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Chhabra Power Plant Sale: A New Template For Revival Of State Electricity Generation Companies?

By
Indian Infra Hub Staff
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0
Snapshot
  • While such a deal is beneficial in itself, it also creates a second order impact of improving discom operations and state government finances over a period of time.This is a win-win-win model for the CPSE power firms, state governments and the end consumers waiting to be tapped in a bigger way.

On 11th January, Rajasthan announced an interesting deal for the sale of 1,000 MW Chhabra coal-fired power plant to the central public sector enterprise (CPSE) National Thermal Power Corporation (NTPC).

The Chhabra power plant, owned by the Rajasthan Rajya Vidyut Utpadan Nigam Limited (RVUNL), the power generation (genco) firm of the state government, is located in Baran district. The currently live 1,000 MW generation capacity represents about 18.5 per cent of the installed generation capacity for the state. Between 2009 and 2014, this plant ramped up to the current 1,000 MW generation capacity. Another 1,320 MW are in the process of getting added and this work will complete partly by first quarter of 2017 and partly by the first quarter of 2018.

The state power generation firms across the country have traditionally operated sub-optimally. The state governments usually lack expertise to run this business. The scale of the plants they are operating is lower compared to the ones operated by central gencos like the National Thermal Power Corporation (NTPC). These captive plants typically supply power only to the state distribution companies (discoms) at through pre-agreed power purchase agreements (PPAs) negotiated for long time periods. The discoms have to take approvals on tariff from State Electricity Regulatory Commissions (SERCs) and quite often they undercharge the consumer while overpaying the captive genco. This counterintuitive commercial arrangement is made possible because the genco and the discom are both owned by the state government. Over the last many years, Indian discoms have aggregated astronomical losses and are currently participating in a financial and operational restructuring programme Ujwal Discom Assurance Yojana (UDAY).

The captive gencos on the other hand continue to run sub-optimally, completely dependent on the largesse of their states. They often borrow from the market or from the state government to service their debt – exactly the kind of situation that led to creation of huge non-performing assets (NPAs) in the Indian private sector between 2011 and 2014. Their discom pays for the fixed cost irrespective of the actual power offtake, but not for the variable cost or opportunities losses of not operating at full capacity. Squeezed between their captive owners and captive buyers, the gencos in many cases continue to be a massive debt trap with no redemption in sight.

The deal which NTPC struck with the Chhabra thermal plant can however change this situation in future. This deal marks an interesting financial transaction, which let Rajasthan government immediately cash out, lets NTPC buy a functioning asset it specialises in operating, and may even hold a promise for cheaper power for the end consumer.

Financial Parameters Of The Chhabra Plant

While the Rajasthan government may have spent upwards of Rs 6,000 crore on this plant through inception, the approved cost by the Rajasthan Electricity Regulatory Commission (RERC) stands at about Rs 5,000 crore. The regulator considers a depreciated value for signing off on tariffs and this depreciated value of the plant at the end of this financial year 2016-17 will stand at Rs 3,900 crore. Using a typical debt – equity structure for power generation industry, the regulator would have determined the debt portion to be Rs 3,200 crore and the equity portion of the state government to be Rs 700 crore.

Another factor which the RERC takes into account for approving tariffs is how efficiently is a power plant running. The idea behind this measure is to ensure that operating inefficiencies are not passed on to the consumers. A Station Heat Rate (SHR) is approved for each plant, which in this case was 2,312 kilo calorie/kilo watt-hour (kcal/kWh). The Chhabra plant has actually been running at a lower efficiency with an SHR of 2,700 kcal/kWh, resulting in an additional Rs 300 crore a year loss to the state government.

What Will NTPC Do?

As part of the deal, NTPC will let the Rajasthan government cash out on its equity portion of Rs 700 crore. It will also assume the Rs 3,200 crore in outstanding debt. NTPC has been routinely raising money from the market at a coupon rate between 7.4 per cent and 7.8 per cent over the last couple of years. The borrowing cost of the gencos however tends to be much higher, usually between 10 per cent and 13 per cent. So even if NTPC performed no operational improvements to the Chhabra plant, it would save money on interest servicing every year.

