Transition towards futuristic and resilient infrastructure December 2018 Transition towards futuristic and resilient infrastructure

Contents

Overview: Sector context 05 India’s infrastructure to meet its growth aspirations 05 Recent policy actions reaffirm the government’s commitment to the sector 05 Reviving PPP investments remains a persistent theme 06 Opportunities continue to open up, but caution prevails 07

Navigating through the noise: Dealing with challenges 09 Infrastructure financing challenges continue to be at the forefront 09 Policy and regulatory actions for a better ecosystem 09 Contractual issues in an increasingly complex ecosystem 10 Procedural challenges affect project progress 10

Transition towards the future: Key take aways 13 Reviving PPP to woo FDI in infrastructure 18 Prepare the roadmap for delivery of India’s infrastructure targets 20 Construction and infrastructure arbitrations: Expediting dispute resolution and clearing the road for robust infrastructure 21 Connected transportation infrastructure: The coming together of roads, railways, airports, ports, and renewables 23 Alternative sources and their impact on infrastructure financing 24

The road towards futuristic infrastructure 27

Annexure- Event agenda and speakers 28

Endnote 31 About Deloitte 33 About ET Edge 34

This 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.

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Overview: Sector context

Infrastructure development is in technology. To achieve the long-term one of the prominent measures to vision for cohesive development, along ascertain a nation’s progress. It is one with the traditional infrastructure such of the critical catalyst to unlock the as roads, highways, airports, railways, development potential of the country power grids, it is essential to focus on and propel the growth of the economy. development of new age infrastructure India is envisioned to become an such as logistics hubs, automation/ economic powerhouse by proliferating mechanisation of ports, smart grids, development of futuristic and resilient green buildings, smart traffic lights, and infrastructure. However, for sustaining integrated traffic management systems, an accelerating pace of growth, it is among others. imperative to promote investments in the sector. In this context, the Government’s focus on robust infrastructure development India’s infrastructure to meet its has been gaining momentum in the growth aspirations recent years. India’s infrastructure sector India has been moving on a growth is expected to see a remarkable journey trajectory over the last few years. The ahead. country is poised to achieve a Gross Domestic Product (GDP) of USD 5 Trillion Recent policy actions reaffirm the by 20251 by undertaking transformative government’s commitment to the initiatives across various sectors. sector Government has been taking many Recent government initiatives reaffirm initiatives for boosting connectivity, its commitment to invigorate the sector, augmenting capacity and fostering with rising public spending in Union industrial development. At the same time, Budgets 2018-19 and 2017-18 (INR 5.97 the country would require an investment lakh crore/ USD 84.2 billion and INR 4.94 of USD 4.5 trillion by 20402 for developing lakh crore/ USD 69.7 billion respectively4), world-class infrastructure. The current policy actions taken to revive languishing trend of development indicates that the Public Private Partnership (PPP) projects, country is likely to meet the requirement establishing single-window clearances of USD 3.9 trillion by the given time, for industry friendly environment, leaving an investment gap of USD 526 instigating government-backed models billion3. The need of the hour is to fill this such as Hybrid Annuity Model (HAM) gap by exploring alternate sources of and Toll-Operate-Transfer (TOT) models finance including private investments, in highways, passing of the Insolvency international financial assistance/ loans, Resolution Act, etc. innovative financing mechanisms, and leveraging public investments to attract With a view to enhance connectivity, substantial funding from the market. schemes such as Bharatmala, Sagarmala, and Regional Connectivity Scheme have Furthermore, the infrastructure been launched introducing abundant landscape is changing rapidly in an era opportunities to the private sector. To of Internet of Things (IoT) and Industry further increase the appeal of the sector X.0, owing to the pace of development to potential investors, multiple steps have

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been taken including relaxation of Foreign of integrated planning, land acquisition Reviving PPP investments remains a As seen from Figure 1: PPP projects undertaking policy and regulatory In sectors other than transport, Direct Investment (FDI) norms, approval delays, lengthy clearance procedures, persistent theme across sectors, India has witnessed reforms to enhance PPPs are some renewable energy (RE) projects are seen of new Metro Policy with a mandatory availability of financing, lack of Given the requirement for private a maximum number of PPP projects steps in the right direction. These may gaining traction. As per the Renewable PPP component for availing financial comprehensive and balanced contractual participation to support adequate undertaken in the Transportation work towards enhancing confidence Purchase Obligations (RPO), distribution assistance, and operationalisation of framework, and a lack of proper infrastructure growth, the government (particularly, roads) and Energy sectors. in the banking system and investors companies and large industries are various infrastructure focus funds. The infrastructure maintenance mechanisms, has been focussing on enabling PPP Going forward, the government is now comfortable with EPC (Engineering required to meet a percentage of power roll-out of Goods and Services Tax (GST) to name a few. projects in the sector. seen focussing on exploring appropriate Procurement Construction) route. requirements from renewables. 100% is also expected to have a considerable and innovative models in social sectors FDI under automatic route for generation impact on reduction in logistics cost. While sectoral reforms are being The Indian PPP infrastructure market such as water and sanitation, education, Opportunities continue to open up, and distribution projects has opened up pursued, a significant thrust has is significantly large with over 1,550 healthcare, etc., for fast-tracking sectoral but caution prevails the market for international investors. As a result of such government been laid by the government to projects worth over INR 11.40 trillion7 development, further leading to a holistic In Q1 of 2018-19, India witnessed a Under National Mission for Clean Ganga, interventions, India’s rank in Ease of bridge the infrastructure gap by (USD 160 billion) under various stages of development of the economy. GDP growth rate of 8.2%8. The Annual the government is considering doubling Doing Business jumped second year in a developing ambitious project plans implementation (PPP Cell, Infrastructure Budget for infrastructure sector has been the capacity of sewerage treatment in 10 row to reach 77th position (100 in 20185) for various sectors. These measures division, Department of Economic Over the years, while PPPs have been increased to INR 5.97 lakh crore (USD 84.2 major cities to curb river pollution, and is among 190 countries (Doing Business and technological advancements have Affairs). lauded for their approach in sectors such billion) in 2018-19.9 also evincing international participation. Report 2019), and improved to a rank of opened up enormous opportunities for as roads and aviation, they have been 44 among 160 countries in World Bank’s private participation in the provision equally criticised for being constrained In terms of sectoral development Several investment opportunities Logistics Performance Index (LPI) 20186. of infrastructure and services. due to long gestation periods and progress, the pace of road construction have also been emerging in the Smart Persistent and collaborative initiatives increasing disputes leading to languishing has increased to 28 kilometres/day Cities and Affordable Housing space. While a lot has been achieved, a with continued reforms are expected projects. in 2017-18 and is targeted to reach 40 Smart Cities are gaining momentum number of structural and operational to further enhance infrastructure kilometres/day in 2018-1910. The port on account of push from central and challenges still need decisive tackling: development in the country. Response to PPPs has been less sector has also shown a growth of 20%11 state investments. Given the technology fragmented institutional framework, lack enthusiastic in most other sectors since government’s flagship programme play for smart solutions besides core owing to a number of regulatory Sagarmala was launched to enhance infrastructure augmentation, service challenges, economic and political ports’ connectivity through unleashing providers could gain from a series of Figure 1: PPP projects across sectors changes, inaccurate demand estimation, the potential of India’s coastline and projects in areas of IT connectivity, high risk perception, and pending waterways. Further, to promote inland intelligent traffic management, air 700 dispute resolution procedures, besides water transport in the country, 111 and water quality monitoring, energy the want of commercially pragmatic waterways have been declared as efficient street lighting, among others. 600 60 implementable models. Financing is National Waterways (NWs)12. Of these, Further, as massive migration ensues becoming more difficult to come by, 36 NWs have been found viable for from rural areas to urban centres, 500 129 as the banking system struggles with development13. The aviation sector too, is Affordable Housing is also emerging as increasing Non-Performing Assets (NPAs) abuzz, as most large airports reach their an area offering significant investments 400 and investors have had past experience flying capacity and metro cities require a opportunities. of value erosion, as uncertainties second airport to meet future demand. 300 loom large on typically long-duration The Government of India has also With a plethora of opportunities infrastructure projects. launched Regional Connectivity Scheme ranging across various segments, India’s 200 446 (or UDAN) to boost air connectivity to infrastructure sector is opening up The government’s focus to address these unserved and underserved airports in avenues for private sector players to 295 challenges by exploring and adopting India. Under Phase I and II of RCS, the explore and establish their presence in 100 1 1 6 4 alternative approaches towards PPP government has already awarded about contributing to the development of the 102 89 77 1 6 8 57 with models such as HAM and TOT 453 routes to airlines and helicopter country. 0 30 1 backed with public funding, along services. Renewable Non-renewable Social and Airports Port Railway Roads and Urban public Water & Energy (grid) Energy Commercial (excluding track, tunnel, bridges transport Sanitation with burgeoning emphasis towards Infrastructure captive) viaducts, (except rolling bridges stock)

