India’s infra sector is once again enticing interest and a lot of foreign investors and construction companies have come forward to bid for road projects in recent months. One of the largest construction companies in the world, the China Railway Construction Corporation (CRCC), has shown its interest to participate in the projects of the National Highways Authority of India (NHAI) under both Engineering, Procurement and Construction' (EPC) and hybrid annuity model. If the Chinese company succeeds in fulfilling the criteria set by the government then this would be the single largest foreign investment in the India’s roads sector.
The Chinese corporation builds 60% of highways and 80 per cent of railway tracks in China. The company is keen on bidding for around 3,000-km highway contracts and will be participating in hybrid annuity, build-operate transfer (BOT) and EPC models. A delegation from CRCC, led by the country’s chief economist Zhao Jinuha, met a team of NHAI officials and expressed interest in investing in road projects in India.
NHAI have projects lined up for upgradation of 2-lane National Highways totaling 50000kms, various special expressway projects of around 15000km and a part of the National Highways Development Programme (NHDP) over the next few years. The Chinese delegates inquired about any restrictions on sources of procurement from abroad, import certifications requirements, whether US dollar could be the currency of repayment (as annuity), availability of repayment guarantee and proof of capacity of NHAI to pay annuity and funding under the Hybrid Annuity Model.
Investor interest in the sector had weakened drastically after 2010 due to difficulties related to land acquisition and getting various approvals. The revival of investor interest in roads sector has been credited to 21 policy changes that the Narendra Modi-led government has introduced in recent months to make investments in the sector more attractive.
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