India’s infrastructure sector is poised for strong growth

V Nagarajan

India’s infrastructure sector is poised for strong growth, with planned investments of $1.4 trillion by 2025. The government’s ambitious National Infrastructure Pipeline (NIP) program envisages injecting massive capital into various sub-sectors, including power, roads, railways and the urban sector. development. This unprecedented push is expected to create related industries, create jobs and boost the economy.

Specific areas of focus include developing public digital infrastructure, clean and renewable energy projects, and creating resilient urban infrastructure. According to the Ernst & Young study, this ambitious venture aims to increase India’s global competitiveness and improve the quality of life of India’s vast population.

Below are the key takeaways from the discussion at a roundtable event organized by EY, attended by top executives from the Indian infrastructure sector.

The Indian government’s proposed capital expenditure puts a strong emphasis on the renewable energy and road sectors. This trend reflects much of the trading and investment activity that is currently taking place, but highlights the importance of diversifying focus on different sectors. Investments in renewable energy and roads are driving infrastructure development in India, paving the way for sustainable development. The balance of buyers and sellers varied significantly across sectors. The construction of new highways stimulates the economy by creating jobs, infrastructure development and increased transport efficiency.

Given the crowded market in sectors such as renewable energy, business differentiation has become essential. Companies must strive to stand out to attract investment and buyers.

Projections for the future of the Indian economy were promising. Various sectors can expect three to five times growth over the next few years. However, these projections have varied significantly, with some estimates reaching a 50-fold increase. Infrastructure companies have typically stuck to a specific capital structure, usually involving some combination of equity capital, shareholder loans or senior debt. The panel encouraged companies not to shy away from playing with their capital structure to secure necessary financing or capitalize on opportunities.

India’s airport sector is growing twice as fast as GDP; therefore, investors expect direct play in the sector.

Energy transition: Expanding the ways we produce, transport and use energy across all industries will be integral to society’s progress towards sustainability.

External investors, especially those not currently present in India, have often proven to be the best partners. These investors approach the market with a “clean slate” – free from prior biases or plagued by past experiences, which can lead to more favorable outcomes for both parties.

Indian infrastructure is attracting interest from various investors, both from the strategic and financial sectors. Deal structures cover the entire spectrum, from equity to structured equity and debt. There have been successful exits and as the regulatory framework matures, deal sizes are also increasing.

The discussion also explored the Gujarat International Finance Tech (Gift) City model as an attractive infrastructure financing option outside India. Locating financial firms in the City of Gifts could provide a useful means of lending to Indian entities and could reduce overall project costs in the long run.

To attract more FDI, there is a need to ensure certainty in the tax administration process. This enables companies to make confident investment decisions, which ultimately lowers overall fundraising costs.

I sold my land in India and re-invested in a new apartment. However, the implementation of the new project may take another year. Am I entitled to capital gains exemption due to construction delay? Please explain. Ashita Aju, Sharjah.

Assuming it is a long-term capital gain, if you invest within a period of one year before or two years after the date of transfer of the property, buy one residential house in India or construct one residential house in India within three years from the date of transfer you will be exempt from tax as per joke. 54 of the Income Tax Act. In your case, you have invested in an ongoing project that will be completed soon. The courts have ruled that cases like yours should be considered “construction” and qualify for the capital gains exemption.

I inherited my ancestral property in Bombay. Can I gift it to my relative in India? Please explain. Dilip Sanghavi in ​​Dubai.

If it is ancestral property, the heirs acquire this right by birth, depending on their religion in India. The property can be transferred through reorganization, family settlement or partition in the case of HUF (Hindu Undivided Family). If you want to donate your share of ancestral wealth, you can do so without any restrictions because it is like wealth that you have earned yourself.