德勤-全球化领航_ 印度致力打造新时代的可持续基础设施（英文）-2019.5-19页.pdf

Transition towards futuristic and resilient infrastructureDecember 2018Transition towards futuristic and resilient infrastructure03ContentsOverview:Sector context 05Indias infrastructure to meet its growth aspirations 05Recent policy actions reaffirm the governments commitment to the sector 05Reviving PPP investments remains a persistent theme 06Opportunities continue to open up,but caution prevails 07Navigating through the noise:Dealing with challenges 09Infrastructure financing challenges continue to be at the forefront 09Policy and regulatory actions for a better ecosystem 09Contractual issues in an increasingly complex ecosystem 10Procedural challenges affect project progress 10Transition towards the future:Key take aways 13Reviving PPP to woo FDI in infrastructure 18Prepare the roadmap for delivery of Indias infrastructure targets 20Construction and infrastructure arbitrations:Expediting dispute resolution and clearing the road for robust infrastructure 21Connected transportation infrastructure:The coming together of roads,railways,airports,ports,and renewables 23Alternative sources and their impact on infrastructure financing 24The road towards futuristic infrastructure 27Annexure-Event agenda and speakers 28Endnote 31About Deloitte 33About ET Edge 34This knowledge paper is an outcome of The Economic Times 6th Annual Infra Focus Summit,conducted by ET Edge.During this Summit,industry leaders,policy makers,developers,technology providers,and other infrastructure stakeholders,from both public and private sector,engaged in discussions and deliberated on,the major bottlenecks and opportunities for the sector in India.The event saw participation from senior government officials working in core infrastructure sectors such as Roads,Railways,Airports,as well as Development Financial Institutions such as the World Bank,Japan International Cooperation Agency(JICA),along with industry experts.Transition towards futuristic and resilient infrastructure0504Transition towards futuristic and resilient infrastructureOverview:Sector context Infrastructure development is one of the prominent measures to ascertain a nations progress.It is one of the critical catalyst to unlock the development potential of the country and propel the growth of the economy.India is envisioned to become an economic powerhouse by proliferating development of futuristic and resilient infrastructure.However,for sustaining an accelerating pace of growth,it is imperative to promote investments in the sector.Indias infrastructure to meet its growth aspirationsIndia has been moving on a growth trajectory over the last few years.The country is poised to achieve a Gross Domestic Product(GDP)of USD 5 Trillion by 20251 by undertaking transformative initiatives across various sectors.Government has been taking many initiatives for boosting connectivity,augmenting capacity and fostering industrial development.At the same time,the country would require an investment of USD 4.5 trillion by 20402 for developing world-class infrastructure.The current trend of development indicates that the country is likely to meet the requirement of USD 3.9 trillion by the given time,leaving an investment gap of USD 526 billion3.The need of the hour is to fill this gap by exploring alternate sources of finance including private investments,international financial assistance/loans,innovative financing mechanisms,and leveraging public investments to attract substantial funding from the market.Furthermore,the infrastructure landscape is changing rapidly in an era of Internet of Things(IoT)and Industry X.0,owing to the pace of development in technology.To achieve the long-term vision for cohesive development,along with the traditional infrastructure such as roads,highways,airports,railways,power grids,it is essential to focus on development of new age infrastructure such as logistics hubs,automation/mechanisation of ports,smart grids,green buildings,smart traffic lights,and integrated traffic management systems,among others.In this context,the Governments focus on robust infrastructure development has been gaining momentum in the recent years.Indias infrastructure sector is expected to see a remarkable journey ahead.Recent policy actions reaffirm the governments commitment to the sectorRecent government initiatives reaffirm its commitment to invigorate the sector,with rising public spending in Union Budgets 2018-19 and 2017-18(INR 5.97 lakh crore/USD 84.2 billion and INR 4.94 lakh crore/USD 69.7 billion respectively4),policy actions taken to revive languishing Public Private Partnership(PPP)projects,establishing single-window clearances for industry friendly environment,instigating government-backed models such as Hybrid Annuity Model(HAM)and Toll-Operate-Transfer(TOT)models in highways,passing of the Insolvency Resolution Act,etc.With a view to enhance connectivity,schemes such as Bharatmala,Sagarmala,and Regional Connectivity Scheme have been