There can be no doubt that India has witnessed one of the most substantial social, economic and commercial transitions of the century, forcing it to be recognised as a global superpower. Notably, India's investment in infrastructure development has been the focus of the past decade. With Viksit Bharat leading the vision of Prime Minister Modi, India aims to increase efficient connectivity and foster nationwide economic participation by enhancing physical and social infrastructure through CapEx.
India boasts an impressive railway system spanning 42,616 miles and sitting as the fourth-largest rail network in the world, often referred to as the Lifeline of the Nation. But how has the Indian rail network and infrastructure-focused legislation progressed in the last year?
FY 23/24
We witnessed a threefold increase in CapEx since 2020. Coupled with increased public investment, this has revolutionised road and rail transport.
Roads
- Ongoing development of key 'corridors' has improved connectivity between India's industry leading cities (e.g. Delhi-Mumbai).
- The length of high-speed corridors has seen a 12x increase.
- Construction time has quickened as a result of National Highway development focused government initiatives.
- The overall logistical efficiency of India, as a direct result of improvements to the National Highway network, has been globally recognised.
Railways
- Railway investment increased by 77%.
- Initiatives have focused on advancing the technology available on trains and at stations, specifically relating to CCTV and safety.
- Further technological advancements have increased accessibility and improved user experience e.g. through introducing user-friendly booking systems.
- Sanitation at stations has improved e.g. through replacing conventional toilets with bio-toilets.
- Land acquisitions and clearances have been expedited through higher involvement from stakeholders.
The Economic Survey 2023-2024 reported that the addition to the stock of infrastructure in the last five years owed predominately to public sector financing, whereas private sector financing was not forthcoming to the extent desired. To address the private sector's reluctance in mobilising large equity and debt at affordable costs for infra projects, the government brought in public-private partnership (PPP) models. However, private sector participation remained limited.
FY 24/25
The government has demonstrated a commitment to reformulating the infrastructure sector in the FY24/25 budget allocating Rs 11.11 lakh crore (equivalent to 3.4% of the country's GDP). This commitment extends beyond the key cities and industry-hubs to its regional areas with the aim of elevating Indian railways and roads to world-class standards across the board. To promote private sector participation, the government announced a formulation of a market-based financing framework to promote investment in infrastructure through viability gap funding and enabling policies and regulation.
Roads
- Increased investment into the ongoing highway project, Bharatmala Pariyojna, focused on systematically developing corridors, feeder routes and expressways to improve connectivity and bolster regional trade.
- Further allocation of funds to the National Highways Authority of India (NHAI) to invest in projects focusing on highway development.
- Announcement of four new major road connection Projects, namely Patna-Purnea Expressway, the Buxar-Bhagalpur Expressway, the Bodhygaya, Rajgir, Vaishali and Darbhanga project in Bihar jointly costing c.Rs 26,000 crore.
Railways
- Focus on enhancing safety measures by, for example; installing electrical interlocking systems with greater signalling controls thus reducing accidents caused by human-error, providing advanced technology used to verify track occupancy, installing CCTV on more trains to provide 24/7 surveillance and displaying fire safety measures in all coaches.
- Modernising the railway experience by investing in upgrading locomotives, coaches, track structures and stations.
- Improvement of land utilisation for railways led by the Rail Land Development Authority to expand the railways reach and increase capacity and subsequent profit.
We are witnessing a historical reformulation of a nation committed to rapid growth, improvement and development. India recognises infrastructure investment (both public and private) as the key to economic, social and commercial growth, enabling India to break down barriers by which it was previously hindered. The next chapter for India looks bright.
DWF is a leading legal adviser to Indian and India-focussed companies, financial institutions and high net worth individuals and families. Our India Group, consisting of over 95 lawyers from 9 countries, 16 practice areas and 9 sector groups, is one of the largest India groups of any international law firm. With decades of extensive expertise in guiding Indian clients in respect of outbound legal work, our team of experts and specialists empower both India-focused and India-based clients to achieve their strategic objectives.
Thank you to Sofie Gill for her contribution to this month's article.
