Growing Infrastructure Investments to Boost Indian Industrial & Logistics Sector

Facilities such as seaport, airport and transport network are the lifelines of a nation. In addition, right support from the government as well as availability of skilled labour, raw materials, real estate are key factors that influence the growth of industrial economy.

It is estimated that India would need to spend $4.51 trillion on infrastructure by 2030 to realise the vision of a $5 trillion economy by 2025, and to continue on an escalated trajectory until 2030. The endeavor of the national infrastructure pipeline (NIP) would be to make this happen in an efficient manner.

Building India through National Infrastructure Pipeline (NIP)

The National Infrastructure Pipeline (NIP) is a programme that comprises a group of infrastructure projects in India. It has outlined plans to invest more than US$ 1.4 trillion on infrastructure projects by 2024-25, with the centre, states and the private sector to share the capital expenditure.

During 2020 to 2025 fiscal years, sectors such as energy (24%), urban (16%), railways (13%) and roads (19%) accounted for around 70% of the projected infrastructure investments in India.

NIP Vision-2025

Source: Press Information Bureau, Government of India

Proposed Investments for Industrial Infrastructure

The government in India allocated a total capital expenditure for industrial infrastructure in India as part of the National Infrastructure Pipeline (NIP) programme during financial years 2020 to 2025 at around US$ 42.6 billion which accounts for 3% of the total proposed outlay of NIP. 

Major Logistics Infrastructure Projects (proposed and ongoing) under NIP

Source: India Investment Grid, Govt. of India

NIP Advantages 

The programme could benefit across various stakeholders of the country including the government, investors and developers leading to the overall economic development. It can empower businesses and create employment as well as improve ease of living. The successful execution of the infrastructural projects will enhance economic activity and eventually improve revenue base of the government.

It will increase investor confidence as well as help in better planning of real estate projects for developers supporting in its timely delivery. Besides, it can reduce aggressive bidding of projects while enhancing access to funds due to increased investor confidence.

Other Infrastructural initiatives

Manufacturing industries require a cost effective and efficient means of transportation for exporting finished goods and importing raw materials. In India, ports are evolving rapidly from being traditional land/sea interfaces to providers of complete logistics networks as the seaway transportation is the most effective, viable and cheapest in comparison with the other modes of transportation.

India is a power surplus country that attained 63% overall energy self-sufficiency in 2017. Large coal reserves and growing renewal energy installations in the country are likely to fulfill the growing energy needs of the industrial sector.

The other infrastructure development programmes such as Bharatmala and Sagarmala’s dedicated fright corridors and investments, and incentives for development of Inland Container Depot (ICD), Cold storage & Cold Chain, Special Economic Zones (SEZs), Free Trade Warehousing Zones (FTWZs), Export Oriented Units (EOUs) will augment infrastructure in the country and improve the nation’s manufacturing capabilities while generating more employment.

We believe both the state and central governments should provide utilities at competitive prices and create necessary infrastructure that will attract companies to set-up their production base in India.

In addition, India’s cost advantage, Make in India initiative, favorable industrial policies apart from the various tax exemptions, incentives and subsidies will continue to help in attracting sizeable foreign investment into the manufacturing sector.