New Delhi: India may face an acute shortage of financing its infrastructure needs says a report by the United Nations released late last evening. The country needs $495 billion for infrastructure development over the next five years. The United Nations Conference on Trade and Development or UNCTAD report states the annual infrastructure financing gap during 2001-2010 is estimated to be close to $14 billion and $140 billion for the entire period.
Pepsico Chief Indra Nooyi touched on the same theme while addressing a gathering of the US-India Business Council. She said the two countries needed to further investment talks for infrastructure development. “Of course the competition for capital is fierce - especially at the moment. Cash is in short supply and there are many pressing infrastructure needs in the USA too.
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The Planning Commission estimates India needs investment averaging $99 billion per annum in 10 major infrastructure segments to support a planned annual GDP growth of 9% over a period of 2007-2012. The future investment needs on infrastructure development far exceed the amounts at present planned by governments, the private sector and other stakeholders, the UNCTAD report states.
Nooyi said India and US should look at a bilateral investment treaty once the focus shifts from the civil nuclear deal. The treaty should give special emphasis to develop transportation and logistics in retail distribution.
”For India to meet its transportation infrastructure needs, massive FDI and private sector participation will be required. International corporations are eager to invest but will hope to find ways to mitigate political risks and avert changes in contracts and government levies, as might have been experienced in the past.”
The UNCTAD report says India attracted an average of only $1.3 billion of FDI per year in electricity, roads, telecom, ports, railways and airports between April 2000 and February this year. Though India did register a 17% increase in FDI last year on the back of improved investment environment and further opening up of telecommunication, retail and other sectors. The FDI inflow to the country was $23 billion in 2007.