across the sectors covered under the infrastructure umbrella. Snapshots of these are provided below:

Railways

• Design and construction of Dedicated Freight Corridors
• Gauge conversion projects
• Development of world-class stations
• Mass Rapid Transit System (Metro) projects

Roads and highways

• Balance work on the highway development including Golden Quadrilateral and East-West North-South Corridors totalling over 17,000km of roads
• Expansion of existing roads and highways to 6-lanes, 4-lanes and 2-lanes for specified stretches
• Development of expressways and tollways
• Creation of ring roads, bypasses, grade separators and service roads

Ports

• Port development projects (eg. construction of jetties and berths)
• Procurement or replacement of port equipment
• Channel deepening to improve draft
• Port connectivity projects

Airports

• Modernisation of metro airports
• Upgrading of 35 non-metro airports (including terminal building and airside works)
• Creation of training centres for aviation industry professionals
• Maintenance, repair and overhaul operations for current and future aircraft fleet

Power

• Power generation including Ultra Mega Power Projects (in excess of 4,000MW)
• Power transmission grids
• Power distribution (including equipment such as transformers, generators and meters)

Real estate

• Retail, residential and commercial projects
• Green building projects
• Products such as cement, steel, timber and services – architecture, landscaping and master planning

Commonwealth Games 2010

• New Stadia construction and refurbishment of existing sports structures
• An eco-friendly ‘green’ Games village
• Various opportunities arising in areas including urban transport, security and environment management

Mining

• Mineral exploration
• Contract mining and mineral extraction
• Mineral processing
• Specialist ancillary services and systems including mine safety systems

Oil and gas

• Exploration including sub-surface mining and deepwater exploration
• Refining and transportation
• Oil and gas distribution and marketing services

Competitive environment

Infrastructure development in India has well and truly set off in a high growth trajectory.

The growth in infrastructure is being driven by a host of factors:

• Favourable demographics. Amongst the primary drivers of growth is India’s huge human resource base. India is the second most populous nation with an estimated population of around 1.1 billion. The average age is only around 25 years indicating that the current generation will remain productive over a long period of time. The decline in the working age population in India is likely to be slower than in other emerging economies including China and Russia, signalling a long term continuation of the growth trend.
• Growing domestic demand. Rising income levels and changing consumer preferences have fuelled demand for a wide range of products and services. The number of households with income levels ranging between US$5,000 to US$12,500 is projected to increase from 10.9 million in 2005 to 55 million in 2015.
• Favourable investment climate. The Indian liberalisation process that began in 1991 has continued very well with opening up of many sectors to private and foreign investment. Foreign Direct Investment (FDI) flows in India were about US$15.7 billion in 2006-07 from virtually nothing a decade ago.
• Innovative modes of funding projects. The Indian Government is tapping alternative modes of funding infrastructure projects. For example, a new cess (tax) is levied on sale of petrol and diesel in the country to fund the two important road sector projects – Golden Quadrilateral and North-South East West Corridor.

Source: 'Opportunities in Infrastructure and Resources in India' Summary Report by KPMG and Austrade

Tariffs, regulations and customs

The policy environment in India for investments in various infrastructure sectors has increasingly become conducive for foreign investments. For example, in roads, airports, ports and real estate sectors 100 per cent FDI is permitted. In addition, there are attractive tax breaks.

In roads, airports and ports sectors, there is complete tax holiday for a 10 year period. Duty free import of high capacity and modern construction equipments is permissible in certain sectors.