Energy Transport

BOT BOT Annuity HAM

Source: Department of Economic Affairs PPP Database, Ministry of Finance, Government of India

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Navigating through the noise: Dealing with challenges

Infrastructure development has been Infrastructure financing challenges seen playing a pivotal role and is likely continue to be at the forefront to be valuable in unleashing the growth It has been long discussed that the potential of India. However, rapid infrastructure spending in the country is urbanisation during the last decade have not commensurate to the GDP growth. put immense pressure on the existing The financing requirement is estimated infrastructure. to be around INR 50 lakh crores (USD 710 billion) in the next five years15. Though there have been several The Indian Infrastructure sector faces initiatives taken by the Government critical financing issues in terms of high of India to promote infrastructure cost of capital, challenges in obtaining development, some of the major non-recourse funding and dearth challenges include cost and time of long-term funding sources. The overruns, uncertainty in the policy and challenge is aggravated further due to regulatory frameworks, inappropriate the unprecedented stress levels in the risks sharing through PPP framework, banking sector on account of increasing prolonged disputes, as well as sectoral NPAs, slow development of alternate issues including poor financial health of sources of finance and lack of innovation public sector counterparts. These issues in financial instruments. have been seen adversely impacting the commercial viability of many of the Structural issues persist with lack of projects which the infrastructure sector mature financial mechanisms and seems to be currently grappling with. appropriate credit rating systems for various infrastructure projects. Further, The gap that exists between the projects new infrastructure funds like National approved for award and the projects Investment and Infrastructure Fund actually completed (some stalled due (NIIF) and India Infrastructure Project to land acquisition issues or, delayed Development Fund (IIPDF) proposed to approvals and clearances), is a testimony enhance infrastructure financing are yet of the challenges which prove to be a to fully take off. significant impediment on infrastructure development. As on today, approximately Policy and regulatory actions for a 1556 Government PPP Infrastructure better ecosystem projects have been awarded out of which A mature PPP framework could help 761 are under completed or operational the government to facilitate private stage and 795 projects are under investment in infrastructure. Concerted different stages of development.14 policy and regulatory actions could help address long pending demands of the industry.

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The uncertainties and fluidity in the past Dispute resolution mechanisms for PPP Delay in regulatory and environmental Addressing critical elements in on policy and regulatory frameworks projects are seen to be time consuming, clearance due to bureaucratic infrastructure development related to Dividend Distribution Tax often derailing project timelines and complexities and the protracted (DDT), applicability of Minimum Alternate freezing funds, eroding surpluses of the procedures for securing approvals, Critical issues and Way forward TAX (MAT) to foreign companies, developers/operators involved. There is a delays in conducting environment applicability of section 80 IA, introduction need for an efficient and credible dispute appraisal meetings and in constituting •• Need to prepare •• PPPs have seen •• Globally, private •• Delay in land •• Time taken to of General Anti-Avoidance Rule (GAAR), resolution mechanism at the national State-level Expert Appraisal Committees for new age success in some finance of infra has acquisition one resolve disputes is GST, land acquisition delays, Generation level. (SEACs) slows down the project approval infrastructure mature sectors declined, from ~ of the primary high – smart cities such as transport, USD 150 billion in reasons for stalled Based Incentive (GBI), and others are process resulting in delay in the overall •• Arbitration embracing energy; need to 2012, to USD 90 infra projects seen to have increased the perceived To foster the successful implementation development of the project. happens but technology, structure projects billion in 201716 - risk in various segments of the Indian of a PPP project, a robust PPP-enabling •• Cost of land decisions are not solar panels, in non-traditional similar situation infrastructure sector. ecosystem including liquid and diversified Governmental capacities to structure acquisition rising necessarily being electric vehicles, sectors like water, persists in India financial institutions, sound regulatory PPPs continue to remain low on – citizen/political implemented multi-use health, education There is a lack of a legal framework and arbitration frameworks, optimal many aspects, especially in the areas •• Currently, FDI protests, statutory infrastructure for PPPs in the form of PPP act/law/ risk allocation among stakeholders, pertaining to risk frameworks, market •• PPP market is able to meet clearances, lack of policy in India. It is required to develop and a robust institutional structure are trends and structuring of PPP projects, •• New set of activities slowing only about 2% appropriate land a comprehensive National PPP act/ essential to address the contractual and operationalisation of PPP funds investors down owing to of financing 17 policy defining the objectives, scope issues and facilitate development. and haven’t kept pace with the market Critical (formerly EPC), economic upheaval requirements and implementing principles of the PPP requirements. service providers and perceived risks issues •• Banking system program envisaged by the government. likely to be in fray by PPP players Going forward, with the emerging struggling with This will impart an authoritative opportunities across new age sectors The government is now seen focussing NPAs, asset-liability framework to implementing agencies like Smart Cities, the PPPs may on undertaking a series of reforms to mismatch that as well as to legislative and regulatory involve comprehensive reforms of the address many of these procedural and may deter them agencies obligated with oversight legislation and procurement procedures. capacity issues which seem to be positive to finance long responsibilities. There is a need for exploring and signs and attempts to revive PPPs. gestation high establishing new avenues for facilitating value infra projects Absence or multiplicity of regulators is contractual mechanism and institutional •• Excess reliance on one of the major reasons for disputes arrangements to cater to the perspective federal guarantees being unresolved, leading to litigations of new and emerging players across and cases which in turn lead to delays or various categories of projects. cancellation of projects and results in cost New age infra Reviving PPPs Financing Land acquisition Dispute resolution escalation, thereby making the projects Procedural challenges affect project unviable. progress •• Appropriate •• Reviving PPPs •• Presence of strong •• Simplifying •• Need to move In the current scenario, land acquisition models for the through public counterparties land acquisition towards Contractual issues in an increasingly is the single-largest roadblock for different set of sector backed (NHAI, PGCIL) processes institutional complex ecosystem development of infrastructure. Several proponents models/ Hybrid boosts investor arbitration •• Developing Given the long-term nature of projects have been stalled or delayed due models, to confidence •• Contractual transparent, •• Need for a pool of continue to complexities and sensitivities involved, to land acquisition issues. Amendments flexibility to •• Foreign investors competitive, arbitrators from leverage capital many of the infrastructure projects to the Land Acquisition and Rehabilitation keep pace with inclined to invest demonstrable infrastructure market tend to face challenges and roadblocks & Resettlement Bill (LARR) have been technological once agreements rehabilitation sector leading to issues in project execution under discussion and are expected to developments are signed, or packages and resulting in delays in completion or ease the process of land acquisition and projects are in •• Better project termination of contracts which further reduce the number of litigations. operation stage planning end up in disputes. •• Recognizing Way bankable projects forward and bankable institutions is important

•• Need for mobilizing development financing

•• Need for innovative financing mechanisms

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Transition towards the future: Key take aways

This section is based on discussions and deliberations held during various panel discussions and key note addresses during the summit. The details of the sessions and speakers are provided at Annexure.

