connecting india: infrastructure, technology and development...connecting india: infrastructure,...

Connecting India: Infrastructure,

technology and developmentVishwas Udgirkar, Deloitte IndiaOctober 2017

2© 2017 Deloitte Touche Tohmatsu India LLP

Presentation Outline

India Story- Reforms triggering infrastructure investments

India-Japan collaborations paving the way for emerging opportunities

Snapshot of key policies and programmes in infra sectors and emerging opportunities


Unleashing opportunities across infrastructure segments, technology and development

India: Large and complex

7.2

7.9

6.8

7.2

7.7 7.8 7.9

2014 2015 2016 2017 2018f 2019f 2020f

India GDP growth (%)

5%7% 8%

10%

2002-07 2007-12 2017

Infrastructure spending (% of GDP)

Aspirational

1.4 billion population by 2020

3.3 Million sq. km area

Over 55 cities with Million+ population

29 States, 7 UTs

Fast pace of urbanization

38% population (535 million) in urban areas by 2026

GDP Current prices USD 2,256 billion

Source: IMF

Source: IMF

Railways route length:

Railways Passenger traffic: Major airports:

Railways Cargo traffic:

Air Passenger traffic:

Air Cargo traffic:108,706 km

8.2 billion

1,101 MT

134.9 million

20.3 lakh MT

95

Key stats (2015-16)

Major ports: 12

Road length: 5.4 mn km


Radically new possibilities in infrastructure and development

Disruptive technologies

Mobile Telephony- Mobile

Phone penetration in India

stood at 1,170 Mn

Fast pace of technology adoption

> 1,44,430 km of optic fiber laid

(Under BharatNet program)

Over 1,70,000 CSCs are operational across India

The confluence of technology, new initiatives powering

banking such as FinTech, data security, and a

progressive regulatory environment, are offering

radically new possibilities

Source: Digital India: Disruptions– Security, New Technology & Our State of Readiness, Deloitte, September 2017

Rapid adoption of the JAM (Jandhan-Aadhaar-Mobile)trinity


Policymakers are driving initiatives in several sectors including, railways, roads & highways, clean energy, skill development, smart cities, etc.

Government keen on driving sectoral reforms to push growth


A programmatic approach to development

India's infrastructure growth is gaining pace

• India’s transport infrastructure sector is anticipated to grow at an average of 5.9% through 2021, driven by government policies and reforms - BMI Research (a Fitch Group company)

• The government has set a target to jump to 90th rank in World Bank’s Ease of Doing Business rakings in 2017-18 (from 130th in 2016-17)

Select key flagship programs

Smart Cities Mission

National Mission for Clean Ganga

Skill India

Bharatmala/ Sagarmala

Digital India

Delhi Mumbai Industrial Corridor

NHDP

Logistics Efficiency Enhancement

Program

Massive push to infrastructure sector - USD 61.9 billion allocated in Union Budget 2017-18

Progressive policies driving development

400 mnYouth to be trained under Skill India initiative by 2022

$142bnInvestments planned by Indian Railways over the next 5 years

55Cities with over one million population

4.3%Industrial output growth (August 2017)

$1.2 trnRequired for India’s smart cities in next 20 years

2030Aim for 100% electric mobility by year 2030

Make in India

Bullet train


The countries signed 15 MoUs in September 2017 across transportation, industrial, and social sectors

Japan and India established diplomatic relations in 1950s and have strengthened their collaboration since then


The countries signed 15 MoUs in September 2017 across transportation, industrial, and social sectors

Japan and India established diplomatic relations in 1950s and have strengthened their collaboration since then

• Signed USD 14.7 bn for India’s first bullet train project between Mumbai and Ahmedabad

• Japan to provide technology transfer, information sharing for environment friendly sanitation technology in trains and know how on mitigation of natural disasters

Bullet train

• Cooperation on training 30,000 Indian youth in Japanese styled manufacturing by 2026

• Launch on Village Buddha project, which aims at leadership development for self-help groups in rural areas

Skill development

• Strengthened cooperation in connectivity and socio-economic development in Northeast India

• Support in Metro and other urban transport projects

Regional connectivity

• Support in deployment of a canal-top solar power project in Gujarat

• Cooperation in Clean Coal Technologies

• Civil nuclear deal to enable Japan to export nuclear power plant technology and provide finance for nuclear power plants in India

Clean energy

• Development of Dahej town in Gujarat as a model centre for reduced emissions, re-use of waste, and recycling of industrial waste

• Establishment of Logistics Data Bank to expedite cargo movement along DMIC, using real time tracking

Smart Community projects

• Official Development Assistance loan of $925 mn for Dedicated Freight Corridor Project Phase 1

• Cooperation on $100 bn Delhi-Mumbai Industrial Corridor, consisting of two power plants, 24 smart cities, 23 industrial hubs, six airports, two ports and a six-lane expressway stretching 1,500 kms

Industrial Corridors

2010 2017Recent cooperation

© 2017 Deloitte Touche Tohmatsu India LLP

Sectoral deep dive


Largest Rail Network in Asia

Railways

100% FDI under automatic route is permitted for High speed train projects, Dedicated freight corridors, Signaling systems, Freight terminals, Mass Rapid Transportation Systems, etc.

