Urban public transport ready to boom in India’s cities

Gaurav Khanna, Head Corporate Finance for Tata Realty & Infrastructure Ltd, talks to the GRI Hub about the current opportunities in the Indian infrastructure market and how transport in urban areas is ready to expand.
 

Does India's infrastructure market offer good opportunities in terms of risk-return?

Yes, the risk-return profile is certainly favourable for operational projects. For example, recent investments by global investors in roads and highways are being routed into INVITs of operational projects and Toll Operate Transfer (TOT) bids of NHAI. This investment is majorly a call on traffic growth which is itself a proxy for India's growth potential. Greenfield projects are also attractive, however, there are some issues related to approval and Right of Way that remains to be addressed - hence the private sector is selective about the projects they undertake at the moment. The government over the years has been addressing some of these issues and we are confident that in the coming years, these reforms will continue making the infrastructure very attractive space for investment.  
 

Which Indian infrastructure sectors are performing well right now?

Roads and Renewable Energy are always the favourite, mainly due to the immense opportunity and capital it promises, relatively evolved policy and regulatory framework and obviously the positive social impact of such infrastructure on the lives of end users. Urban transport is another area where opportunities will be huge, given the rapid urbanisation and the added benefit of pleasing the end user. We at Tata believe in the potential of metro projects which we have recently taken up.
 

What's the financial landscape like? What are the main challenges you face? 

As a developer, given keen interest in operational projects, it is certainly a good time to churn operational projects and recycle the capital. On the debt front, the banks are tackling issues in older projects (primarily due to construction delays) and therefore being extremely cautious in funding projects. 

 

How do you compare the Indian infrastructure sector to other countries?

The scale of India’s infrastructure opportunities - ~1.4 trillion over the next 5-7 years - is very large. If 20% is from the private sector, this would mean ~$300 billion investment in equity and debt. India certainly has seen improved regulation, ease of doing business and faster on ground execution in recent years and therefore compares favourably against other emerging countries.

 

For more information on the Indian infrastructure sector, join many of the most senior individuals present in the industry at Infra India GRI, taking place in New Delhi on 19 - 20 February, 2020.

Article by Matt Harris