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Firms compete for a spot in India’s economic battleground

Firms compete for a spot in India’s economic battleground

The UAE isn't the only interested investor in India. Fierce competition for infrastructure projects in India is even ramping up government expectations in infrastructure spending to $1trillion over 5years.

September 20, 2011 11:13 by

… its targets for both funding and construction.

A slump in India’s real estate sector and a drying up of work in parts of the Middle East amid unrest in several countries, means Indian builders are turning to domestic infrastructure.

A dearth of attractive projects is another factor. The fallout from a spate of corruption scandals, red tape and land acquisition hassles have slowed the award of bids and subsequent construction work.

In roads, for example, India managed to build about 5 kms (3 miles) a day in the last fiscal year, far short of New Delhi’s target of 20 kms a day.

The Indian government, which unlike China is not flush with government funds to spend on big projects, welcomes the competition.

For its part, China has much larger state resources and a much better record of execution on infrastructure projects, although now Beijing appears to face a different sort of headache.

The state has accumulated a mountain of bad loans for infrastructure projects — part of a stimulus package during the economic slowdown — leaving a clutch of redundant works.

“We want an aggressive bidding climate,” Montek Singh Ahluwalia, a top adviser to the government, told Reuters. “It’s the job of the private sector to make intelligent bids.”

Some builders have called on the government to shut out bids that look outlandish and end a mentality in New Delhi that they say is more keen on getting things done cheaply than done well.

“We need to move out of the syndrome that the cheapest is the best. It’s rarely the best,” Shahzad Nasim, Singapore-based global CEO of the engineering firm Meinhardt, told Reuters. (By Matthias Williams; Additional reporting by Prashant Mehra in Mumbai and Randy Fabi in Singapore; Editing by Tony Munroe and Lincoln Feast)

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