New Delhi, Apr 23 — India’s competitive landscape is seeing domestic contractors accounting for 89 per cent of construction roles on infrastructure and building projects in the market, according to a new report by Fitch Solutions.
Larsen & Toubro (L&T), Bharat Heavy Electricals Ltd (BHEL) and Hindustan Construction Company (HCC) stand out as the largest domestic players with L&T having a 55 billion dollars pipeline, including the 8.6 billion dollars Mumbai-Nagpur Super Expressway.
“Such companies have a strong advantage over foreign players with years of experience and strong capacity in civil engineering, equipping them with the skills to undertake large-scale infrastructure projects,” said Fitch.
Dongfang Electric Corporation (DECL) and China Railway Tunnel Group (CRTG) do have a presence with DECL involved in the construction of several coal power plants and CRTG involved in the construction of Mumbai Metro.
As projects are completed, Fitch expects that the Chinese share of roles will decrease in favour of other foreign contractors which operate in the same sectors. French and Japanese companies also have a small presence in India, primarily in rail and coal.
In regards to the financing landscape for infrastructure projects, there is a strong presence of local banks. Indian institutions account for 59 per cent of financier roles with State Bank of India, Punjab National Bank and Bank of Baroda standing out as the top three Indian financiers.
Public authorities remain key to the realisation of large-scale projects with domestic entities accounting for 94 per cent of projects with National Highways Authority of India (NHAI), the government and Indian Railways as the largest sponsors in the market.
“We expect this trend to continue with expenditure in infrastructure central to the government’s FY2021-22 Budget with capital expenditure in infrastructure to surge by 26 per cent to Rs 5.5 lakh crore,” said Fitch.
India is also host to a strong presence of multilateral development banks with the Asia Development Bank (ADB) and Japan Internal Cooperation Agency (JICA) financing the most projects at 15 per cent and 9 per cent respectively of projects.
Both institutions are key financiers of rail projects with ADB financing projects including metro projects in Bengaluru and Mumbai, and JICA key to financing the Western Dedicated Freight Corridor.
Similarly, the World Bank also plays a significant role in rail financing with 3,127 km of rail track in the pipeline. Other international financiers include the German KfW, the Bank of Singapore and Australia’s’ Macquarie SBI Infrastructure Fund.
