BY Richard Summerfield
Indian infrastructure development is set to enter a golden era over the next decade, according to PwC.
In its report 'Developing Infrastructure in Asia Pacific: Outlook, Challenges and Solutions', PwC expects the wider Asia pacific infrastructure market to grow by 8 percent per year over the coming decade, reaching $5.36 trillion by 2025, a figure which would represent 60 percent of the world’s investment total. Growth in the region is due to be driven by favourable conditions in the most dominant economies, India and China, as well as a number of South East Asian nations. The size of the consumer base, abundance of natural resources and low cost workforce will all help to drive investment in the region in the coming decade.
The marked increase in infrastructure spending in India over the next decade is expected to be influenced by improvements and investment in a number of industries, including housing, telecoms, healthcare, education and transportation, among others. Some of the most significant growth is expected in the transportation and utilities sectors, where investment is due to treble as income and travel demand rises and the rapid urbanisation of the Indian population continues apace. The population of India's towns and cities is likely to expand to around 600 million by 2031, according to the UN.
A second PwC report, 'Capital project and infrastructure spending: Outlook to 2025', has also highlighted the investment needs that will be propagated by India’s burgeoning urban population. “The ongoing development of technology services sector, as well as demand from households, is likely to drive investment in telecommunications infrastructure. The population is expected to grow much faster than other countries in the region, which will further boost demand for infrastructure sectors serving households," the report said. The telecoms sector alone will see infrastructure rise increase to $130bn by 2025, up from $27bn in 2013.
On 16 September private equity giant KKR announced that it had agreed to invest $164.2m of structured long-term financing, with a number of co-investors, in leading Indian infrastructure development company GMR Holdings, the holding company for GMR Infrastructure.