India Infrastructure Report Q3 2008

Without more substantial improvements to the country's infrastructure, growth beyond India's long-term trend (at roughly 7.5%) will be difficult to achieve. This year's budget has singled out power (especially coal), national highways and rural infrastructure as the main beneficiaries of government spending, while rural development is a particularly important sector in need of attention, as data showed that it is agriculture and its related activities that are holding back the country's economic growth.

To address these problems, the Indian government plans to invest US$320bn in the improvement of ports, railroads, highways and airports over the next 15 years. About US$12bn has been exclusively earmarked for the development of ports in the five-year plans for 2001-2012. The government has outlined plans to invite private players through public-private partnerships (PPP) to develop over 300 airports and airstrips.

The Civil Aviation ministry is also in talks with the military to open its airbases to civil aircraft. The ministry also plans to develop 35 greenfield airports across the country by 2010. The government is expected to invest US$35bn in the proposed airports.

Investment is flowing into India's port sectors as the country import and export industry increases.

Upgrades are required to a number of the country's ports if the sector is to compete with other major Asian ports for trade such as Singapore and Shanghai.

Expansion is a common theme across India's power sector. Apart from oil all areas are set to see an increase over the midterm. The country has initiated a number of Ultra Mega Power Projects (UMPP) in a bid to increase India's power generating capacity. So far these have been developed as coal fuelled facilities but plans are in place to bring on line hydro power UMPPs. Demand has overtaken supply and the gap is set to widen further as demand for power is spurred on by a growing population and economic expansion.