London: India is on course to meet its infrastructure investment needs of an estimated USD 1 trillion over the next five years, according to Reserve Bank of India (RBI) executive director G Padmanabhan.
"The funding process is working in a seamless manner and things have taken off in a very exciting way," he said at a conference here on Wednesday.
'Financing India's Infrastructure - Building Partnership with the UK' brought together policy-makers, CEOs, heads of PSUs from India and the UK at Guildhall, in the heart of London's financial district, to assess opportunities available within public private partnership (PPP) model in the sector.
"The underlying is strong, which is the product called India. Firms must decide on the case for investing in Indian infrastructure based on the strong market credentials," said Arvind Mayaram, Secretary, Department of Economic Affairs, who spearheaded the conference on behalf of the Indian government.
The conference offered a broad analysis of investment instruments such as Indian Equities and Debt and Infrastructure Debt Funds (IDFs) available to build new highways, ports, airports, power plants and transmission grids, and for the development of industrial townships.
"Given the size of Indian banks, there is a limit on how much they can lend for infrastructure projects. Some have really stretched themselves as the requirement, of a USD 1 trillion, is massive. The reality is that we have to look beyond banks, which is where the other investment models come in," Padmanabhan said.
IDFs were described as a good route to get money into the sector, with ratings agency CRISIL estimating between USD 4 billion and USD 5 billion being established within a year alone.
"We see this quantum multiplying as the route gets further established and more banks are willing to sell off assets to IDFs. Once they are in place, the ratings of IDFs could be as high as AAA which will attract more investors,” said Raman Uberoi, COO of CRISIL Limited.
"There is a new fresh mood and energy on this subject. Things take time in India but there is a real attempt to reach out to the private sector with instruments like IDFs," said Thomas Harris, vice-chairman Asia for Standard Chartered Bank.
"The India story is well known and the opportunity costs of not investing in India are very high. We offer robust regulatory and legal standards," said Sharmila Chavaly, Joint secretary - infrastructure and investment - Department of Economic Affairs.
Concerns around skills shortages are being addressed with the Skill Development Mission and there is also a certain maturity in India's PPP model and the PPP Approval Committee has already approved big ticket deals worth around USD 60 billion, she added.