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Key Take-aways Sector outlook and Connected transport Roadmap for delivery of Reviving PPP to woo FDI Alternative sources of Arbitrations – Expediting opportunities•• infrastructure•• infrastructure•• targets infrastructure financing dispute resolution •• Need to fill the infrastructure •• Intermodal connectivity is key for •• Basic infrastructure is still lagging •• India has vast PPP experience, •• Investors typically look for •• Known quantum of disputes investment gap through logistics; challenges of last mile – average speed on Indian roads albeit mostly in roads, aviation projects with stable returns and remaining unsettled: over INR 0.7 private investments, dedicated connectivity are multifold in the during peak hours is in single and power sectors hence seek assets which are lakh crores (USD 9.8 billion) infrastructure institutions, and country; Logistics costs are high, digits in most cities, need for rapid already in operating stage, have •• Brownfield PPP investments are •• Arbitration management in India alternate sources ports are yet to be modernised, transit systems in million-plus strong counterparties to manage perceived less risky and more fraught with project delays, slow execution of projects cities risks, and stable regulations •• In current market conditions, profitable than greenfield PPPs cost escalations, and judicial sector growth is government •• Large-scale integration of •• Need for integrated project •• Policymakers are responding interventions •• Contractual issues and challenges driven renewable energy in transport planning, clearly defined through models such as ToT, HAM, persist despite attempts to revisit •• Few progressive amendments (electric vehicles) is yet to be timelines, and clear contract InVITs •• Government action regarding traditional frameworks have been made to outdated adopted due to concerns about clauses reviving stalled projects, public- •• Potential financiers such as dispute resolution Act reliability and availability •• Aggressive bidding and gold sector backed hybrid models, •• Private financing difficult to come pension funds can invest only plating of projects lead to disputes •• Need to promote institutional boosting sector growth •• There is need for disruption in by as there is expectation of in AA-rated funds while infra over cost overruns and projects arbitration and alternate connected transport infrastructure return; however, private funding projects tend to be rated around •• Large flagship programs of being stalled for long duration modes of resolution (mediation, – exponential technologies, may be leveraged in non-core BBB. Appropriate rating systems the government- Sagarmala, conciliation, etc.) co-location of mega-zones, high areas such as supply of rolling •• Government taking steps to for infrastructure projects to be Bharatmala, UDAN expected to speed lines, connectivity with stock, maintenance of infra asset, improve investor confidence – developed, viz., expected loss boost sectoral investments international borders manning of service desks, etc. interventions for languishing ratings •• Opportunities also opening up in projects, renegotiation of clauses, •• Connecting various modes could new age infrastructure projects Insolvency Act, higher budgetary begin with constituting an inter- and non-traditional asset class support, Viability Gap Funding ministerial body

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Progressive infrastructure initiatives driving sub-sectors

Box 1: The Sagarmala Project and Box 2: Inland Waterways Box 4: Aviation related challenges with a spotlight on UDAN-RCS Box 6: Case Study: Indian Railways’ Inland Waterways India has an extensive network of inland waterways and of the total navigable The catapult to economic development lies in catering to the majority strata of the most expensive project – The Ports handle 90% of the country’s length of 14,500 kilometres. India has now declared a plan to develop 111 national country – the middle class. UDAN, the regional connectivity scheme for airports Chenab River Bridge Project external trade by volume and waterways. Of this, 32 new national waterways and 5 existing national waterways launched by the Government of India in 2017 aims at enabling air connectivity The Chenab River Bridge, an 70% by value18. The Sagarmala are planned to be developed in the next three years.23 to and from the small cities of India, as well as improving infrastructure in such amalgamation of wonders in science, program launched in 2015 underutilised airports. The motto behind the scheme being “Ude Desh ka Aam technology, and policy, is a project envisions port-led development As compared to the US, China, and the European Union, freight transportation by Nagrik (UDAN) or Let the common citizen of the country fly”, the scheme intends to that would bestow India with the in a comprehensive and holistic waterways is highly underutilised in India. The cost of logistics in waterways is a cater to the population in a two-pronged approach – First, to develop the existing highest railway bridge in the world manner with 400 projects and an mere INR 0.90 – INR 1.06 per kilometre as compared to INR 2.5 and INR 1.3 in roads regional airports and increase operational flights in such airports. Second, to bring with a length of 1315 metres and envisaged infrastructure investment and railways, respectively.24 Moreover, the environmental benefits of switching to down the cost of travelling to and from remote airports, thereby making flying a height of 359 metres above the of USD 69.2 billion19 to harness the waterways is multitudinous as the carbon emissions are close to zero. financially viable. river. 33 full potential of India’s maritime sector and coastal transport. The To exploit the efficiencies of waterways several progressive initiatives such as In Phase 1 of UDAN-RCS, 7227 new routes were formed after taking airlines viability Connecting Bakkal, Jammu and Kauri, flagship programme of the Ministry the Sagarmala Project, Clean Ganga Project, Jal Marg Vikas Project have been into consideration. Phase 1 alone saw an initial funding of INR 45,000 million28. Srinagar, the railway bridge also of Shipping was initiated with the taken by the government as the keys to unlocking efficiencies in cost and energy. 21 unserved and 12 underserved airports have been operationalised under the would have the widest span in the objective of capitalising on India’s The development of waterways would go in tandem with multimodality and scheme29. Helicopter services to cater to the hilly areas have also been explored. Indian broad gauge railway network. 7,500 kilometres long coastline and technological enhancement. With the help of satellites and river information In 2017, 5 airlines won bids to fly 128 routes linking 70 airports. As of October, over 14,500 kilometres of inland stations, monitoring of transported goods becomes easier. To enhance these 2018, 3030 new routes were commenced under phase 2 of the scheme and the Himalayas, being an area prone waterways. functions that waterways could harness, Freight Villages to aggregate cargo and development is underway for additional routes. With subsequent phases, the to tectonic movements, sub-zero provide facilities of warehousing, manufacturing, packaging, etc. are being looked government aims to develop and operationalise about 426 of India’s uncovered temperature, seismic activity, high Although water-borne transport is at as options for the future. and underdeveloped regional airports.31 wind speed and geographic fragility, much safer, cheaper, and cleaner this project is one of the most compared to other modes of challenging projects in the sector. transportation, inland waterways Box 3: Bharatmala Project Box 5: Versova-Bandra Sea Link Estimated to be financed at a cost of accounts for less than 6% of India’s Bharatmala Project, the flagship programme of the Government of India, Mumbai, a city with a population of close to 2 crores and an area of 603 square above INR 1000 crores, the bridge’s modal split. By comparison, coastal pertaining to roads and highways, was launched in 2015. An investment of INR 5.35 kilometre, is one of the most traffic-ridden cities of India. With the amount of height extends almost 35 metres and inland water transportation lakh crores25 (USD 75 billion) was committed to the project, making it one of the inevitable traffic, mobility is an issue that requires dire attention. With an effort to higher than the Eiffel Tower. contribute to 47% of China’s freight grandest schemes for road construction in the country. It aims at enhancing significantly enhance connectivity and reduce traffic on the west coast, the Bandra- modal mix, while in Japan and connectivity across the country including road development in the north east Worli sea link was inaugurated in 2009, which reduced travel time to 10 minutes US, this share is 34% and 12.4%, region. from 30-40 minutes at peak time. respectively20. The scheme also complements multimodality and aims at enhancing international To further bring about ease in mobility, Versova, a neighbourhood in north- The Sagarmala Project, aimed at connectivity, especially to neighbouring nations such as Nepal, Bhutan, western Mumbai is proposed to be connected to Bandra through the Versova- filling this gap, identified 577 projects Bangladesh, and Myanmar. Bandra sea link. An investment of approximately INR 7 crores32 connecting with an investment of approximately Bandra, Otters Club, Juhu Link Road and Versova Link Road aims to bring down USD 120 billion during 2015 to The Project is designed to meet the following objectives26: the travel time to 15 minutes from 1 hour at peak time. This additional 17.17 203521 across the four pillars of kilometres stretch would require another five years in construction before it is fully •• To develop 44 Economic Corridors, raising the number from 6 Economic Sagarmala being port modernisation operational. Corridors to 50 and capacity augmentation, Port connectivity enhancement, Port •• To increase the share in freight carried on National Highways to about 80% led industrialisation, and Coastal •• To increase the number of roadways that are connected by 4-lane highways community development. In addition, Coastal Economic Zones are Further, the overall programme is focused on increasing the efficiency of existing planned to be developed across India corridors in terms of traffic mitigation, freight capacity, etc., reducing the in regions such as Kutch, Saurashtra, chokepoints in ring roads and bypasses through lane expansions for decongestion; Konkan, Malabar, etc., in tandem enhancing technological aspects of roadways monitoring and functioning and with this mission. With this program, creating of employment opportunities in the sector. the Indian maritime sector is poised to witness significant growth going forward.22