Industry standards

For comprehensive information on legislations, policies, tenders and industry standards, please visit the websites of different ministries below:

• Airports – www.civilaviation.nic.in
• Mining – www.mines.nic.in and www.coal.nic.in
• Oil and gas – www.petroleum.nic.in
• Ports – www.shipping.nic.in
• Power – www.powermin.nic.in
• Railways – www.indianrailways.gov.in
• Real estate – www.urbanindia.nic.in
• Roads – www.morth.nic.in

Marketing your products and services

Market entry

If you are considering entering the Indian infrastructure and resources industry, it is advisable to:

• Make regular visits to India and meet relevant companies to help build relationships.
• Network with Indian and Australian representatives of companies operating in India and their engineering, procurement, and construction management service providers.
• Develop relationships with Australian export agents dealing with local infrastructure and resources companies.
• Identify and meet other important players such as contractors, central and state government offices and key industry associations.

When presenting to local infrastructure and resources companies, you will need to consider the following:

• What is your competitive advantage compared to existing supplier?
• Are you willing to adapt your product to suit the market?
• Are you prepared to wait if there is a slight delay in the process – like tendering opening or appointment of a supplier?
• Are you ready to send products for trial?
• What distribution channels do you plan to choose to market the product (eg. direct, through local/export agents)?

Distribution channels

Distribution channels can be established:

• By going direct to Indian companies in infrastructure and resources domain.
• Via Austrade's network of contacts in the industry.
• Through Australian export agents.
• By appointing a local agent/distributor (Austrade can help you identify an agent).

Links and industry contacts

Infrastructure-related resources

Railways
 
Ministry Of Railways
Room No. 561, Rail Bhawan
New Delhi 110 001 India
Tel: +91 11 2338 6334 or 330 3624
Fax: +91 11 2330 3978
Web: www.indianrailways.gov.in

Roads
 
Ministry of Shipping, Road Transport and Highways
Chief Engineer (Planning)
Transport Bhawan
1, Parliament Street
New Delhi 110 001 India
Tel: +91 11 2371 0134
Web: www.morth.nic.in

Chief General Manager (BOT)
National Highways Authority of India
Plot No. G 5 and 6
Sector 10, Dwarka
New Delhi 110 045 India
Web: www.nhai.org

Ports

Department of Shipping
Ministry of Shipping, Road Transport and Highways
Transport Bhawan
1, Parliament Street
New Delhi 110001 India
Tel: +91 11 2371 4938
Fax: +91 11 2371 66556
Web: www.shipping.nic.in 

Airports

Ministry of Civil Aviation
Rajiv Gandhi Bhawan, B Block
New Delhi 110003 India
Tel: +91 11 2461 0358
Fax: +91 11 2461 0378
Web: www.civilaviation.nic.in

Airport Authority of India
Rajiv Gandhi Bhawan
Safdarjung Airport
New Delhi 110 003
Tel: +91 11 2463 2950
Web: www.airportsindia.org.in

Power

Ministry of Power
Shram Shakti Bhawan
New Delhi 110001 India
Tel: +91 11 2371 1316
Fax: +91 11 2372 1487
Web: www.powermin.nic.in

Real estate

Builder’s Association of India – www.baidc.com
Confederation of Construction Products and Services – www.ccpsindia.com
Confederation of Real Estate Developers Associations of India – www.credai.com
Indian Green Building Council – www.igbc.in
Practicing Engineers, Architects and Town Planners Association – www.peataindia.org  

Ministry of Urban Development
Nirman Bhawan
Maulana Azad Road
New Delhi 110011 India
Tel: +91 11 2302 2199
Fax: +91 11 2306 1446
Web: www.urbanindia.nic.in  

Mining

Directorate-General of Mines Safety – www.dgms.net
Geological Survey of India – www.gsi.gov.in
Indian Bureau of Mines – www.ibm.nic.in 

Ministry of Mines
3rd Floor, A Wing
Shastri Bhawan
Dr. Rajendra Prasad Marg
New Delhi 110001 India
Tel: +91 11 2338 3082
Web: www.mines.nic.in

Ministry Of Coal
A I, A Wing
Shastri Bhawan
New Delhi 110001 India
Tel: +91 11 2338 4887
Fax: +91 11 2338 4893
Web: www.coal.nic.in