NTPC today has a thermal power installed capacity of 36 GW through its 19 power plants nationwide. With this experience and specialisation in place, it can transfer operational best practices to the Chhabra plant. NTPC runs similar power plants at SHR around 2,400 kcal/kWh and can expect to bring the same efficiency to this plant. Assuming that RERC accepts this efficiency level, the variable cost of operation can then be passed on the discom, thus removing the generation loss burden for NTPC.

The biggest benefits of NTPC running such a plant rather than the state genco running it however may accrue in the future. NTPC can always renegotiate PPAs for a national footprint if Rajasthan discoms were not to buy from this plant due to demand fluctuation. With the inter-regional transmission capacity in India improving significantly, NTPC has more buyers to sell its power to.

Another important consideration for NTPC is the cost of acquiring this 1,000 MW capacity. If it were to set up a thermal plant afresh today, NTPC will easily spend around Rs 6 crore per MW in total set up costs. Given the current land acquisition costs and procedures, it is anyway not easy to set up a greenfield plant today. The Chhabra deal works out to be Rs 3.9 crore per MW for NTPC and it is an operational unit, which is currently expanding! This is a big plus for the acquirer.

Benefits To The End Consumer

The end consumer pays for the power to the discom, which has two cost components attached to it – a fixed rate and a variable rate. The current tariff approved for the discoms against power sourced from this plant is Rs 3.89 per unit of which Rs 1.62 comes from the fixed interest servicing cost and Rs 2.27 from the variable operating costs with SHR of 2,312 kcal/kWh.

NTPC can restructure the fixed component to reflect a cost input of Rs 1.49 per unit by borrowing more efficiently. Assuming that the RERC approves a higher SHR or 2,400 kcal/kWh when NTPC operates the plant, the variable cost would then rise to Rs 2.35 per unit with the total for the end consumer being Rs 3.84 per unit. This is still 5 paise per unit lower than the current cost.

Operational Roadblocks

This sale deal has to overcome a uniquely Indian roadblock. When NTPC acquires the Chhabra plant, the state government employees will get an option to move to the central power sector firm. Usually, a central power sector firm may pay up to twice to their employees compared to the state genco, but there is an important distinction. Indian CPSEs encourage a defined contribution pension model, while states still operate on a defined benefits model. This means that the closer one is to retirement, more the benefit of staying in a defined benefits structure for future cash-flow security! As this deal becomes a reality at the end of first quarter of 2017, there is a good chance several old officials of RVUNL will not move to NTPC, choosing to stay with the state government. NTPC will then be able to use this as an opportunity to bring its own management and attain the operational improvement objectives necessary to make the deal financially lucrative.

A New Divestment Template?

While the Rajasthan government could have struck this deal even with a private sector player, it would have needed much more change management and effort with respect to managing the employee unions. With a central public sector buyer, the state government can complete the transaction without any operational disruptions.

In this case, while the ownership transfers from the state to the centre, notionally keeping the role of the government constant; it is a much better operational structure. The net cost of involvement of the government in its aggregate does come down. And NTPC is always in a better position to realise greater value from the asset.

Most power firms owned by various state governments really have no business being in the generation business, and this model sets the tone for a great low-friction divestment template. Of course, on its part NTPC will have to pick and choose the right assets, focusing on the ones it can realistically improve and transform. But this deal can set an interesting precedent for divestment in the power generation space.

To start off, NTPC will use the same model for the next phase of the Chhabra plant once it is operational. Hopefully other state chief ministers are keenly looking at this initiative taken by their Rajasthan counterpart Vasundhara Raje Scindia and the Minister of State with independent charge for Power, Coal and New and Renewable Energy, Piyush Goyal.