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robust experience and large pockets, For new age projects like Smart Cities, PPP structuring, contracting mechanism, Reviving PPP to woo FDI in infrastructure PPPs offer expertise which a single new innovating financing mechanisms for transparency, and dispute resolution. entity otherwise may not be able to recovery of costs along with measures Nearly a quarter of India’s FDI is directed PPPs continue to be important in the However, Foreign Direct Investment (FDI) delved into issues with regards to the possess. Over the years, while some related to monetization of data and use towards the infrastructure sector. area of infrastructure development and in infrastructure has been sporadic over funding models of PPP, risk appetite of PPP projects have garnered interest, of technology like blockchain might be the However, can meet only about 2%% of offer potential to leverage funds from the past few years. The panel discussion, investors in PPPs, the challenges faced, many have been constrained owing new evolving models for consideration. the sector’s requirements. In the last few domestic and international markets. held at the Infra Focus Summit 2018, and the trends that follow. to regulatory challenges, inaccurate years, major FDI deals have taken place in demand estimation, economic and Foreign investments have been the road and energy sector. While banks Box 7: Infrastructure sector provides ample opportunities for the high-spirited private sector/ economy of India political changes, and pending dispute sporadic have played a key role in infrastructure Infrastructure, and in particular the roads sector has been on a consistent growth trajectory over the years. resolution. Despite these and other The government has been trying development in the past, asset-liability Private sector is emerging as a key player across various infrastructure segments, ranging from roads and challenges, PPPs are seen as one of the to attract foreign investment in mismatch, rising NPAs, and long gestation communications to power and airports. important drivers for infrastructure infrastructure to bring in financial, periods have deterred their funding to development in India. Going forward, operational, and managerial efficiency the sector. This has created a need for In the roads sector, the past few years have seen a tremendous increase in the road construction in India. During 2017-18, on an renegotiations of contracts are being from the private sector. However, new financing mechanisms. average, 27 kilometres of highways were constructed every day with a total of approximately 10,000 kilometres during the year.34 looked at to revive languishing projects, despite easing of FDI norms, foreign as also to incorporate flexibility in future investment in infrastructure PPPs has Although the bottlenecks of land acquisition are persistent, the country has seen other forms of transport development – PPP contracts. been sporadic due to concerns relating to primarily in terms of multimodality. Table 1: FDI inflows in India The road ahead for the sector foresees private participation as an integral component. Financial Year (April-March) FDI inflows in India (USD billion) FDI in construction sector (infrastructure The Bharatmala project, a large-scale highways development project single-handedly aims to build about 24,800 kilometres35 of activities) (USD billion) highways in phase I across the country. With such greenfield projects underway, private participation can truly be encouraged 2016-17 60.2 12.5 to optimise performance. Not only would private participation ensure financial support, but also lead to reduction in time of delivery as private sector often pushes for faster completion to reap quicker rewards. 2017-18 62.0 17.6 2018-19 (up to June 2018) 16.9 - Further, for financially viable projects, market borrowings are a clear option. However, for social development projects e.g. road Source: Department of Industrial Policy and Promotion, Government of India constructions in backward and border areas that do not guarantee high returns, the government would need to lend a hand. While FDIs are being targeted for mobilising investments, challenges remain. Despite several policy measures, the market is able to mobilise foreign investments in a limited way. Alternative models and financing Some major construction conglomerates Preparing the India infrastructure mechanisms may help draw FDIs have been able to mobilise foreign market for FDIs The government’s focus on undertaking progressive initiatives to bring in private sector efficiency has been gaining momentum With an aim to deal with legacy issues, investments into their companies, on To woo foreign investors, it is and is envisaged to bring a change going forward. policymakers have taken steps to make back of their positioning and strong imperative to ensure stability of cash PPPs more attractive viz., alternative financials. However, the success has flows, empower development of models like HAM and ToT, dedicated been few and far in between. There strong counterparties, and facilitate This section draws inputs from panel Large infrastructure market with high generate socially acceptable returns in institutions like India Infrastructure is a persisting reluctance of foreign predictable returns through more discussion on ‘Reviving PPPs to woo potential for foreign investors; PPPs: relatively shorter periods of time. This Finance Company Limited, and companies to undertake construction realistic forecasting. Government FDI in infrastructure’. Moderated by Important drivers for infrastructure creates a dichotomy between what is introduction of progressive financing risk, and hence there is a preference support in mitigating risks not only Vishwas Udgirkar, Partner and leader The Indian PPP infrastructure market needed now (village roads, sewerage mechanisms such as Viability Gap for projects which are already in the in the construction stage but also in of infrastructure practice at Deloitte, is significantly large with over 1,500 systems, basic care hospitals) and what Funding (VGF) and NIIF. operating stage. Investors’ expectation implementation stage is necessary, the panel was graced by eminent projects worth over INR 10.48 trillion is required to propel towards the future that the government will fill the especially in cases where there is a high personalities such as Katsuo Matsumoto, (USD 150 billion) under various stages of (smart cities, energy-efficient lighting, Past experiences may have impacted risk-return gap and safeguard their revenue risk, or passenger footfall is Rohit Modi, Shailesh Pathak, Bipin implementation (PPP Cell, Infrastructure smart grids). However, both ends offer market perception investments, may also have been a unpredictable such as in the Railways Pradeep Kumar, P.R Jaishankar, S.K division, Department of Economic significant potential and opportunities Past infrastructure PPP bids have seen deterrent which transfers more risk to sector. Adequate preparation for Saha, and Gurpreet Chhatwal. The key Affairs). for innovation and investments of diverse aggressive bidding by private sector to the government. projects, selection of an appropriate highlights of the interaction on the issues nature. Keeping a 50-year timeframe procure major projects, only to realise model and prudent regulations are some and future of FDI in PPPs revolved around Any plan for infrastructure development in perspective, an economy of USD later that the project may not be feasible G2G financing and bi-lateral of the key aspects required to generate alternative models such as ToTs and their in the country has to keep in mind India’s 100 trillion would require substantial at agreed-upon costs. In addition, cooperation another promising avenue desired outcomes. In the absence of potential, the government’s focus on economic requirements in the next investments. gold plating of projects, i.e., promising In such a scenario, G2G financing is yet these foundation stones, no amount of upfront investments in projects, need 40-50 years. In a developing country additional features which may not add another avenue such as through bi-lateral investment, due diligence, or budgetary for transparency in the system and new like India, the basic requirements like At a time when governments are reeling value but substantially raise costs, have cooperation agencies like JICA, involved support is likely to pay off. age projects like Smart Cities that may education for all, 24X7 power supply, under budget constraints, PPPs offer to led to unrealistic expectations. Excessive in Metro projects in India. In such require a different approach. These are accessible safe drinking water, etc., are develop socially relevant infrastructure reliance on federal guarantees, leading to projects, foreign companies have more detailed below. still the prevailing challenges in the while tapping private sector efficiencies. low due diligence, as also unequitable risk concerns regarding passenger (footfall) economy. Hence, policymakers tend Given the long gestation periods of allocations, have led to dilution of PPP risks, and a provision for compensation to invest in infrastructure assets that infrastructure projects, requiring principles per se. by government in case of a gap, would provide them adequate comfort. 18 19 Transition towards futuristic and resilient infrastructure Transition towards futuristic and resilient infrastructure

