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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
3© 2017 Deloitte Touche Tohmatsu India LLP
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
4© 2017 Deloitte Touche Tohmatsu India LLP
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
5© 2017 Deloitte Touche Tohmatsu India LLP
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
6© 2017 Deloitte Touche Tohmatsu India LLP
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
7© 2017 Deloitte Touche Tohmatsu India LLP
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
8© 2017 Deloitte Touche Tohmatsu India LLP
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
10© 2017 Deloitte Touche Tohmatsu India LLP
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
11© 2017 Deloitte Touche Tohmatsu India LLP
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
12© 2017 Deloitte Touche Tohmatsu India LLP
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
13© 2017 Deloitte Touche Tohmatsu India LLP
Opening up opportunities
Focus on enhanced connectivity
Underlying opportunity
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
14© 2017 Deloitte Touche Tohmatsu India LLP
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
15© 2017 Deloitte Touche Tohmatsu India LLP
Opening up opportunities
Focus on augmentation of infrastructure and improved connectivity
Underlying opportunity
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
16© 2017 Deloitte Touche Tohmatsu India LLP
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
17© 2017 Deloitte Touche Tohmatsu India LLP
Opening up opportunities
Focus on seamless movement of people and vehicles
Underlying opportunity
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
18© 2017 Deloitte Touche Tohmatsu India LLP
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
19© 2017 Deloitte Touche Tohmatsu India LLP
Opening up opportunities
Focus on developing smart infra and governance solutions
Underlying opportunity
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
20© 2017 Deloitte Touche Tohmatsu India LLP
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
21© 2017 Deloitte Touche Tohmatsu India LLP
Opening up opportunities
Investments in industrial infrastructure to drive country’s growth
Underlying opportunity
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
22© 2017 Deloitte Touche Tohmatsu India LLP
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
23© 2017 Deloitte Touche Tohmatsu India LLP
Opening up opportunities
Water & waste water
Underlying opportunity
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
© 2017 Deloitte Touche Tohmatsu India LLP
In summary, Opportunities to collaborate
25© 2017 Deloitte Touche Tohmatsu India LLP
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
26© 2017 Deloitte Touche Tohmatsu India LLP
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
27© 2017 Deloitte Touche Tohmatsu India LLP
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
+91-124-6792363
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