Ministry of Finance, RIS and FICCI organise Thematic Seminar on ‘Private Sector Participation and Innovation in Resource Mobilization’:

Experts call for a Holistic Approach on Private Sector Participation and Risk Mitigation

The Infrastructure Segment is a key propeller for the Indian markets, contributing significantly to the growth of the national economy. Consequently, the Government of India lays special emphasis on this Sector, initiating and establishing several Regulatory, Financial  and Operational Structures to ensure the fast advancement of this sector. With this backdrop, one day thematic Seminar on “Private Sector Participation and Innovation in Resource Mobilisation” was being hosted in Mumbai by the Ministry of Finance, Government of India in collaboration with Research and Information System for Developing Countries (RIS) as knowledge partner in partnership with Federation of Indian Chambers of Commerce (FICCI). The main thrust of the Seminar was to address the critical dimensions of Infrastructure Projects Funding and underline the need for financial support, from Private Sector players.

During the Inaugural Session, several eminent Speakers, including Mr. Sujoy Bose, CEO, National Investment and Infrastructure Fund (NIIF), Mr. Shailesh Pathak, CEO, L&T Infrastructure Development Projects Limited and Dr. Kumar V. Pratap, Joint Secretary (IPF), Department of Economic Affairs (DEA), Ministry of Finance, Government of India, shared their expert perspectives of the investment landscape in the Infrastructure Sector and also discussed the various initiatives undertaken by the present Government in this regard in last four years.

Speaking, on the occasion, Dr. Kumar V. Pratap says, ‘Developing at an extremely fast pace, India’s Infrastructure Sector has received an investment worth $1 trillion in the period from 2007 to 2017, of which, more than a third of this capital was contributed by the private sector. India aims to raise the investment in this sector to $200 billion every tear from the present level of $110bn per annum. To encourage private participation, the Government of India has launched several initiatives. Schemes such as the Brownfield Asset Mobilization for Infra Investments (BAMII), Credit Enhancement Fund for raising Bond Ratings issued by infra companies and the New Credit Rating scale for infrastructure projects creates opportunities for private investors, thereby promoting a steady flow of financial resources into this sector.

Sharing his thoughts on this subject, Mr. Sujoy Bose, CEO, NIIF said that India is a preferred destination for investments especially in infrastructure sector. He said that with an improving and fast growing economy, the Government led infrastructure projects are getting funded and there is an increase in the flow of Foreign Direct Investments. To ensure financial investments in the infrastructure sector, the Government of India has financed various projects under National Investment and Infrastructure Fund (NIIF),Infrastructure Investment Trusts (InvITs) and Build Operate and Transfer (BOT) to bridge the gap in the funding space, he added.

Earlier delivering the Welcome Address, Mr. Jaspal Bindra, Chairman, FICCI - Maharashtra State Council and Executive Chairman, Centrum Group welcomed the panel and spoke about the opportunities in the Infrastructure Sector in the country relating to private financing. He added, “The global population will witness a growth of ~2bn people by 2040. The Global Infrastructure Hub Report states that, investment worth $97trillion is needed in the global infrastructure sector of which 50% is required by Asia.  India needs around $4.5 Trillion investments in the Infrastructure sector by 2040.”   Mr. Subhomoy Bhattacharjee, Consultant, RIS noted the paradigm shift in the definition of Infrastructure in the 21^st century and highlights the need for Private Sector Participation and Innovation In Resource Mobilization in Government projects. Further laying the framework for today’s Sessions, he stated the importance of understanding the current infrastructure scenario and the financial, institutional and regulatory operations, when investing in this segment.

The Session on ‘Risk Management’ was attended by eminent panelists like Mr. Sajjid Z Chinoy, Chief India Economist, JP Morgan, Mr. Sudip Sural, Senior Director, Infra and Public Finance, CRISIL Infrastructure Advisory, Mr. Praveen Gupta, Managing Director and Chief Executive Officer, Raheja QBE General Insurance, Mr. Suneet Maheshwari, Founder and Managing Partner, Udvik Infrastructure Advisors, Mr. Raghwendra Pande, Head Infrastructure and Real Estate sector, Investment banking, ICICI Securities Limited and Mr. Soumyajit Neogi, Associate Director, India Ratings who deliberated on various risks that one foresees once a project is bagged, right from Regulatory Risks, Political risk, Market risk, Sponsoring risk and Judicial risk among others.  The risks determine the payoffs that private companies will want to negotiate before contracting any projects.  The contracts, therefore, need to be analysed and dealt holistically.

Private sector participation in infrastructure drives innovative finance and credit enhancement to mobilise long term private investment. Private sector participation is central to mobilising infrastructure finance, supported by government tools such as asset mobilisation schemes, credit enhancement measures, a dedicated credit rating approach, and investment vehicles including a national infrastructure fund, infrastructure investment trusts and public-private delivery models to expand investor opportunity and channel long term financing into infrastructure assets.