This divestment model allows a state to get immediate cash in its coffers, reduces its interest servicing burden, eliminates the need for state government guarantees for borrowings by firms owned by them, and makes their discoms more commercially linked on the supply side. Thus, while any such deal is beneficial in itself, it also creates a second order impact of improving discom operations and state government finances over a period of time. This is a win-win-win model for the CPSE power firms, state governments and the end consumers waiting to be tapped in a bigger way.

Aashish Chandorkar writes on public policy, politics, and current affairs. He is based in Pune. He tweets at @c_aashish.

Bullet Train Project Moves Ahead. Pact Signed With Japanese Funding Agency For Rs 1 Lakh Crore Project

By
Indian Infra Hub Staff
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Railway Ministry and National High-Speed Rail Corporation (HNSRC) have signed a tripartite pact with Japan International Cooperation Agency (JICA) for the development of Mumbai-Ahmedabad high-speed rail corridor. The pact is significant because it marks the finalisation of the methodology of project work. This, in turn, will boost actual project implementation.

JICA said in a statement that the agency has signed a Memorandum for General Consultancy (GC) to “provide design and bidding assistance for the public works and systems required for the construction of a high-speed railway linking two cities Mumbai and Ahmedabad in India”.

While JICA will bear the cost of GC up to 2020 and will contribute to the smooth implementation of the project, NHSRC will be in charge of the implementation of the project.

The project will be completed at a cost of approximately Rs 1 lakh crore. Japan has agreed to fund 80 per cent of the project through a soft loan of Rs 79,000 crore at an interest rate of 0.1 per cent, with a tenure stretching over 50 years and a moratorium period of 15 years.

Will Nuclear Energy Power India’s Future?

By
Indian Infra Hub Staff
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0
Snapshot
  • It might already be too late to ask that question because if India has to meet its gigantic energy needs in the future, nuclear energy has to be the area of focus.

The total installed electrical capacity of India crossed the 300 gigawatts (GW) mark in early 2016. Of this, 210 GW (70 per cent) constituted thermal power from sources such as coal, gas and diesel. As is evident, India is highly reliant on fossil fuels to meet its energy needs. Hydroelectric power too contributes a significant component (13 per cent) with total installed capacity of just over 40 GW. The total installed capacity of grid-interactive renewable power—which consists of wind, solar, biomass and small hydro—is just under 43 GW (14 per cent). Nuclear power accounts for 6.78 GW, a mere 2.3 per cent of the total capacity. In terms of actual energy generation, the total electricity production in India in 2014-15 was 1,278 terawatt hour (TWh) of which nuclear energy contributed just under 3 percent.

Although India is the fourth largest energy consumer in the world, behind only the US, China and Russia, it is a highly energy deficit country. While it supports 18 per cent of the world’s population, it has only 0.6 per cent, 0.4 per cent and 7 per cent of the world’s oil, gas and coal reserves, respectively. India’s dependence on imported fossil fuels – oil, coal, gas and others – rose to 38 per cent in 2012. India imported 23 per cent of its coal requirements, 71 per cent of its oil needs and 30 per cent of its gas demand in 2012. These shares have increased over the last few years. India’s oil needs reached a level of 81 per cent import dependency in 2015-16.

India’s per capita electricity consumption stood at just over 1,000 kilowatt hours (kWh) in 2014-15. In comparison, developed countries average around 15,000 kWh. China has a per capita consumption of around 4,000 kWh. World average is more than 3,000 kWh.

In 2013, India’s population without access to electricity was estimated by World Energy Outlook to be a staggering 237 million which accounts for 19 per cent of the entire population.

And it looks for worse going ahead

International Energy Agency’s (IEA) World Economic Outlook (WEO) 2015 projection is that India will see the fastest growth in energy demand by 2040 as China effects structural changes to its economy, such as moving towards services. India’s total energy demand will more than double, propelled by an economy that will be more than five times larger in 2040 and a demographic expansion that will make India the world’s most populous country. This will happen even after impressive energy efficiency gains—the overall energy intensity of India’s economy is expected to reduce from 0.11 tonnes of oil equivalent (toe) per $1,000 of gross domestic product (GDP) in 2013 to 0.05 toe per $1,000 of GDP in 2040. India’s energy needs will reach 1,900 million tonnes of oil equivalent (Mtoe).