USD 23 BnRevenue earned by Indian Railways in FY 2016

USD 7 BnWorth of projects awarded to Alstom and GE

400 Railway

StationsTo be redeveloped under PPP model

USD 142 BnInvestments planned by Indian Railways over the next 5 years

Policy on Participative Models for Rail Connectivity and Capacity Augmentation Projects to boost private sector participation in the development of railway lines

Indian Railways to build 7 high-speed rail corridors to provide faster rail connectivity across the country, for high speed train project, at a cost of USD 17 mn

Metro Rail Policy focused on compact urban development, cost reduction and multi-modal integration – PPP component must for getting Central Government’s assistance

Modernization/ redevelopment of railway stations across the country on PPP basis, the biggest ever station redevelopment programme taking place anywhere in the world

Rashtriya Rail Sanraksha Kosh to be created with a corpus of USD 16 bn over a period of 5 years towards passenger safety

Indian Railways carried 8 billion passengers and 1.1 billion ton of freight in FY 2016

Make in India Initiative will help in establishing locomotive factories with state of the art technology

Cost to be met by leveraging commercial development of land and air space in and around the stations

Focus to be on expansion as well as modernization of the existing facilities

Sector Initiatives


Opening up opportunities

Focus on railway infrastructure upgradation and modernization of operations

Underlying opportunity

areas

Signallingsystems

Integrated ticketing systems

Station redevelopment

Operations & maintenance services

Dedicated freight corridors

Railway line expansion,

electrification

Eco-friendly waste

management

High speed Rail links

Research and advisory services

Security and surveillance systems

500 stations to be made

differently abled friendly

Redevelopment of at least

25 stations in 2017-18

Unmanned crossings on Broad

Gauge to be eliminated by 2020,

Digital signalling systems for

faster train movement

By 2019, all coaches of Indian

Railways to be fitted with bio

toilets

Plan for installation of 6,000

point-of-sale (POS) machines and

1,000 ticket vending machines

across rail network

3,500 kms to be

commissioned in 2017-

18


Second largest road network

Roads & Highways

2,000 kms of coastal connectivity roads identified for construction

USD 10 BnAllocated for national Highways in FY 17-18 Budget

304Projects recommended for development by PPP Appraisal Committee (PPPAC)

41 km/dayTarget construction time for highway roads

Financial institutions received government approval to raise money through tax-free bonds

The Government has proposed to upgrade 2-lane national highways into 4-lane national highways, for which USD65 billion has been allocated

In January 2017, the government proposed to lay down cycle tracks on all highways and major roads pan India

In February 2017, NHAI floated bids to monetize 10 national highway projects in the country

Government is planning to offer a bonus of 10% of the total project cost to firms that construct and deliver highway projects before deadline

National Highway Development Project (NHDP) aims to develop 47,054 Kms of national highways at cost of USD 60 bn

Expected investment of USD 31 billion in PPP for national highways, by 2020

The current rate of construction is 22-23km per day

Sector Initiatives



Focus on enhanced connectivity


areas

Electronic tolling

Sub-national network expansion

Coastal connectivity

Capital projects management

International connectivity

Innovative financing

Connectivity in rural and

remote regions

Highway construction

Research and advisory services

Push for developing innovative

financing models such as Hybrid

Annuity

Approved USD 1 bn for

constructing and upgrading 558

kms of roads to link India with

Bangladesh, Bhutan, and Nepal

Approximately 1,000 e-

tolls to be developed over

the next 5 years

Plans to approve almost

10,000 kms of national

highway in FY17

Sagarmala envisages 415

projects for port modernization,

including connectivity

enhancementBharatmala Program

envisions construction of

34,800 Kms of Highways

GIS mapping, exponential

technologies, land registries

to streamline land acquisition


India enroute to becoming 3rd Largest Aviation Market in the world by 2020

Airports

New Civil Aviation Policy released in 2016 with a vision to create an ecosystem to make flying affordable to the masses

18.3%Growth in overall passenger traffic in 2016-17

USD 1.5 BnSize of MRO (Maintenance, Repair & Overhaul) market in India by 2020

USD 30 BnInvestment required in the airport sector over the next 15 years

2,100Planes expected to be ordered by India airlines over the next 20 years

AAI exploring to provide O&M contracts for cluster of existing and new airports

Aeronautical ‘Make in India’ – for developing commercial aero-related manufacturing and its eco-system in India