launched introducing abundant opportunities to the private sector.To further increase the appeal of the sector to potential investors,multiple steps have Transition towards futuristic and resilient infrastructure07Transition towards futuristic and resilient infrastructure0646111As seen from Figure 1:PPP projects across sectors,India has witnessed a maximum number of PPP projects undertaken in the Transportation(particularly,roads)and Energy sectors.Going forward,the government is now seen focussing on exploring appropriate and innovative models in social sectors such as water and sanitation,education,healthcare,etc.,for fast-tracking sectoral development,further leading to a holistic development of the economy.Over the years,while PPPs have been lauded for their approach in sectors such as roads and aviation,they have been equally criticised for being constrained due to long gestation periods and increasing disputes leading to languishing projects.Response to PPPs has been less enthusiastic in most other sectors owing to a number of regulatory challenges,economic and political changes,inaccurate demand estimation,high risk perception,and pending dispute resolution procedures,besides the want of commercially pragmatic implementable models.Financing is becoming more difficult to come by,as the banking system struggles with increasing Non-Performing Assets(NPAs)and investors have had past experience of value erosion,as uncertainties loom large on typically long-duration infrastructure projects.The governments focus to address these challenges by exploring and adopting alternative approaches towards PPP with models such as HAM and TOT backed with public funding,along with burgeoning emphasis towards undertaking policy and regulatory reforms to enhance PPPs are some steps in the right direction.These may work towards enhancing confidence in the banking system and investors comfortable with EPC(Engineering Procurement Construction)route.Opportunities continue to open up,but caution prevails In Q1 of 2018-19,India witnessed a GDP growth rate of 8.2%8.The Annual Budget for infrastructure sector has been increased to INR 5.97 lakh crore(USD 84.2 billion)in 2018-19.9 In terms of sectoral development progress,the pace of road construction has increased to 28 kilometres/day in 2017-18 and is targeted to reach 40 kilometres/day in 2018-1910.The port sector has also shown a growth of 20%11 since governments flagship programme Sagarmala was launched to enhance ports connectivity through unleashing the potential of Indias coastline and waterways.Further,to promote inland water transport in the country,111 waterways have been declared as National Waterways(NWs)12.Of these,36 NWs have been found viable for development13.The aviation sector too,is abuzz,as most large airports reach their flying capacity and metro cities require a second airport to meet future demand.The Government of India has also launched Regional Connectivity Scheme(or UDAN)to boost air connectivity to unserved and underserved airports in India.Under Phase I and II of RCS,the government has already awarded about 453 routes to airlines and helicopter services.In sectors other than transport,renewable energy(RE)projects are seen gaining traction.As per the Renewable Purchase Obligations(RPO),distribution companies and large industries are required to meet a percentage of power requirements from renewables.100%FDI under automatic route for generation and distribution projects has opened up the market for international investors.Under National Mission for Clean Ganga,the government is considering doubling the capacity of sewerage treatment in 10 major cities to curb river pollution,and is also evincing international participation.Several investment opportunities have also been emerging in the Smart Cities and Affordable Housing space.Smart Cities are gaining momentum on account of push from central and state investments.Given the technology play for smart solutions besides core infrastructure augmentation,service providers could gain from a series of projects in areas of IT connectivity,intelligent traffic management,air and water quality monitoring,energy efficient street lighting,among others.Further,as massive migration ensues from rural areas to urban centres,Affordable Housing is also emerging as an area offering significant investments opportunities.With a plethora of opportunities ranging across various segments,Indias infrastructure sector is opening up avenues for private sector players to explore and establish their presence in contributing to the development of the country.been taken including relaxation of Foreign Direct Investment(FDI)norms,approval of new Metro Policy with a mandatory PPP component for availing financial assistance,and operationalisation of various infrastructure focus funds.The roll-out of Goods and Services Tax(GST)is also expected to have a considerable impact on reduction in logistics cost.As a result of such government interventions,Indias