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US$1 Trillion Infra Investment in 12th Plan
Between 2012 and 2017 (12th Plan period) India will require investment of US$ 1 trillion in infrastructure, according to a report prepared by the Royal Institute of Chartered Surveyors. The investment in infrastructure for the period 2007-2012 has been estimated at US$ 500 billion.
The report then states that different sectors of the economy will also create over 97 million jobs in the country over the next decade. The report states there is a huge deficiency in skill sets needed in the infrastructure sector and this will need to be addressed at the earliest.
Airport Modernisation: Meanwhile the government has identified 30 airports across the country which will be modernised through a public-private partnership. Mr NaseemZaidi, Secretary, Civil Aviation has said that the infrastructure for the aviation sector would attract an investment of close to US$130 billion over the next 10 years. The government also intends to set up a National Aviation University.
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Investor Inputs for Reforms
The government of India is making a strong pitch to ensure that they receive investor feedback on reforms that will fuel economic growth, news reports said.
The Union Minister for Commerce and Industry, Mr Anand Sharma has slated a set of meetings with the manufacturing sector to seek their inputs and then follow up with other government departments and the Reserve Bank of India for flexibilities and other inputs needed to give a push to the manufacturing sector, reports said.
Secretary, Economic Affairs, Mr R Gopalan is travelling to United Kingdom to look at how investors can be brought into the infrastructure sector, reports said. Mr Gopalan is accompanied by bankers and industrialists who will also present a case for investment in India’s infrastructure sector.
Mr P K Chaudhery, Secretary Department of Industrial Policy and Promotion is in discussions with sectors like textiles, pharmaceuticals, chemicals and cement to focus on building their competitiveness. All these inputs are further expected to be bolstered by the inputs that would be received for the preparation of the Union Budget that will be presented to Parliament in February 2012.
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FII Caps Raised
The Government has decided to increase the current limit of Foreign Institutional Investors’ (FIIs) investments in Government Securities by US$ 5 billion raising the cap to US$ 15 billion, news reports said.
The incremental limit of US$ 5 billion can be invested in securities without any residual maturity criterion. Besides, the Government has also decided to increase the investment of FIIs’ investments in corporate bonds by US$ 5 billion raising the cap to US$20 billion. The incremental limit of US$ 5 billion can be invested in listed corporate bonds.
Thus the enhanced total limit for FII investment in Government Securities would be US$ 15 billion (from the existing limit of US$ 10 billion) and the enhanced total limit for FII investmentin corporate bonds would be US$ 20 billion (apart from the US$ 25 billion for long term infra bonds).
Currently, FIIs can invest only up to US$ 10 billion or Rs.43,650 crore in Government securities, US$ 15 billion or Rs.74,416 Crore in Corporate bonds and US$ 25 billion or Rs.112,095 Crore in corporate long term infra bonds, reports said.
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PM Firm on Retail FDI
Prime Minister, Dr Manmohan Singh reiterated the cabinet decision to open up foreign direct investment in India’s retail sector and asserted that the move will help farmers and consumers, increase employment and modernise a sector dominated by small stores. He was speaking at a meeting of the Youth Congress in New Delhi.
The Prime Minister’s statement is in response to several comments by some large political parties stating that this move will hurt employment in the country.
FDI in Civil Aviation: Meanwhile, the Department of Industry has circulated a cabinet note seeking to provide foreign airlines an option to hold 26 per cent stake in Indian airline companies. This move which was reportedly earlier opposed by the Civil Aviation Ministry now seems to be finding favour, reports said. The decision will have to be whether there should be 24 per cent stake to foreign investors or 26 per cent, reports said.