MRO sector has been granted the 'infrastructure sector' status with Customs and Excise duty exemptions on various tools and components

UDAN for a period of 10 years to boost regional connectivity through revival of unserved and underserved airports

100% FDI allowed in scheduled commercial flights; 100% FDI under automatic route for Greenfield airports and 74% for Brownfield airports

India is one of the fastest growing aviation markets in the world and handled 265 mn passengers in 2016-17

Indian airlines spend over 13–15% of their revenues on maintenance; it is the second-highest expense after fuel cost

India requires large amount of investments to establish new airports and add capacity to the existing ones

Boeing expects Indian airlines to order 2,100 planes worth USD 290 billion over the next 20 years

Sector Initiatives



Focus on augmentation of infrastructure and improved connectivity


areas

Airport development

Regional connectivity

Land monetization

Airport ancillary services

Cargo services

Signallingsystems

Digital connect

Technological improvement,

operational efficiency

Maintenance, Repair & Overhaul (MRO)

servicesMRO market estimated

to be worth USD 500 mn

in FY 16

Focus on generating non-

aeronautical revenues

(retail, advertising, vehicle

parking, etc.)

India plans to increase

the number of airports to

250 by 2030

Launch of DigiYatra platform for

faster check-ins, booking in-flight

services, receiving information on

delays, submitting grievances, etc.

Airports Authority of India

plans to develop over 20

airports in Tier-II and Tier-

III cities in FY 17-18


Enabling connectivity to remote areas of the country

Urban transport

New Metro Rail Policy focusing on private investments in metro operations, and setting up a unified metropolitan transport authority across states

55Cities with over one million population

~ 535 mnPeople will be residing in urban areas by 2026

3xGrowth of Census Towns and Nagar Panchayats in India between 1991-2011*

A draft auto policy aims for 100% electric vehicles in India by 2030

5-year government budget of USD 15 billion for transforming 100 brown field cities to SMART cities

AMRUT Mission focusing on improving existing infrastructure services like drinking water supply, sewerage networks, public transport services, and creating green public spaces like parks

India is projected to add 404 mn people to its urban population between 2014 and 2050

68 cities with more than one million population by 2030

USD 600 billion expected to be invested in urban infrastructure between 2012 and 2031

*Census Towns refer to towns with minimum population of 5000, at least 75% males in non-agricultural pursuits, administered by Gram Panchayats; Nagar Panchayats refer to constitutional local bodies created for areas transitioning from rural to urban

National Urban Transport Policy (NUTP) focusses on increasing efficiency of road space by favouring public transport, using traffic management instruments, and restraining growth of private vehicular traffic

Sector Initiatives



Focus on seamless movement of people and vehicles


areas

Mass rapid transport-Metro rail

Electric Vehicles

Car charging infrastructure, battery

technologies

Mobility as a service

System integration

Ride-sharing apps

Data storage and

management

Integrated urban transport

Training & Development

More than 1,000 officials

trained on urban transport

issues

Delhi Metro has average

daily ridership of over 2

million passengers

Internet-enabled cars

present USD 180 bn market

in India by 2020

Government provides

subsidies on Electric

Vehicles for encouraging

clean transport


Progressing towards a smarter nation

Smart Cities

Smart infrastructure – water supply, sewerage connection, drainage network, pedestrian facility and transport, green spaces– benefiting all sections of society

100 citiesTarget number of smart cities in India

USD 15 Bn5-year government budget for transforming 100 brown field cities to SMART cities

USD 29 Bn2800+ projects costing $29 bn underway

Enhanced citizen service delivery and governance mechanism

Improved monitoring of urban services provided by municipal bodies

Increased capacity of municipalities and state departments

Convergence with other complementary government missions e.g., Digital India, AMRUT, FAME, etc.

Cities selected through a unique 2-stage challenge

Fund aimed at improving Governance, Spatial, Economic, Social, Environmental and Service Delivery related parameters

Using state of art technology for sharing data, transparent & effective decision making.

