Investments options for NRIs in Indian infrastructure sector

Infrastructure development in India has contributed majorly in the country's economic transformation and growth during the last decade. Roads, ports, railways and power are key segments of the infrastructure sector. Some of the key facts related to the same are -

• Indian Shipping segment, with 187 minor ports and 13 major ports, is spread across nine maritime states
• The Indian Railways network is spread over some 64, 000 km, with 12, 000 passenger and 7, 000 freight trains plying each day from 7, 083 stations carrying around 23 million travellers and 2.65 million tonnes (MT) of goods daily
• Indian road network is the second largest in the world with a total length of 4.1 million kilometres (km)

Investment Opportunities for NRIs

Overseas investors looking for high return on investments are going to target Indian infrastructure companies in the coming years, says a report by research agency Preqin. As per the study, India is attracting the highest number of unlisted, closed-end funds that focus on a single country, making it the most preferred choice among the business investors. India is expected to require around US$ 1 trillion worth of infrastructure investment over the next five years

Non-resident Indians (NRIs) investing in India can choose from sub-sectors such as power, telecom, roads and ports. The Preqin report says 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.

Investments 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)
• FDI up to 100 per cent under the automatic route is allowed both in setting up new and in established industrial parks from overseas investors

Recent Investments in Indian Infrastructure Industry

• IVRCL Ltd has entered into an MoU with the Haryana Government for the development of Rai Malikapur-Kharak road corridor which would cover a stretch of 151 km of Rai Malikapur close to the Rajasthan border up to Kharak corridor and enhance the north-south connectivity. The Rs 1, 605 crore (US$ 292.23 million) project will take about 30 months to execute
• Indian Railways has recently launched an application namely RailRadar which envisages an interactive map to allow users to track train movements on real-time basis. Such an application has been launched for the first time in India, wherein any of the public transport system can be tracked on the internet and mobile

Future of Indian Infrastructure

India is betting high on business investors in infrastructure as the Government hopes that the private sector, through public-private partnerships (PPP), will invest US$ 350-400 billion in infrastructure sectors (like roads, ports, railways and airports) between 2012 and 2017.