FOREIGN DIRECT INVESTMENT IN

INFRASTRUCTURE SECTOR
ROADS:
Roads are the dominant mode of transportation within India, with the country having one of
the largest networks of roads in the world. It totals 4.2 million kilometers and carries almost
90 percent of the country’s customer traffic and 65 percent of its freight.
With the Government permitting 100 per cent foreign direct investment (FDI) in the road
sector, several foreign companies have formed partnerships with Indian players to capitalise
on the sector's growth. Cumulative FDI in construction development^ since April 2000 stood
at US$ 25.05 billion as of March 2019. MAIF 2 became the first largest foreign investment in
Indian roads sector under TOT mode worth Rs 9,681.5 crore (US$ 1.50 billion). As of
November 2018, total length of projects awarded under Bharatmala Pariyojana (including
residual NHDP works) was 6,460 kms for a total cost of Rs 1.52 trillion (US$ 21.07 billion).
The total amount of investments* are estimated to reach Rs 1.58 trillion (US$ 2.25 billion) in
FY19.

RAILWAYS:
The Indian Railways is among the world’s 4th largest rail networks, behind only US, Russia
and China. The Indian Railways route length network is spread over 115,000 km, with 12,617
passenger trains and 7,421 freight trains each day from 7,349 stations plying 23 million
travellers and 3 million tonnes (MT) of freight daily. India's railway network is recognised as
one of the largest railway systems in the world under single management.
100% FDI in railway industry in India is allowed under the automatic route. FDI in railway
industry in India can drastically change the face of Indian Railways with an inflow of
technology and capital. Foreign Direct Investment (FDI) inflows into Railways Related
Components from April 2000 to March 2019 stood at US$ 969.28 million.
Following are some of the major investments and developments in India’s railways sector:

 In December 2018, France-based Alstom announced plans to augment its coach

production capacity at its facility in Sri City from 20 cars per month to 24 cars per
month. Also, it will set up a new production line to increase capacity to 44 cars per
month by the end of 2019.
 In December 2018, the Prime Minister of India laid the foundation stone for the third
phase of the Pune metro.
 The Government of India has signed an agreement with the Government of Japan
under which Japan will help India in the implementation of the Mumbai-Ahmedabad
high speed rail corridor along with a financial assistance that would cover 81 per cent
of the total project cost.

AVIATION INDUSTRY:
The civil aviation industry in India has emerged as one of the fastest growing industries in the
country during the last three years. India is currently considered the third largest domestic
civil aviation market in the world. India has become the third largest domestic aviation
market in the world and is expected to overtake UK to become the third largest air passenger
market by 2024.

According to data released by the Department of Industrial Policy and Promotion (DIPP),
FDI inflows in India’s air transport sector (including air freight) reached US$ 1,817.23
million between April 2000 and December 2018. The government has 100 per cent FDI
under automatic route in scheduled air transport service, regional air transport service and
domestic scheduled passenger airline. However, FDI over 49 per cent would require
government approval.

India’s aviation industry is expected to witness Rs 35,000 crore (US$ 4.99 billion) FDI
inflows in the next four years.

SHIPPING AND PORT INDUSTRY

According to the Ministry of Shipping, around 95 per cent of India's trading by volume and
70 per cent by value is done through maritime transport. India has 12 major and 205 notified
minor and intermediate ports. Under the National Perspective Plan for Sagarmala, six new
mega ports will be developed in the country. The Indian ports and shipping industry plays a
vital role in sustaining growth in the country’s trade and commerce

The Indian Government plays an important role in supporting the ports sector. It has allowed
Foreign Direct Investment (FDI) of up to 100 per cent under the automatic route for port and
harbour construction and maintenance projects. It has also facilitated a 10-year tax holiday to
enterprises that develop, maintain and operate ports, inland waterways and inland ports.Ports
sector in India has received a cumulative FDI of US$ 1.64 billion between April 2000 and
March 2019.In May 2018, Ministry of Shipping allowed foreign flagged ships to carry
containers for transshipment.Indian ports and shipping sector witnessed three M&A deals
worth US$ 29 million in 2018.

TELECOMMUNICATION INFRASTRUCTURE:
India is currently the world’s second-largest telecommunications market with a subscriber
base of 1.20 billion and has registered strong growth in the past decade and half. The Indian
mobile economy is growing rapidly and will contribute substantially to India’s Gross
Domestic Product (GDP), according to report prepared by GSM Association (GSMA) in
collaboration with the Boston Consulting Group (BCG). As of January 2019, India has
witnessed a 165 per cent growth in app downloads in the past two years. With 604.21 million
internet subscribers, as of December 2018, India ranks as the world’s second largest market
in terms of total internet users

With daily increasing subscriber base, there have been a lot of investments and developments
in the sector. FDI inflows into the telecom sector during April 2000 – March 2019 totalled to
US$ 32.82 billion, according to the data released by TRAI.

Vodafone India and Idea Cellular have merged into ‘Vodafone Idea’ to become India’s
largest telecom company, as of September 2018. FDI cap in the telecom sector has been
increased to 100 per cent from 74 per cent; out of 100 per cent, 49 per cent will be done
through automatic route and the rest will be done through the FIPB approval route. FDI of up
to 100 per cent is permitted for infrastructure providers offering dark fibre, electronic mail
and voice mail.

POWER:
Power is one of the most critical components of infrastructure crucial for the economic
growth and welfare of nations. The existence and development of adequate infrastructure is
essential for sustained growth of the Indian economy. In May 2018, India ranked 4th in the
Asia Pacific region out of 25 nations on an index that measures their overall power.

Between April 2000 and March 2019, the industry attracted US$ 14.32 billion in Foreign
Direct Investment (FDI), accounting for 3.41 per cent of total FDI inflows in India.In August
2018, Kohlberg Kravis Roberts & Co (KKR) acquired Ramky Enviro Engineers Limited for
worth US$ 530 million.