The Ministry of Urban Works (MOU) intends to invest €726.000 M in urban infraestructure during the next 20 years. The XII five-year plan establishes the objective of an investment of approximately €1,704M destined to metro lines.
The Indian rail network, with a total length of 64.600Km, is the fourth longest network in the world after the US (250,000 km), China (100,000 km) and Russia (85,500 km). In addition, it is the rail network transporting more people and the third in terms of freight transport worldwide. Therefore, it is the second most populous country in the world after China with over 1,236 million and seventh in area with over 3.28 million km2.
There are currently 27 cities in India that offer either a subway system or a subway plan- These are: Calcutta, Chennai, Delhi, Bangalore, Gurgaon, Jaipur, Chennai, Mumbai, Navi Mumbai, Kochi, Hyderabad, Ahmedabad & Gandhinagar, Bhopal, Chandigarh, Indore, Kanpur, Lucknow, Ludhiana, Nagpur, Nasik, Patna, Pune, Surat and Guwahati.
This railway development, together with the investment of €1,704 M planned for the next 20 years makes India a country with future business. It is a country in full expansion, which has its own characteristics that make it attractive for a wide range of business sectors in addition to a projection of becoming the world’s third largest in terms of GDP growth economy for the year 2050.
This development in infrastructure is an important source of business for the industry of Spain. “The Spanish railway industry has managed to become one of the best in Western Europe as a result of a policy of major investment carried out by the Government and the high technological level obtained by the Spanish private companies. Spain has the third longest High Speed network in the world and first in Europe, with a length of about 2,900 km. It has the most modern fleet of trains and the most technologically advanced. This is why Spain is gaining brand recognition and prestige worldwide, including in this complex and different country, “explains Carlos Jimenez, Chief Commercial Counsellor for the Economic and Commercial Office of Spain in New Delhi. Proof of this is the fact that more and more Spanish companies get a foothold in the Indian market in subsectors as diverse as construction of the track, rolling stock, signaling systems, process automation, communication between stations, ticketing, passenger services, train furniture and train stations, renewal of cars, air conditioners and refrigeration, testing and trials, etc.
Population increase
The Indian economy has suffered a reduction in growth rate of 6.2% in 2011-12 to 4.5% in the first three quarters of 2013-14 due to the slowdown underway in the global economy. “Also, it has been shown that the GDP growth of a country is related to the level of infrastructure development thereof, the infrastructure sector is one of the sectors that is receiving the largest institutional support currently in India,” explains Carlos Jimenez Aguirre. Recently there has been a large increase in population. According to the census of 2001 and 2011, India’s total population amounts to 1,210,200,000 inhabitants (March 2011) and 377.1 million of them live in urban areas. In the last decade the net addition to the population in urban areas was 91 million. Urban population represents 31.6% of the total population, suffering an increase of 3.35% in the total population that was living in urban areas during 2001-11.
It is estimated that India will reach over 700 million people in urban areas by 2040. “Despite the above, India is suffering the creation of a middle class with greater purchasing power which has resulted in an increased number of vehicles in big cities”, adds Jiménez Aguirre. “This has led to some problems such as very congested roads, a higher rate of accidents and emissions of CO2 that have put some cities in India among the most polluted in the world”.
Because of these consequences, “the need for development of urban infrastructure and the implementation of a public transport is evident, positioning the subway as a solution. According to the characteristics of each city, the Planning Commission establishes guidelines for the choice of transport mode to implement,”explains Carlos. This is summarized in Table 1.
This strong commitment of investments for metropolitan rail can be interesting for foreign industry since other projects of great interest are arising:
◗ The construction of exclusive freight corridors linking the four metropolitan cities: Delhi, Mumbai, Chennai and Howrah.
◗ The construction of 10 logistics parks.
◗ The Government of India has identified seven sections for constructing High Speed lines.
◗ A Renewal Plan of railway stations that will adjust them to international standards. A total of 50 stations have been identified.
◗ The creation of multiple port connectivity projects.
PPP model
Given the strong demand expected in investment of the Indian Government that cannot be covered only by the resources and budgets the central and/or state government or local authorities, it has become necessary to broaden participation in urban development programs to the private sector and thus access to foreign financial resources. “Therefore, more than ever there is room for foreign industry, as it is firmly committed to increase the PPP (Public Private Partnership) model. Thus, the XII Plan provides that private participation in infrastructure rises to 48%, compared to a 36.61% in the previous plan,” comments Carlos Jimenez. In the railway sector, private investments have reached so far only 4% of the total investment in the infrastructure industry, well below the percentage obtained in other sectors such as ports (80%), telecommunications (82%), energy (44 %), airport (64%) or roads (16%).