Washington, Oct 12 — Expressing confidence that India will see a long spell of high, sustained growth, Finance Minister P. Chidambaram has said the country offers huge opportunity for foreign investment with high returns.
“The focus of the Indian economy has been on the infrastructure investment, which has grown massively supported by increased private sector participation,” he said at an event here Friday for the announcement of first closure of IDFC’s second infrastructure fund.
Total investment requirements for power, roads, ports, civil aviation etc. during the Twelfth Plan period is projected at $1 trillion, nearly half of which is expected to come from the private sector, Chidambaram noted.
“This provides an ample opportunity for foreign investments to reap benefits from the high returns from India,” he said referring to several massive infrastructure projects underway.
These included Delhi Mumbai Industrial Corridor that will link Delhi to Mumbai’s ports covering an overall length of 1483 km passing through six States, entailing over $90 billion in investment,.
India, in recent years, has emerged as one of the leading Public Private Partnerships (PPP) markets in the world, he said with the government promoting PPP as an effective tool for bringing private-sector efficiencies for delivery of quality public services.
India currently has over 1000 PPP projects in the infrastructure sector with a total project cost (TPC) of about US $ 97 billion.
Pointing to steps taken to make India more attractive for Foreign Direct Investment, Chidambaram said FDI limits have been increased in several sectors, including retail, civil aviation and telecom, and restrictions in the banking sector have been eased.
FDI up to 100 percent is allowed, under the automatic route, in most of the sectors/activities. Investors are only required to notify and file documents at the regional office of the Reserve Bank of India, he said.
Through policy interventions and tax incentives, India has encouraged Infrastructure Development Funds, Chidambaram said calling it an i”nnovative attempt to address the issue of sourcing long term debt from foreign investors for infrastructure projects.”
Potential investors in these will be overseas High Net Worth individuals and institutional investors like Sovereign Wealth Funds, Insurance and Pension Funds, he said.
He congratulated IDFC established by the Government of India in 1997 to lead private investment flows into Indian Infrastructure on successfully conveying the robustness of the Indian infrastructure investment opportunity to foreign institutional investors.
Noting that these investors have committed $644 million towards first close of its Second India Infrastructure Fund, Chidambaram expressed confidence that they will shortly achieve the target size of $1 billion.
(Arun Kumar can be contacted at [email protected])