Key benefits



Focus on developing smart infra and governance solutions


areas

Smart governance tools

GIS and analytics-based property tax monitoring

Monitoring of urban services

Safety & security systems

Citizen engagement

Project monitoring and information tools

Smart mobility

Infrastructure solutions - Water & waste management, Energy

Skill Development

Sectoral investment in Smart Cities

Waste Management

8.0%

Water

7.5%

Others

9.5%

Urban Mobility/Transport

23.4%

Social Infrastructure/Open

Spaces 18.5%

Energy

Management

12.8%

Housing

11.2%

Intelligent govt. services & Safety Security 9.2%

Source: Deloitte analysis


Pillar for India’s economic growth

Industrial infrastructure

National Investment and Manufacturing Zones developed to create an ecosystem for industries in India

One-thirdOf India’s demand for capital goods is met through imports

USD 337 MnCumulative FDI inflow in earth-moving machinery between April 2000 and March 2016

USD 5 BnExpected revenue from construction equipment by FY20

Special cells called ‘Japan Plus’ and ‘Korea Plus’ created under the Make in India initiative to facilitate investments and fast track proposals from Japan and Korea, respectively

National Manufacturing Policy aims to increase the share of Manufacturing sector in India’s GDP to 25% and create 100 million jobs by 2021

In 2016, eight National Investment and Manufacturing Zones (NMIZs) were announced to be developed along the Delhi-Mumbai Industrial Corridor

100% FDI allowed under automatic route for material handling equipment

India’s capital goods sector remains relatively underdeveloped, offering significant opportunities for both Indian and foreign original equipment manufacturers (OEMs)

Industry sales expected to grow in the rage of 10-15%

Granting of sops, including a large number of SEZs to capital goods industry, with the aim to increase exports

Sector Initiatives



Investments in industrial infrastructure to drive country’s growth


areas

Renting and leasing

equipment

Technology development

Defense manufacturing

Exports

Skill development of local labor

Industrial water & waste management

Construction equipment

Manufacturing capital goods

NIMZ Master Planning and

implementation

Construction Equipment

Rental Market anticipated

to grow

India and Japan signed MoU for

cooperation on training 300,000

Indian students in Japan

Technology Acquisition Fund

Programme (TAFP) helps heavy

industrial enterprises in developing

new technologies for manufacturing

heavy vehicles


Focused on providing clean water across the country

Water & waste water

National Mission for Clean Ganga (NMCG) to accomplish effective abatement of pollution, conservation and rejuvenation of the River Ganga

USD 3 BnAllocated for environmental solutions for National Mission for Clean Ganga

750 mnProgram outlay for AMRUT cities

USD 1.3 BnAllocation of rural sanitation for FY16-17

Swachh Bharat Mission to accelerate efforts to achieve universal sanitation

Atal Mission for Rejuvenation and Urban Transformation (AMRUT, the Mission) to ensure access to clean water, sewerage networks, green spaces, and promotion of clean transport

Smart Cities MissionHousehold-level access to drinking water and city level infrastructure; capacity building; metering; water quality

JICA supporting one project in Varanasi worth ~ USD 74.5 mn on 85:15 basis

Aim to make India open defecation free

National Rural Drinking Water Program for access to clean water in rural and remote regions

Sector Initiatives



Water & waste water


areas

River-front development

River cleaning;Water quality monitoring

Industrial effluent monitoring

Water supply infrastructure;

purification systems

Scientific solid & liquid waste management

Sewerage & septagetreatment

Construction, modernization,

renovation of Ghats

Biodiversity conservation

500 AMRUT cities;

program outlay of USD

750 mn

Over 60 sewerage

management projects

PPP-based projects

Over 760 Grossly

Polluting Industries

28 river development

projects; renovation

of 182 Ghats

Water & waste water in urban and peri-urban areas

Technological interventions; GIS; Monitoring systems; SCADA


Vast Opportunities to collaborate

Transformation of e-toll collection & highway operations

Equipment leasing & renting

Process automation, Artificial intelligence

Car charging infrastructure, battery cell technology

Data storage and management

Mass transit systems, Signaling systems, integrated ticketing

Operation & maintenance services

Innovative financing models

Tools and technology

Artificial Intelligence in manufacturing processes

Capital Projects Management

Smart city solutions

Skill development

Environmental solutions, cleantech

Industrial infrastructure

Railway electrification and station modernization


Supporting client missions to drive development

Deloitte in India

Over 250 professionals in India dedicated to servicing and advising clients

Offices in 13 locations

Unique sectoral organization to help governments, international funding agencies, private clients, NGOs

Collaborating with our global network and servicing multiple countries such as Zimbabwe, Kenya, Philippines, Bangladesh, Nepal, Bhutan, Malaysia, Indonesia

Supporting key client missions

Assistance in formulation of Regional Connectivity Scheme

National Highways Development Project

National Mission Monitoring unit for Smart Cities Mission

Assisting in mainstreaming Electric Vehicle adoption

Financial Consultant and Transaction advisor for Metro Rail Projects-Pune, Hyderabad, Jaipur

Development of Logistics Performance Indicators


Contact

Vishwas UdgirkarPartner, Deloitte Touche Tohmatsu India LLP

Leader, GUIDe (Government Utilities & Infrastructure Development)

Leader- Infrastructure & Capital Projects, Deloitte India

Leader, Public Sector Industry, Deloitte India

[email protected]

+91-124-6792363

mailto:[email protected]

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