Led by coal, the share of fossil fuels in India’s energy mix will rise to 81per cent by 2040 from 72 per cent in 2013. The IEA expects India’s oil demand to rise the fastest—by 6.0 million barrels per day to 9.8 mb/d in 2040. It projects that oil production will fall behind demand, pushing oil import dependence above 90 per cent by 2040 although Prime Minister Modi has set a target to bring this down to 67 per cent by 2022.

Over 50 per cent of new generation capacity up to 2040 will come from renewables and nuclear power. Keeping pace with the demand for electricity will require nearly 900 GW of new capacity, the addition of a power system four-fifths the size of that of the United States today. India has the world’s fifth largest wind power market and plans to add about 100,000 MW of solar power capacity by 2020. There will be greater reliance on solar and wind power (areas where India has high potential and equally high ambition) to deliver on the pledge to build up a 40 per cent share of non-fossil fuel capacity in the power sector by 2030. IEA calculations show that renewables will account for 43 per cent of all power generated in India in 2040. Nuclear energy—with its massive potential—can be expected to play a key role in the country’s future energy mix.

India’s Nuclear Industry

Since independence, India has strongly endorsed nuclear power for civil use. Today India has 22 operating nuclear reactors at six locations across the country, their combined capacity totaling 6.8 GW. Till 2008, India’s civil nuclear strategy had evolved largely without fuel or technological assistance from other countries for more than 30 years. This was the result of India’s Peaceful Nuclear Explosion (PNE) in 1974 and refusal to sign the Non-Proliferation Treaty (NPT) because of its discriminatory nature. This led to India’s isolation from international commerce in nuclear materials and technology. However, scope for civilian nuclear trade increased significantly beginning September 2008 following the Nuclear Suppliers Group’s (NSG) unique, India-specific waiver to enable it to trade internationally in nuclear technology, equipment and materials. India was permitted to carry out nuclear commerce with the rest of the world, although it has not signed the NPT, in recognition of its impeccable non-proliferation record. Following this, India has signed bilateral deals on civilian nuclear energy cooperation with several countries.

India’s domestic uranium reserves are small. The country is dependent on uranium imports to fuel its nuclear power industry. Since early 1990s, Russia has been a major supplier of nuclear fuel to India. Due to dwindling domestic uranium reserves, nuclear powered electricity generation declined by 12.83 per cent from 2006 to 2008.

Since March 2011, large deposits of uranium have been discovered in the Tummalapalle belt in Karnataka. This belt of uranium reserves promises to be one of the top 20 uranium reserves discovery of the world. So far 44,000 tonnes of natural uranium has been discovered in the belt, which is estimated to have three times that amount.

Nuclear Agreements with Other Nations

As of 2016, India has signed civil nuclear agreements with Argentina, Australia, Canada, France, Japan, Kazakhstan, Mongolia, Namibia, Russia, South Korea, the United Kingdom and the United States. The latest country to enter into a nuclear deal with India is Japan, the only country to have suffered atom bomb attacks. The bilateral Agreement was signed during PM Modi’s visit to Japan on 11 November, 2016.

After the NSG waiver, France was the first country to sign an agreement with India on 30 September 2008. Framework agreements were signed in 2010 for setting up two third-generation EPR (Evolutionary Power Reactor) reactors of 1650 MW each at Jaitapur, Maharashtra by the French company Areva. The deal caters for first set of two of six planned reactors and supply of nuclear fuel for 25 years. Electricite de France (EDF) which took over Areva signed a memorandum of understanding on 26 January, 2016 with Nuclear Power Corporation of India Limited (NPCIL) to build six reactors. Some regulatory issues persist as also difficulty in sourcing major components from Japan due to India not being a signatory to the Nuclear Non-Proliferation Treaty. This position could undergo a significant change after the recent India-Japan nuclear agreement.