in consideration is the involvement of Measures being taken to improve the monetization of assets and setting up a Prepare the roadmap for delivery of India’s infrastructure targets private parties for supply of rolling stock infrastructure ecosystem, expected to Project Monitoring Group (PMG). Further, Infrastructure development is the at 70-80% capacity level. The delivery of in automobile industry, competitive where a depot for maintenance would be yield results new avenues like InvIT, setting up of catalytic force driving economic progress. railways projects are taking longer than prices of cars and easily available finance, provided by government, and the private Interventions ranging from PPP policy NIIF and IIPDF to enhance infrastructure In the past, India’s difficult business initially planned. The government is now the vehicle population is on a rise, and sector would own, maintain and supply and regulatory changes to development financing have also been explored to play environment with unpredictable laying more emphasis to overcome the congestion has been multiplying. During rolling stock on requirement basis. of long-term financial instruments a pivotal role in infrastructure sector regulations, bureaucratic delays in challenges leading to delays which would the peak hours, the average speed on which are likely to be instrumental in development. approving projects, endless struggles to reduce the overall logistics cost and road ranges in single digit numbers Going forward, to meet the infrastructure attracting investments to the sector secure land rights and the government’s facilitate the development in this region. and about approx. 10-12 kilometres of targets in the sector, there is a need are being undertaken, to accelerate the Further, the Kelkar Committee’s stalled attempts at reforms have been distance takes around 1-1.5 hours of for a conducive policy framework with development and implementation of PPP recommendations on revisiting and the major prevailing challenges, curbing Development initiatives for future traveling time. As per a recent estimate a cooperative endeavour to address projects. It is of paramount importance revitalising PPP are being implemented, the enthusiasm of many in the private enhancement: In the next 3-4 years, by NITI Aayog, we are losing around INR issues. There is a need for development to implement these reforms to enable however the momentum with which sector. The government is now focussing progressive initiatives are being 3 lakh crores (over USD 42.3 billion) every of a comprehensive strategy through unlocking of the invested capital these initiatives are driven and the on formulating conducive new policies, undertaken to resolve these issues and year for not having a good sustainable integrated planning and contracting through strategic investments, efficient execution of these ideas within offering more attractive incentive meet the requirements of the next 15- transport due to factors like travel time, mechanism to resolve prevailing issues and innovative financing mechanism, stipulated timelines holds the key. packages and developing mechanisms 20 years. More than 20,000 kilometres loss of productivity and fuel, etc. within definite timelines. Further, more developing capital market avenues and Despite the efforts, some overarching to facilitate greater private sector of new railway lines are planned to be emphasis on creating project specific enabling reinvestment in new projects. issues such as balancing out the risks participation in improving the operational constructed in remote areas for socio- Delhi Metro was initiated in 1997-98 and entities like Delhi Metro Rail Corporation sharing mechanism in the PPP format, and managerial efficiency in the sector. economic development and in industrial in less than 18 years, a network of over which are empowered to take project Some transforming initiatives that have provision for re‐negotiation of contracts, areas to feed the industries. Analysis 300 kilometres has been developed. specific decisions in a more effective been undertaken during the last couple impartial and quicker dispute redressal This section draws inputs from a panel of routes and railway lines has been Additional 70-80 kilometres is envisaged manner should be considered for of years include adoption of new PPP mechanism, and encouraging project discussion was held on preparing the undertaken by the Railways and over to be constructed by the end of this year. establishing an appropriate institutional modalities in the roads sector, permission finance based on prudent project roadmap for delivery of infrastructure 15,000 kilometres of railway lines are As on today, it is one of the top metros in mechanism. to infuse funds in languishing projects, appraisal and structuring expertise are targets, moderated by Himangshu Watts, planned to be double or triple lined in the world in the league of Moscow, New liberalization of exit policies, revision some of the areas which still require Senior Editor, Energy and Infrastructure the next 4-5 years. In terms of projects York and London. After its success, the of policy and regulatory frameworks, improvements. at The Economic Times. The panel was financing, reforms are being undertaken Government of India is now focussing on graced by eminent personalities from to promote project financing where non- constructing metros in about 10-11 cities the industry such as Naveen Jindal, financially viable projects are facilitated of India by exploring different models M.K.Gupta, Rajiv Mundhra and Ajit through government support and for development. However, there are Gulabchand. Specific examples from rail financially viable project are undertaken challenges related to complexities, high sector were discussed during the session. through market borrowing. costs, and risks associated with them. Construction and infrastructure arbitrations: Expediting dispute

Railways are undertaking many Currently, initiatives such as JVs with Future Focus: Private intervention resolution and clearing the road for robust infrastructure initiatives to widen and modernise the 11 states in India are being taken up in metro rail development would be Government is working towards In India, arbitration is a preferred This section draws inputs from a panel rail infrastructure for developing railway projects by challenging due to higher risks of reinvigorating the infrastructure sector mode of dispute resolution and has discussion wherein eminent personalities Current Scenario: Railways in India incorporating a mechanism of involving ridership or revenue risk. This was also PPPs. However, given the long-term been governed by the Arbitration and from the fraternity discussed on have a 150-year old legacy. Over this private investors. Project specific JVs seen in a privately operated stretch of nature of these projects, there are several Conciliation Act, 1996. However, with arbitrations in construction and period, the increment in infrastructure would also be floated. A new line in Delhi Metro. The cost of financing is also complexities and sensitivities involved. the increase in complex infrastructure infrastructure projects. The discussion is hardly 30% in terms of laying new Chhattisgarh involving approximately higher leading to expectations of higher As a result, many of the infrastructure contracts, the entire arbitration was moderated by Geetu Singh, Partner, railway lines and tracks. Today, around INR 6000 Crores (~USD 0.85 billion) of return on equity. With a concession PPP projects tend to face challenges and management was perceived to be fraught Forensic & Dispute Practice, PwC. The 20% of the routes carry 50-60% of the investment is currently being undertaken period of 30 years, there are huge stakes roadblocks leading to disputes. with project delays, cost escalation and panel comprised B.S. Saluja, Dr P. R. traffic leading to clogged routes. The through this model. This would be a and uncertainties where private sector increased judicial interventions leading Swarup, Tejas Karia, Ajay Kharbanda and bottlenecks in augmenting the railway major advantage in resolving state- may be reluctant to participate due to In the current scenario, the known to a huge setback in the investment Atul Sharma. lines are associated with land acquisition, related issues and faster clearances limited risk appetite. The challenge lies in quantum of disputes unsettled is more and business climate of the country. forest clearances and acquiring right of due to an integrated mechanism arriving at appropriate risk mechanism than INR .7 Lakh Crores Billion (USD 9.8 Therefore, as a major step towards Need to address implementation way. Further, there is a lack of competent of stakeholders where the state for these projects. The government billion). The major crippling factor to the improving the ease of doing business in challenges contractors to deliver the railway government’s involvement, responsibility, may be in a better position to deliver growth of the infrastructure sector lies line with the international jurisdictions, Progressive initiatives such as projects and there is a lack of engineers and accountability for the projects would such projects owing to the high risks of in the fact that about 15% of the entire the present regime promulgated The amendments to Acts and codal to supervise these projects leading to be crucial for its success. financing and delivering factors. turnover of the industries has been Amendment Act, 2015 for speedy provisions have been made with the difficulties in its implementation. eroded due to expenditure on disputes resolution of disputes, minimal judicial recommendations from UNCITRAL to Metro Rails are emerging as an Other modes of private intervention and about 95% of these disputes end in interventions and transparent and improve the arbitration regime in the Furthermore, the eastern part of important urban mobility element are being explored in upcoming phases arbitration36. There is a need to ensure conflict-free appointment of arbitrator. country. However, in the current scenario India majorly lacks in meeting the Current Scenario: Urban public transport where part of the non-core services such that an efficient dispute resolution This has been an optimistic and a of disputes, the main challenge lies in the infrastructure target requirements due in India is not able to cater to the current as delivery stations are planned to be mechanism is in place. revolutionary leap towards augmentation implementation of these provisions in all to which the private sector are operating development requirements. Due to boom handed out to private sector Other option of growth in the infrastructure sector. earnestness.

