Investing in Infrastructure

4 Months agoAs India and Russia celebrate 70 years of diplomatic ties, we take a closer look at a more recent collaboration, on infrastructure investment. From Industrial Corridors to Metro and Rail, the opportunities are endless.

Maintaining a high growth trajectory requires state-of- the art infrastructure and the government of India has articulated the infrastructure vision for India through some really powerful ideas. With a planned investment of $100 billion in the Delhi-Mumbai Industrial Corridor and 3,360 km of Dedicated Freight Corridors under construction, India’s Infrastructure projects are unstoppable. 415 projects have been identified under the Sagarmala Initiative for port-modernization and development and an ambitious “Smart Cities” initiative envisions 100 smart cities 2022. From advanced airports to magnificent metro projects, from futuristic freeways to stellar solar projects: all bespeak India’s aspiration to create a world-class infrastructure.

While India and Russia share a robust cooperation in multiple spheres, the collaboration on the Infrastructure front is in its nascent stage. In 2014, Russian Deputy Prime Minister Dmitry Rogozin visited India and expressed interest in partnering with India in its major Infrastructure projects. Commerce and Industry Minster Nirmala Sitharaman announced in March 2017 that India and Russia will be setting up a $1 billion fund to promote mutual investments in infrastructure and technology projects.1 Each country would contribute $500 million to the fund, through the National Investment and Infrastructure Fund and Russian Direct Investment Fund, respectively. This Fund will help to advance infrastructure projects and support attractive investment opportunities and growth of Russian business activity in India.2 A Memorandum of Understanding for this was signed at the BRICS Summit 2016, Goa.

 

METRO AND RAIL PROJECTS

 

The Indian Railways is collaborating with Russian Railways on a high-speed project to increase passenger trains’ speed up to 200 kmph. A preliminary report was submitted in January on the 575-km stretch between Nagpur, Maharashtra and Secunderabad, Telangana. Recommendations included safety features, a new type of passenger car, as well as technical and technological solutions.3 The project will be jointly financed.

In Mumbai, a joint venture between Russia’s Mosmetrostroy and Hindustan Construction Company Ltd is involved in the construction of the city’s first underground metro line. When completed, it will be a 33.5 km long line, with 26 underground stations and one ‘at-grade’ station. HCC and its Russian partner won a contract worth $388 million executed for the Mumbai Metro Rail Corporation Limited (MMRCL), for construction of about 4 km of this underground line.4

 

SMART CITIES

 

The Indian government’s Smart Cities initiative envisages 100 smart cities by 2022. These are potential urban game-changers, focusing on uninterrupted water and power, internet connectivity, e-governance and quality infrastructure.5

There is an agreement with Russia for cooperation on the implementation of this program, through the use of IT solutions by Russian companies, between JSC Rusinformexport, the Urban Development Ministry, Ministry of Home Affairs, National Buildings Construction Corporation Ltd and the Haryana government.

Leading Russian technology hub Skolkovo, on the outskirts of Moscow, comprises about 1000 companies and is keen to partner Indian IT companies and focus on the smart cities sector. Skolkovo is known for developing technology for smart cities.6

At BRICS 2016, one of the MoUs signed was between the Andhra Pradesh Economic Development Board, JSC Alexeev’s Central Hydrofoil Design Bureau, JSC Radar MMS and JSC Morinsis – AGAT and Elcom Systems Private Limited to facilitate investments in the state to develop7:

  • A single integrated Transport Logistics System
  • A “Smart city”
  • Intellectual monitoring system for the areas of high responsibility
 

PORTS AND SHIPPING

 

There is a MoU between Andhra Pradesh Economic Development Board and JSC United Shipbuilding Corporation (USC), Russia’s biggest shipbuilding corporation, which could enable Andhra Pradesh to become one of Asia’s biggest ship building hubs.8

 

OPPORTUNITIES

 

In the Union Budget, Finance Minister Arun Jaitley announced an increase in public investment in infrastructure and development project, saying that India would invest $61 billion in creating and upgrading infrastructure in the next financial year.9 The Indian government is also prioritising the development of new, modern ports and airports; the development of multi-modal logistics parks and transport facilities– all of which provide business opportunities to Russian companies, as noted by Russian media commentators10.

Russia’s ability “to support large-scale infrastructure projects, its expertise in creating robust electronic payments infrastructure and its technological advancements in renewable energy could support India's move towards a more competitive economy,” says a news report.11

India has invited Russian participation in the Delhi-Mumbai Industrial Corridor and the Dedicated Freight Corridor as well as the Bangalore-Mumbai Economic Corridor and the Chennai-Bangalore Industrial Corridor12 – one of the world’s largest infrastructure projects, with 3,360 km of dedicated freight corridors.

Source:
1 http://www.livemint.com/Politics/LKigmTxalykPMWNc7vdMoJ/India-Russia-to-set-up-1-billion-fund-to-promote-business.html
2 https://blog.ipleaders.in/top-russian-investments-india/
3 http://www.thehindu.com/news/national/With-Russia%E2%80%99s-help-India-to-increase-train-speed-to-200-kmph/article17077775.ece
4 http://www.financialexpress.com/industry/mumbai-metros-first-underground-line-in-lt-hcc-hands/308031/
5 http://indiatoday.intoday.in/story/india-russia-ink-mou-for-cooperation-in-smart-cities-scheme/1/787837.html
6 http://economictimes.indiatimes.com/tech/ites/h-1b-visa-restrictions-india-russia-look-for-cooperation-in-it-sector/articleshow/58450544.cms
7 http://mea.gov.in/bilateraldocuments.htm?dtl/27481/List_of_agreementsMOUs_exchanged_during_IndiaRussia_Annual_Summit_October_15_2016
8 http://indianexpress.com/article/india/india-news-india/brics-summit-2016-andhra-pradesh-signs-two-shipbuilding-mous-with-russia-3084972/