Oil and gas

Directorate General of Hydrocarbons – www.dghindia.org 

Ministry Of Petroleum and Natural Gas
Shastri Bhavan
New Delhi 110001
Tel: +91 11 2307 3069
Web: www.petroleum.nic.in

Government, business and trade resources for India

Business Information Services Network – www.bisnetIndia.com 
Central Board of Excise and Customs – www.cbec.gov.in
Chambers and Associations – www.tradenic.nic.in/vstradenic/prm3.htm
Government of India Site – www.nic.in
Indiaindustry.com – www.indiaindustry.com
Indiamarkets – www.indiamarkets.com
Ministry of Finance – www.finmin.nic.in
National Centre for Trade Information – www.ncti-india.com
National Informatics Centre (Ministry of Commerce) – www.nic.in/eximpol
Securities Exchange Board of India – www.sebi.gov.in
Trade and Industry Organisation – www.tradenic.nic.in/vstradenic/toii3.htm 

Department of Industrial Policy and Promotion
Ministry of Commerce and Industry
Tel: +91 11 301 1983
Fax: +91 11 301 1034
Web: www.dipp.nic.in

Foreign Investment Promotion Board
Department of Economic Affairs
Ministry of Finance
North Block, New Delhi 110001 India
Tel: +91 11 2309 4905
Fax: +91 11 2309 3422
Web: www.finmin.nic.in

Confederation of Indian Industry (CII)
CII Mantosh Centre
23, Institutional Area, Lodhi Road
New Delhi 110003 India
Tel: +91 11 2462 9994
Fax: +91 11 2462 1649
Web: www.ciionline.org 

Federation of Indian Chambers of Commerce and Industry (FICCI)
Federation House
Tansen Marg
New Delhi 110001 India
Tel: +91 11 2373 8760/70
Fax: +91 11 2372 1504
Web: www.ficci.com 

Service providers:

Financial

Bombay Stock Exchange – www.bseindia.com
Export Import Bank of India – www.eximbankindia.com
Industrial Credit and Investment Bank of India – www.icici.com
Industrial Development Bank of India – www.idbi.com
National Stock Exchange – www.nse-India.com
Reserve Bank of India – www.rbi.org.in
State Bank of India – www.sbi.co.in

Legal

Lexsite – www.lexsite.com

Logistics

Air-India – www.airindiacom
Qantas – www.qantas.com.au/freight/dyn/menu

Media

123 India – www.123india.com
Assocham Publications – www.assocham.org
India Infoline.com – www.indiainfoline.com
Indian Express – www.expressindia.com
India Today – www.india-today.com
Khoj – www.khoj.com
Outlook Magazine – www.outlookindia.com
Times of India – www.timesofindia.indiatimes.com 

Australian resources

Department of Foreign Affairs and Trade (India country fact sheet) – www.dfat.gov.au/geo/fs/inia.pdf 

Australian Consulate General
Maker Tower E, 16th Floor
Cuffe Parade, Colaba
Mumbai 400 005
Tel: +91 22 6669 2000
Fax: +91 22 6669 2005

Australian High Commission
1/50G Shantipath
Chanakyapuri
New Delhi 110 021
Tel: +91 11 4139 9900
Fax: +91 11 4139 4491

Indo-Australian Chamber of Commerce
Arjay Apex Centre, 3rd Floor
24, College Road
Ningambakkam
Chennai 600 006 India
Tel: +91 44 2821 3231
Fax: +91 44 2822 5603

High Commissioner of India (Australia) – www.hcindia-au.org
3-5 Moonah Place
Yarralumla ACT 2600
Tel: +61 2 6273 3999, 6273 3774 or 6273 3875
Fax: +61 2 6273 1308

Consulate-General of India, Sydney – www.indianconsulatesydney.org
Level 27, 25 Bligh Street
Sydney NSW 2000
Tel: +61 2 9223 9500
Fax: +61 2 9223 9246