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Strengthening contractual it still needs to address the additional positively enhance the infrastructure documentation and procurement time of 6-8 months for filing of claims market in India. However, some Connected transportation infrastructure: The coming together of methodology prior to the appointment, causing drawbacks such as the increase in the roads, railways, airports, ports, and renewables The drafting of contracts is assumed to further delay. cost of arbitration needs to be addressed. be the root cause for imbalance in the risk Transportation sector is considered infrastructure and sub-optimal modal Need to explore energy efficient and reward in a project. The contracting This defect is proposed to be revised the lifeline of a nation. However, the mix in India. It is believed that integrating technologies Box 8: Strengthening Regional regime followed in the country lacks in the pending amendment bill of 2018 main challenge arises in integrating the multiple transport modes, improving Deploying energy-efficient technologies Transport Connectivity in South appropriate risk-reward mechanisms which aims at defining a period of 6 different transport infrastructure in last mile connectivity, adopting digital may be able to reduce costs substantially. Asia in the bid to standardise procurement months for filing of claims and a timeline the country to achieve cost efficiencies technologies, and deploying energy- Given the decline in solar and wind costs In today’s world, trade accounts for process. The public procurement of 1 year from the date of filing the claim and economic prosperity. Improving efficient and renewable technologies can in India, renewables are emerging as over 40% of the world’s GDP37. Yet, methodology needs to be re-evaluated for quick and efficient resolutions. connectivity and coordination in multiple significantly bring down these costs. an alternative. While electrification (of the growth rate in trade stands at a and strengthened to ensure a balanced modes would help achieve time and cost vehicles, railways, etc.) has been catching mere 2-3% year on year. However, approach towards risk and reward. There Alternative modes of resolution efficiencies. Increasing government interventions up, renewable energy may fulfill its it is interesting to note that up to is a need to ensure early identification There is also a need to ultimately explore to promote multimodality expectations subject to availability and 2008, the growth rate in trade was of risks prior to the contractual other forms of dispute resolution like This section draws on a panel The primary reason for lagging reliability going forward. about 12%. documentation for quick resolution. conciliation or mediation for evolving discussion on Connected Transport last mile connectivity has been into a more developed dispute resolution Infrastructure which deliberated the capacity constraints, and inadequate Way forward There is huge potential to improve Need for institutional arbitration process. Currently, National Highways situation in India on multimodality. infrastructure. This has led to high To facilitate seamless flow across various this growth, and this potential lies in According to the prevailing practices in Authority of India (NHAI) has adopted Moderated by Jaffery Thomas, Director turnaround time for delivery of goods, modes of transport, inland container the South Asian regions of the world. India, about 95% of the arbitration cases the mediation mode of settlement by at PricewaterhouseCoopers, the panel higher transport costs, and smaller profit depots, container freight stations / It is imperative to focus on enhancing are dealt on ad hoc basis, relying on creating a mediation cell consisting was graced by eminent personalities such margins. However, the government private freight terminals, ports, and interconnectivity in countries former judges, and adding exorbitant of 3 mediators and have been able to as Anoop Kumar Agrawal, Ankit Singhvi, is now trying to plug this gap through airports could be designed with cargo such as Nepal, India, Bangladesh, fees to the project proponents. As on successfully settle 8-10 major cases and P.S Nair, who are all experts in their major programmes such as Bharatmala, specificity and operational requirements Myanmar, etc for facilitating trade today, there are limited institutions involving crores of rupees. respective fields. Sagarmala, and Dedicated Freight in mind. The theme of multimodality also and coordinated development. It is dealing with Arbitrations in India. Corridors (DFC). It is also working towards needs to incorporate digital elements an irony that transporting containers Construction Industry Arbitration Council The litigation funding system which has Multimodal transportation crucial for an integrated multimodal logistics and in order to be successful. Automation, from India to its neighboring (CIAC) was the first institution in the been successful in other jurisdictions, enhancing last mile connectivity transport policy to switch from a point- IoT, blockchain, robots, big data may countries such as Nepal, Bhutan, country followed by other institutions like has been under consideration in India India is the world’s third largest importer to-point transportation system to a well prove to be game changers for the Bangladesh and Myanmar is The International Centre for Alternative for a long time. Our judicial system is in of crude oil. Given that fuel costs are hub-and-spoke model that is expected sector. Many private sector players and often more expensive than the Dispute Resolution (ICADR), Mumbai the process of creating a more matured the main contributor to transport costs, to facilitate the movement of domestic public agencies have started using these transportation costs to far regions. Centre for International Arbitration resolution ecosystem for adopting logistics costs in the country are also freight on lower-volume corridors. The technologies for tracking shipments, Therefore, there is an enormous (MCIA) and International Court of this mechanism. Further, the ceilings high: logistic costs form about 14-15% of integrated supply chain program is likely determining best route for doorstep potential to exploit regional trade Arbitration (ICA) which continue to on the arbitration fees have been our GDP, while optimally it must be less to include development of 50 economic delivery, predicting breakdowns, handling through developing inter-regional dispense arbitral justice at the national defined to ensure a more transparent than 8%. Historically, road and railways corridors, upgrades of key feeder and freight, and optimising asset utilisation. connectivity. and international level. The country and economical system. There is no have borne the burden of carrying cargo inter-corridor routes, 35 multimodal needs to promote institutional arbitration law prohibiting such funding but its across India’s borders and beyond, logistics parks and 10 intermodal points. The benefits of broadening where a specialised institution aids and enforceability can be challenged under while waterways have played a relatively While these are progressive actions, the connectivity not only pertain to a administers the arbitral process involving public policy in some cases. modest role owing to their insufficient need for cost reduction is critical to give a growth in trade, but also include professional experts, who would have a development. Mode-specific silos have boost to the sector. creating network externalities, fully better understanding to adjudicate and The road ahead resulted in uncoordinated transport harnessing strategical exploitation address the technical and complex issues The judicial system is now focussing and enabling multilateral financing. in the industry. on strengthening the arbitration act With trade agreements such as the and expediting the dispute resolution South-Asian Free Trade Agreement Addressing time delays for speedy process. It has been making progress (SAFTA), Asia-Pacific Trade Agreement resolution by moving forward from ad-hoc and in- (APTA), etc. and trade unions such as The biggest challenge in the current room based settlements to institutional South Asian Association for Regional scenario is the delayed timelines for arbitrations through online dispute Cooperation (SAARC), Association of clearing disputes, thus deviating form resolutions. Southeast Asian Nations (ASEAN), etc. the core purpose of arbitration to settle trade has become more bilateral and disputes in the least cost and time. The stakeholders in the sector are has strengthened regional ties. Kick- Prior to the amendment of the Act in now looking forward to effective and starting the southern corridor would 2015, there was no cap defined on the timely implementation of the roadmap lead to huge positive spillovers in timelines. In the Amendment Act, a for institutionalisation of the dispute terms of externalities that can reach limit of 1 year from the appointment of resolution mechanism. Resolving out quickly to markets everywhere. arbitrator has been defined. Despite this, disputes in a timely manner could

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finance to fill the infrastructure deficit, Way forward: Exploring innovative Alternative sources and their impact on it is hard to come by, given the stringent financing mechanisms regulatory policies, long gestation period The current scenario highlights the infrastructure financing of infrastructure investments, and the need to explore a new credit rating Developing good infrastructure calls for is optimally required. It is therefore limited bargaining power of private sector system for infrastructure projects and an enormous amount of funds. There imperative to mobilise funds through in the event of significant changes in the diversify the sources of funding through is often a gap between funds that the diverse and alternative sources. economic environment. new age financing architecture through government can provide versus what viable solutions around application of Under-investment in infrastructure may innovative products such as Masala constrain and even shrink developing Bonds, Infrastructure Investment Box 9: Key hurdles preventing infusion of funds into the infrastructure sector economies, since new age infrastructure Trusts (InvIT) and Infrastructure Debt Over the past few years, infrastructure needs have multiplied at an exponential is needed, along with maintenance and Funds (IDF) along with exploring other rate. With this accelerating infrastructure requirements in the country, the need for operation of existing infrastructure. sources such as Pension Funds and finance has been a crucial factor for meeting these requirements. Formerly funded Financing sustainable urbanization is Covered Bonds. exclusively by the government through tax collections and institutional loans, therefore an investment in our present Infrastructure Finance has become an aspect of the economy that requires more and future. As for the more innovative sources than what the government funding can suffice. of financing, governments can look Addressing risk perceptions to tap at instruments such as value capture Encouraging private investors to throw their hats in the ring, these gaps have long-term funds financing tools, which recover some reduced to a great extent. However, there still exist an exorbitant gap between While there is money available with the value generated by public infrastructure the funds required for infrastructure, and the amount contributed by private pension funds and sovereign funds in investments for private landowners capitalists. As per World Bank, in 2017, PPI investment totalled USD 93.3 billion India (USD 80-100 trillion), these funds through betterment levies, impact fees; across 304 projects, an increase of 37 percent over 2016 levels at the global level.38 typically want to invest in instruments green bonds, which invest in sustainable with predictable and stable returns, infrastructure projects (aimed at energy The key hindrances arise in crowding-in private investment through all available have strong counterparties to mitigate efficiency, pollution prevention, clean sources, increasing efficiency of the government in spending aforementioned risks, and are mostly unwilling to take on transportation, etc.), and monetizing funds, and also due to the large amount of non-performing loans that currently construction risks. Smart Cities’ data (charging access fees plague the capital market. The short term steps to recovery must therefore for any third-party developers who primarily include recognizing and speedily resolving the issue of non-performing Recycling of assets could unlock wish to develop applications using data loans, and identifying and filling the investment gap. potential obtained from smart cities, such as a On the other hand, the agencies parking space app). Additionally, urban There is a need to identify a stage-wise process that helps monitor and ensure associated with handling good assets local bodies need to be empowered so progress. Corroborating a development, project and operations stage to funnel such as NHAI, Airports Authority of as to be able to raise resources through through the various projects that are implemented would help direct them in an India (AAI), and National Thermal Power private means to recover their costs. efficient flow that ensures completion. Corporation (NTPC) do not have an inclination towards trading them as they Lastly, given that financing for are hesitant to bid and are wary of audits infrastructure is insufficient, the path to and regulations. As a result, the assets long-term finance is to diversify sources. are not being recycled, and are hence not These sources could take many forms: This section draws inputs from a panel Investment promotion initiatives reflecting their true value staggering the Private participation (through PPPs), discussion moderated by Manish imperative for sector development overall development of the sector. budgetary resources, value capture Aggarwal, Partner and Head of Corporate India needs USD 4.5 trillion by 2040 for financing, municipal bonds, etc. The Finance – Infrastructure and Government developing world-class infrastructure. viability of multiple sources may need to Services and Head of Energy and Natural The current trend shows that India can be assessed, to arrive at the best possible Resources, KPMG India and graced with meet USD 3.9 trillion by the given time, means to finance a given asset or project. the presence of experts such as Sujoy which will still leave the country with Bose, Satish Mandhana, Mukul Modi, an investment gap of USD 526 billion. M.K Sinha, T.N Arun Kumar, and Sujeet And while private sector participation is Govindaraju, who discussed the subject. cited as one of the potential sources of

