The Indian Infrastructure Industry

Transcription

1 n The Indian Infrastructure Industry DIBD OMII Own Man In India October 2010

2 Introduction to the Indian Infrastructure Industry Macro level Key drivers Government initiatives Future projects Danish infrastructural companies

3 Current market situation India, as the second most booming and fast growing market in the world after China is in a profound need of much more efficient infrastructure in order to meet the vast national and international demand that India faces these years. Crumbling roads, jammed airports and power blackouts are major problems that India faces on a daily basis. Cars, trucks, buses, motorcycles, rickshaws, cows, dogs and pedestrians jostle for every inch on the poorly maintained roads in every big city in India. Today India has one of the biggest road networks in the world aggregating to 3.34 million km. However, national highways only constitute 2% of the total network, but still carries 40% of the total traffic in India.

4 Current market situation Furthermore, these highways have not been maintained adequately for many years, and they are not extensive enough to give the massive traffic optimal and efficient conditions. India not only needs to improve their poor highway network though, but also to develop: Railways Metro systems Shipping infrastructure Aviation infrastructure Sanitation and water system and other basic facilities and installations needed for a society to function optimally.

5 Current market situation India ranks 51st overall in the World Economic Forum competitiveness index, but for infrastructure it fell 10 places to 86th this year. Inadequate supply of infrastructure ranked as the most problematic factor for doing business in the country. India s infrastructure deficit acts as a brake that knocks an estimated 2 percentage points off growth and forms a constant unflattering comparison with China and its ability to complete the sorts of projects that made the 2008 Beijing Olympics a showpiece The New Delhi Commonwealth Games, have faced worldwide critique due to poor management, corruption and disastrous infrastructure. This clearly shows that India still has a long way to go in order to become a real power threat to especially China. China has the past decade executed vast infrastructural projects that has led them to a powerful position in the world today.

6 Main segments in the infrastructure industry Energy Telecom Ports & Shipping Oil & Gas Roads & Bridges Aviation & Airports Water and Sanitation Railways

7 Key drivers for Indian Infrastructural improvements India has underinvested in the infrastructural area for the past 60 years, thus India is far behind in terms of exploiting their full GDP potential. Population growth of more than 15 million a year (corresponding to more than 40,000 per day) Growing urbanization today more than 40 cities have more than a million inhabitants. Increasing FDI coming to the country demanding better infrastructural conditions to enhance their business level.

8 Key drivers for Indian Infrastructural improvements Water supply and sanitation facilities continue to be a scarcity in India despite increasing efforts and investments from the Government over the years. The level of investments in the area has increased during the 2000s and access has improved, albeit still very low compared to international standards. Thus, the water supply and sanitation area are in significant need of immense improvements still. According to recent sources India is today the sixth biggest energy consumer per capita after the US., China, the EU region, Russia and Japan. However, most of these countries have the power generation capacity to meet the demand for electricity in order to exploit the their optimal GDP level. India is far behind in this respect. The economic rise in India leads to increasing needs for more power, but the predominantly Government owned electricity sector cannot keep up with this demand. Thus, the Government has set an ambitious target to almost double the installed generator capacity by 2012.

9 Government initiatives The Indian economy is expected to grow 8-9% the coming years, thus the Ministry of Finance (MF) has estimated that investments of US$ 488 billion is required between that is the the 11 th Five Year Plan. However, India's prime minister, Manmohan Singh, recently announced ambitious targets for the 12th Five Year Plan, which will run from 2012/13 to 2017/18. Accordingly, the headline figure is a target for US$ 1trn of investments during the 12th Five Year Plan. The figure is double that of the 11th Five Year Plan. A significant share of this investment is expected to come from the private sector. However, the MF has outlined several of innovative schemes and guidelines in order to attract the investments. The most common form for raising capital is through PPPs (Public Private Partnerships). The Government has prepared a Vision 2015 stating their goals with a planned investment of US$ 8.2 billion just within the railway infrastructure. The Indian Railway System is the largest railway system in the world operating more 11,000 trains everyday.

10 Future main projects in the Indian infrastructure industry The second airport in Mumbai is currently under the decision making process determining the investors for this large project. The airport will be constructed under a PPP framework. The new airport is expected to be completed within five years. The National Maritime Development Programme has 276 projects in pipeline expected to be implemented by 2012 at an investment of US $12.7 billion. The Maersk Group is a big player in the Indian maritime area. They currently have investments for US $500 million in India. The Indian Railway System is expanding their capacity on a daily basis. They have 260 projects in pipeline amounting to more than US $12 billion.

11 Future main projects in the Indian infrastructure industry Larsen and Toubro (L&T), one of the largest infrastructure players in India, announced the creation of a private equity fund to invest in transport and power in the country. L&T's local expertise give it a competitive advantage given the essential challenges that foreign investors face when venturing in India's infrastructure market. The company is planning to create a US$ 300 million private equity fund to make investments in road and power projects in India.

12 Danish companies in the Indian Infrastructure Telecom Ramboll Telecom in India constructs communication masts and develops software tools for project management in order to improve the telecom infrastructure that needs capacity expansion due to the growing demand on telecommunication. Heating & Cooling LOGSTOR is a global energy company specialized within district heating and district cooling, where they have developed a special pre-insulated pipe system that prevent huge energy losses. This pipe system are widely used in the oil and gas sector, the marine sector and industries that transports gasses and liquids.

13 Danish companies in the Indian Infrastructure Power Vestas is the largest wind energy company globally with a market share of 36% and is the second-largest in India, with a 27% market share. India is the third-largest market for Vestas, after the US and Germany. Interestingly, India is the world s fourthlargest market for wind power with 5,200 mw of installed capacity. Airport and Aviation: AXA POWER is a leading manufacturer of power supplies for aircrafts on ground with more than 7000 units in operation worldwide.

14 Danish companies in the Indian Infrastructure Water supply Grundfos is one of the world's leading pump manufacturers. Circulator pumps for heating and air-conditioning and other centrifugal pumps for industry, water supply, waste water and dosing are the major products. Today, Grundfos is the world's largest manufacturer of circulator pumps, covering approximately 50 per cent of the world market for these pumps. Grundfos India began operations in 1998 with 4 employees and 4 distributors. In 2005 Grundfos India had manpower of 90 and operated with about 70 distributors. Grundfos India has seen impressive growth from a small turnover of US$ 1.1 million in 1999, to a turnover of US$ 11.2 million in 2004.

15 Danish contact in India If you are interested to hear more about India and the rising infrastructure industry s possibilities do not hesitate to contact: Ejvind Vøgg director of the DI office in India: ejv@di.dk Phone: / He will be in Denmark from: The 14th of October to the 29th of October He will be more than willing to come by and elaborate further on this matter.