rank in Ease of Doing Business jumped second year in a row to reach 77th position(100 in 20185)among 190 countries(Doing Business Report 2019),and improved to a rank of 44 among 160 countries in World Banks Logistics Performance Index(LPI)20186.While a lot has been achieved,a number of structural and operational challenges still need decisive tackling:fragmented institutional framework,lack of integrated planning,land acquisition delays,lengthy clearance procedures,availability of financing,lack of comprehensive and balanced contractual framework,and a lack of proper infrastructure maintenance mechanisms,to name a few.While sectoral reforms are being pursued,a significant thrust has been laid by the government to bridge the infrastructure gap by developing ambitious project plans for various sectors.These measures and technological advancements have opened up enormous opportunities for private participation in the provision of infrastructure and services.Persistent and collaborative initiatives with continued reforms are expected to further enhance infrastructure development in the country.Reviving PPP investments remains a persistent themeGiven the requirement for private participation to support adequate infrastructure growth,the government has been focussing on enabling PPP projects in the sector.The Indian PPP infrastructure market is significantly large with over 1,550 projects worth over INR 11.40 trillion7(USD 160 billion)under various stages of implementation(PPP Cell,Infrastructure division,Department of Economic Affairs).Figure 1:PPP projects across sectorsSource:Department of Economic Affairs PPP Database,Ministry of Finance,Government of India7006005004003002001000Renewable Energy(grid)2951028957774461296068130Non-renewable EnergySocial and Commercial InfrastructureAirportsPort (excluding captive)Railway track,tunnel,viaducts,bridgesRoads and bridgesUrban public transport(except rolling stock)Water&SanitationEnergyTransportBOTBOT Annuity HAMTransition towards futuristic and resilient infrastructure0908Transition towards futuristic and resilient infrastructureNavigating through the noise:Dealing with challenges Infrastructure development has been seen playing a pivotal role and is likely to be valuable in unleashing the growth potential of India.However,rapid urbanisation during the last decade have put immense pressure on the existing infrastructure.Though there have been several initiatives taken by the Government of India to promote infrastructure development,some of the major challenges include cost and time overruns,uncertainty in the policy and regulatory frameworks,inappropriate risks sharing through PPP framework,prolonged disputes,as well as sectoral issues including poor financial health of public sector counterparts.These issues have been seen adversely impacting the commercial viability of many of the projects which the infrastructure sector seems to be currently grappling with.The gap that exists between the projects approved for award and the projects actually completed(some stalled due to land acquisition issues or,delayed approvals and clearances),is a testimony of the challenges which prove to be a significant impediment on infrastructure development.As on today,approximately 1556 Government PPP Infrastructure projects have been awarded out of which 761 are under completed or operational stage and 795 projects are under different stages of development.14 Infrastructure financing challenges continue to be at the forefrontIt has been long discussed that the infrastructure spending in the country is not commensurate to the GDP growth.The financing requirement is estimated to be around INR 50 lakh crores(USD 710 billion)in the next five years15.The Indian Infrastructure sector faces critical financing issues in terms of high cost of capital,challenges in obtaining non-recourse funding and dearth of long-term funding sources.The challenge is aggravated further due to the unprecedented stress levels in the banking sector on account of increasing NPAs,slow development of alternate sources of finance and lack of innovation in financial instruments.Structural issues persist with lack of mature financial mechanisms and appropriate credit rating systems for various infrastructure projects.Further,new infrastructure funds like National Investment and Infrastructure Fund(NIIF)and India Infrastructure Project Development Fund(IIPDF)proposed to enhance infrastructure financing are yet to fully take off.Policy and regulatory actions for a better ecosystemA mature PPP framework could help the government to facilitate private investment in infrastructure.Concerted policy and regulatory actions could help address long pending demands of the industry.Transition towards futuristic and resilient infrastructure11Transition towards futuristic and resilient infrastructure10Way forwardThe uncertainties and fluidity in the past on policy and regulatory frameworks related to Dividend Distribution Tax(DDT),applicability of M