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The road towards futuristic infrastructure

As the infrastructure landscape it only to get the finances off their balance continues to mature, new opportunities sheet or transfer risks, or is it because and challenges are also likely to they have a genuine faith that private continue to emerge. In the light of new sector will drive more efficient, long-term macroeconomic realities, the government outcome in that particular segment. The will need to consider periodically answer to these questions are expected reviewing implementation models to help define a structure to meet the including PPPs and their structure. objective that the sector is seeking. Private sector is expected to continue to be an important player, and the onus of Right preparation, right model, and harnessing the collaborative power will right regulations are key to reinvigorate have to be on the government. private interest in infrastructure domain and generate best outcomes. In the While the government seems to be going absence of these foundation stones, no the extra mile to generate interest in amount of investment, due diligence, the infra sector through funds like NIIF, or budgetary support are likely to pay IDF, InVITs, etc., and mechanisms such off. Development of robust institutional as VGF, HAM, ToT, etc., whether they will mechanism, backed by sector specific be the only real financier in the future, policies and an integrated approach and continue to set up bigger, larger towards technical and financial planning institutions, or will the private sector is crucial in undertaking infrastructure eventually pick up the threads needs to development. Hence, it is imperative that be seen. the governments look into fine-tuning these aspects to achieve the required Given that PPPs are not a one-size-fits-all pace on the road to a futuristic and solution to all infrastructure development resilient infrastructure. constraints, authorities will need to clearly define their objective for PPPs – is

26 27 Transition towards futuristic and resilient infrastructure Transition towards futuristic and resilient infrastructure

12:00 - 12:45 Interactive Panel Discussion – Reviving PPP to woo FDI in Infrastructure Annexure- Event agenda Katsuo Matsumoto, Chief Representative, Japan International Cooperation Agency Rohit Modi, Chief Executive Officer, Essel Infra & Smart Utilities, Essel Infra

P. R. Jaishankar, Chief Executive Officer, IIFCL Projects Limited and speakers S.K Saha, Adviser, NITI Aayog Shailesh Pathak, Chief Executive Officer, L&T Infrastructure Development Projects

Bipin Pradeep Kumar, Co-Founder & Director, Product Development, Gaia Smart Cities

6th Annual The Economic Times Infra Focus Summit Gurpreet Chhatwal, President, CRISIL Ratings 27th September 2018 Panel Moderator: Vishwas Udgirkar, Partner & Leader Government Utilities Infrastructure Development, Deloitte Taj Palace, New Delhi Theme : Transition towards Futuristic and Resilient Infrastructure 12:45 - 13:00 Spotlight Session: Aviation related challenges with a spotlight on UDAN- RCS

Dr Guruprasad Mohapatra, Chairman, Airports Authority of India Agenda 13:00 - 14:00 Networking Lunch 09:00 - 10:00 Welcome & Registration 14:00 - 14:45 Talk Show – Prepare the roadmap for delivery of India’s infrastructure targets 10:00 - 10:05 Welcome Address from ET Edge Naveen Jindal, Chairman, Jindal Steel and Power Limited 10:05 - 10:15 Opening Remarks M.K Gupta, Chairman, Indian Railways Station Development Corporation & Member Engineering Railway Board 10:15 - 10:45 Chief Guest Address : Government’s push in addressing the Infrastructure Investment Gap Rajiv Mundhra, Chairman, Simplex Infrastructures Limited

Shri Mansukh L. Mandaviya, Hon’ble Minister for State for Road Transport & Highways, Shipping and Chemical & Dr Mangu Singh, Managing Director, Delhi Metro Rail Corporation Fertilisers Panel Chair: Himangshu Watts, Senior Editor, Energy and Infrastructure at The Economic Times 10:45 - 11:30 Flash Presentations - Taking Stock – Rebranding and Redefining India through new age Infrastructure Projects 14:45 - 15:00 Keynote: International Case Study – Strengthening Regional Transport Connectivity in Southern Asia The Sagarmala Project

Nagesh Kumar, Director of Social Development Division, United Nations Economic and Social Commission for Asia Kailash Kumar Aggarwal, Joint Secretary, Ministry of Shipping and the Pacific (UNESCAP)

Inland Waterways 15:00 - 15:45 Panel Discussion: Construction and Infrastructure Arbitrations - Expediting the Dispute Resolution and Pravir Pandey, Chairman, Inland Waterways Authority of India unwinding the road for Robust India

Versova-Bandra Sea Link B.S. Saluja, Secretary General, The International Centre for Alternative Dispute Resolution

R.L. Mopalwar, Vice Chairman, Maharashtra State Road Development Corporation Dr P. R. Swarup, Secretary & Director General, Construction Industry Development Council

The Bharatmala Project Tejas Karia, Partner, Head – Arbitration, Shardul Amarchand Mangaldas, Vice-Chairman, Society of Construction

Law, India Nagendra Nath Sinha, Managing Director, National Highways Infrastructure Development Corporation( NHIDCL) Ajay Kharbanda, Chief Legal Officer, Delhi International Airport Limited 11:30 - 11:45 Networking Tea/Coffee Break Atul Sharma, Managing Partner, Link Legal India Law Services 11:45 - 12:00 Keynote Address: Sector’s outlook and upcoming opportunities for the high-spirited Economy of India Panel Moderator: Geetu Singh, Partner, Forensic & Dispute Practice, PwC Shri Yudhvir Singh Malik, Secretary, Ministry of Road Transport and Highways

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15:45 - 16:00 Case Study: Indian Railways’ most expensive project – The Chenab River Bridge Project

AK Sachan, Managing Director, Dedicated Freight Corridor Corporation India Limited (Chenab Railway Bridge) Endnote 16:00 - 16:45 CEO’s Panel Discussion: Connected Transportation Infrastructure – The coming together of roads, railways, airports, ports and renewables

Anoop Kumar Agrawal, Managing Director, Indian Port Rail Corporation Ltd

1 Saibal De, Chief Executive Officer, IL&FS Maritime Infrastructure Company Limited Outlook India website. Retrieved from https://www.outlookindia.com/website/story/indias-gdp-expected-to-reach-usd-5-trillion by-2025-says-indian-official-to-worl/311249 (last accessed on 20th Oct, 2018) Hemant Kumar Thanvi, Chief Financial Officer, Mytrah Energy 2 Economic Survey 2018. Retrieved from http://mofapp.nic.in:8080/economicsurvey/pdf/120 150_Chapter_08_Economic_ P. S. Nair, Chief Executive Officer-Corporate, Airports Sector, GMR Group Survey_2017-18.pdf (last accessed on 20th Oct, 2018)

