A PERSPECTIVE

In India, construction is the second largest economic activity after agriculture. The investment in construction accounts for nearly 11 percent of India's Gross Domestic Product (GDP) and nearly 50 percent of its Gross Fixed Capital Formation (GFCF). It accounts for nearly 65 percent of the total investment in infrastructure and is expected to be the biggest beneficiary of the surge in infrastructure investment over the next five years.

• An investment of Rs 14,50,000 crore or about USD 320 billion would be required in the infrastructure sector during the Eleventh Five Year Plan (2007-08 to 2011-2012).

• Investment requirement by 2012, estimated by the Committee on Infrastructure, headed by the Prime Minister, in some of the key sectors are: Rs 2,20,000 crore for modernization & upgradation of Highways, Rs 40,000 crores for Civil Aviation, Rs 50,000 crores for Ports and Rs 3,00,000 for the Railways.

• There is a shift in the policy of the government to finance infrastructural projects through Public Private Partnership (PPPs). PPPs through a range of alternatives such as Build Operate Transfer (BOT), Build Own Operate Transfer (BOOT), Build Own Lease Transfer (BOLT), Design Build Finance Operate (DBFO) etc. are increasingly becoming the preferred mode for construction and operation of infrastructure services such as highways, airports, ports etc.

• Since the inception of the SEZs policy in India, 14 SEZs are in operation and around 150 SEZs have been approved. The Ministry of Commerce & Industry, GoI estimates an investment of USD 22.22 billion in these SEZs by 2009.

• With a total capacity addition of 1,13,000 MW expected by 2012, an investment of USD 200 billion in power generation, transmission & distribution is envisaged.

• Investment opportunities exist in water supply, sewerage and waste management systems in many towns and cities. Construction opportunities exist in roads, bridges, flyovers etc in cities, both in Government sponsored projects as well as Build Own Operate (BOO) and Build Own Operate Transfer (BOOT) basis projects. A number of cities are planning mass rapid transportation systems and light rail systems. These projects are mostly through private participation. Housing is another major investment area with significant potential.

• The Government of India has initiated the Jawaharlal Nehru National Urban Renewal Mission to develop urban infrastructure, provide basic infrastructure facilities and urban services to 63 cities all over the country. Estimated to involve a capital outlay of Rs 1,20,536 crore over a seven-year period starting 2005-06.