Panel Moderator: Jaffery Thomas, Director, PricewaterhouseCoopers 3 Economic Times. Retrieved from https://economictimes.indiatimes.com/news/economy/infrastructure/india-needs-4-5-trillion-by- 2040-to-develop-infra-eco-survey/articleshow/62694945.cms (last accessed on 20th Oct, 2018) 16:45 – 17:00 Special Keynote Address – Key Hurdles Preventing Infusion of Funds into the Infrastructure Sector 4 Union budget 2018-19. Retrieved from http://pib.nic.in/newsite/PrintRelease.aspx?relid=176056 ( last accessed on 20th Oct, 2018) Dr Sumila Gulyani, Program Leader, Infrastructure and Sustainable Development, World Bank 5 Doing Business 2018: Reforming to Create Jobs. World Bank (2018). Retrieved from http://www.doingbusiness.org/content/dam 17:00 – 17:45 Special Panel Discussion on Alternative Sources - Need for new sources and their impact on Infrastructure doingBusiness/media/Annual-Reports/English/DB2018-Full-Report.pdf (last accessed on 20th Oct,2018 ) Financing 6 World Logistics performance Index 2018. Retrieved from https://lpi.worldbank.org/international/global/2018 (last accessed on 20th Sujoy Bose, Chief Executive officer, National Investment and Infrastructure Fund Oct, 2018) Mukul Modi, Senior Vice President, SBI Capital Markets 7 PPP India website. Retrieved from https://www.pppinindia.gov.in/infrastructureindia/web/guest/status-wise?p_p_

Sujeet Govindaraju, Director, Canada Pension Plan Investment Board id=statuswisesummaryreport_WAR_Projectportlet&p_p_lifecycle=0&p_p_state=normal&p_p_mode=view&p_p_col_id=column-

1&p_p_col_count=1&_statuswisesummaryreport_WAR_Projectportlet_jspPage=%2Fhtml%2Fstatuswisesummaryreport%2Fview.jsp M.K. Sinha, Managing Partner and Co-Head - India, Global Infrastructure Partners India (last accessed on 20th Oct, 2018) T.N. Arun Kumar, Executive Director, CARE Ratings 8 Press Information Bureau, Ministry of Finance. Retrieved from http://pib.nic.in/newsite/PrintRelease.aspx?relid=183207(last Satish Mandhana, Managing Director and Head of Investments, Eversource Capital accessed on 20th Oct, 2018)

Panel Chair: Manish Aggarwal, Partner and Head, Corporate Finance - Infrastructure and Government Services, 9 Press Information Bureau, Ministry of Finance. Retrieved from http://pib.nic.in/newsite/PrintRelease.aspx?relid=176056 (last Head - Energy and Natural Resources, KPMG India accessed on 20th Oct, 2018)

17:45 hours End of Conference 10 Invest India Website. Retrieved from https://www.investindia.gov.in/sector/roads-highways (last accessed on 20th Oct, 2018) 11 Press Information Bureau, Ministry of Finance. Retrieved from http://pib.nic.in/PressReleaseIframePage.aspx?PRID=1513281 (last accessed on 20th Oct, 2018)

12 Press Information Bureau, Ministry of Finance. Retrieved from http://pib.nic.in/newsite/PrintRelease.aspx?relid=180801 (last accessed on 20th Oct, 2018)

13 Press Information Bureau, Ministry of Finance. Retrieved from http://pib.nic.in/newsite/PrintRelease.aspx?relid=176384 (last accessed on 20th Oct, 2018)

14 PPP India website. Retrieved from https://www.pppinindia.gov.in/ (last accessed on 20th Oct, 2018)

15 Crisil Infrastructure Yearbook Report (2017). Retrieved from https://www.crisil.com/content/dam/crisil/our-analysis/reports/ Infratstructure-Advisory/documents/AbstractCRISILInfraYearbook2017.pdf (last accessed on 20th Oct, 2018)

16 Private Participation in Infrastructure (PPI) Annual Report. The World Bank (2017). Retrieved from http://ppi.worldbank.org/~/media/GIAWB/PPI/Documents/GlobalNotes/PPI_2017_AnnualReport.pdf (last accessed on 24th Oct, 2018)

17 Bank Quest Report- Challenges in Infrastructure Financing. IIBF (2017). Retrieved from http://www.iibf.org.in/documents/ BankQuest/Apr-June2017/Bank%20Quest%20Apr%20-%20June%20%202017.pdf (last accessed on 20th Oct, 2018)

18 Press Information Bureau, Ministry of Finance. Retrieved from http://pib.nic.in/newsite/PrintRelease.aspx?relid=155754 (last accessed on 20th Oct, 2018)

19 India Maritime Investor Summit, Ministry of Shipping. Retrieved from https://www.maritimeinvest.in/ (last accessed on 20th Oct, 2018)

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20 Sagarmala website Retrieved from http://sagarmala.gov.in/about-sagarmala/background ( last accessed on 24th Oct,2018)

21 Sagarmala website Retrieved from http://sagarmala.gov.in/projects/projects-under-sagarmala ( last accessed on 24th Oct,2018)

22 About Deloitte Sagarmala Website .Retrieved from (http://www.sagarmala.gov.in) ( Last accessed on 24th Oct,2018)

23 Inland Waterways Authority of India website. Retrieved from http://www.iwai.nic.in. (Last accessed on 24th Oct,2018)

24 Press Information Bureau, Ministry of Finance. Retrieved from http://pib.nic.in/newsite/PrintRelease.aspx?relid=181099 ( Last accessed on 24th Oct,2018) All the facts and figures that talk to Deeper still, it’s in the beliefs, behaviours 25 Bharatmala Program. Retrieved from http://morth.nic.in/BharatMala/files/assets/basic-html/page-1.html (last accessed on 24th our size and diversity and years of and fundamental sense of purpose that Oct, 2018) experiences, as notable and important as underpin all that we do. they may be, are secondary to the truest 26 Ministry of Roads, Transport and Highways website. Retrieved from http://morth.nic.in/BharatMala/files/assets/basic-html/page-1. measure of Deloitte: the impact we make Deloitte Globally has grown in scale and html (Last accessed on 24th Oct, 2018) in the world. diversity – more than 245,000 people in 27 Airports Authority of India Website. Retrieved from https://www.aai.aero/sites/default/files/rcs_news_notifications/Airports%20 150 countries, provide multidisciplinary started%20and%20routes%20commenced%2022%20Oct%2018.pdf (last accessed on 24th Oct, 2018) So, when people ask, “what’s different services yet our shared culture remains about Deloitte?” the answer resides in the the same. 28 Udan Program. Retrieved from https://www.aai.aero/en/rcs-udan (last accessed on 24th Oct, 2018) many specific examples of where we have 29 Airports Authority of India Website. Retrieved from https://www.aai.aero/sites/default/files/rcs_news_notifications/Airports%20 helped Deloitte member firm clients, © Deloitte Touche Tohmatsu India LLP started%20and%20routes%20commenced%2022%20Oct%2018.pdf. (last accessed on 24th Oct, 2018) our people, and sections of society to achieve remarkable goals, solve complex 30 Airports Authority of India Website. Retrieved from https://www.aai.aero/sites/default/files/rcs_news_notifications/Airports%20 problems or make meaningful progress. started%20and%20routes%20commenced%2022%20Oct%2018.pdf (last accessed on 24th Oct, 2018)

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32 33 Transition towards futuristic and resilient infrastructure

About ET Edge

ET Edge is an initiative of The Economic leaders for insightful conversations Times to build global business intelligence which aid in drawing the blue print for through engaging forums that would policy changes and giving directions focus on key sectors and domains, to these critical sectors. Delegates at which would establish themselves as the conference are key management Knowledge and Networking Platforms. personnel and decision makers who further enrich the gatherings with their ET Edge was launched in 2013 making its crucial insights and vast experience. foray through domestic conferences. It has now steadily moved into new formats ET Edge builds engagement for its not just covering knowledge sharing conferences through validated content platforms such as conferences but also through third party market research includes exhibitions, community building agencies and interactive formats. It and more. deploys cutting edge formats such as fishbowl sessions, speed networking and While ET Edge is well established in other diverse formats such as key notes, the domestic market with expertise one to one discussions, workshops, panel in sectors panning Infrastructure, discussions, roundtables, case studies Education, Technology, Retail, BFSI and and awards. Telecom amongst other sectors, it is also expanding geographies by building The findings of the conferences are initiatives in South East Asia and is published through white papers in covering new segments including the association with knowledge partners to government segment as well as the B2C provide rich insights. Some of the marque segment. conference properties by ET Edge include Global Business Summit, Smart Green, ET Edge conferences are primarily B2B Architecture and Design, Infrastructure platforms which bring together industry Focus and Best Brands series having heads, vertical experts, academicians, coffee table books. government, visionaries and thought

34 Contacts

Vishwas Udgirkar Partner, Deloitte Touche Tohmatsu India LLP [email protected]

Jyoti Arora Conference Producer, The Economic Times- Edge [email protected]

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