India and Kazakhstan signed an inter-governmental agreement for Cooperation in Peaceful Uses of Atomic Energy in April 2011. This envisages a legal framework for supply of fuel, construction and operation of atomic power plants, exploration and joint mining of uranium, exchange of scientific and research information, reactor safety mechanisms and use of radiation technologies for healthcare. India and Kazakhstan have been collaborating in civil nuclear area since January 2009 when Kazakh nuclear company KazAtomProm signed an MoU with NPCIL for supply of uranium.

The nuclear agreement with USA led to India issuing a Letter of Intent for purchase of 10,000 MW nuclear reactors from USA. However, liability concerns and a few other issues prevented further progress in the matter. India’s nuclear liability law gives accident victims the right to seek damages from plant suppliers in the event of a mishap.

It has apparently deterred foreign players like General Electric and Westinghouse Electric, a US-based unit of Toshiba, with companies seeking further clarification on compensation liability for private operators. Risks related to nuclear power generation prompted Indian legislators to enact the 2010 Nuclear Liability Act which stipulates that nuclear suppliers, contractors and operators must bear financial responsibility in case of an accident. The legislation addressed key issues such as nuclear radiation and safety regulations, operational control and maintenance, management of nuclear power plants, compensation in the event of a radiation-leak accident, disaster clean-up costs, operator responsibility and supplier liability.

An accident like the 2011 Fukushima Daiichi nuclear disaster would have dire economic consequences in heavily populated India as did the 1984 Union Carbide Bhopal tragedy, the world’s worst industrial catastrophe. India has taken significant steps over the last few years to address this issue. It has ratified the Convention on Supplementary Compensation for Nuclear Damage and set up an insurance pool of Rs 1,500 crore (US$225 million) for liability risks that may arise from the construction and operation of nuclear power plants in the country. It is uncertain, however, if this amount will effectively assuage supplier concerns. For example, after the Bhopal gas calamity, the Indian government claimed US$3.3 billion in damages. The proposed insurance pool is paltry in comparison.

India and Russia signed an agreement dating back to 1988 to establish nuclear reactors in India. Not much progress was possible in subsequent years due to sudden disintegration of the Soviet Union in 1991 and India’s financial difficulties and related international developments. The project was revived during the visit of Foreign Minister Primakov to India in 1998 when it was decided to construct two VVER (Water-Water Energetic Reactor) 1000 MW reactors at Kudankulam in Tamil Nadu.

Bilateral partnership in nuclear and other areas was further strengthened with the establishment of the Strategic Partnership between the two countries during President Putin’s first visit to India in 2000. A 2008 bilateral agreement provided for an additional four, third generation VVER-1200 reactors of capacity 1170 MW each. Russia declared that it would not impose curbs on export of sensitive technology to India. A new bilateral accord signed in Dec 2009 gave India freedom to proceed with the closed fuel cycle which includes mining, preparation of fuel for use in reactors, and reprocessing of spent fuel.

The first reactor with Russian collaboration, the new 1,000-MW power plant at Kudankulam, started commercial operations in 2014. The second reactor has achieved 85 per cent capacity and is likely to accomplish full capacity by early next year. Concrete pouring for the 3rd and 4th units was done by Prime Minister Modi and President Putin during the 17th India-Russia Summit in Goa on 15 October, 2016. Construction is expected to start shortly. Negotiations on the 5th and 6th units are in progress and are likely to conclude soon.

Agreement was reached at the India-Russia Summit in December, 2014 in New Delhi to identify another site in India for another 6 reactors. This is likely to be in Andhra Pradesh. Final decision is expected soon.

So far nuclear plants with Russian support only have been constructed in India. They are successfully generating electricity. The two sides will soon develop a framework for collaboration in the field of radioactive waste management. They will also promote localisation of manufacturing of equipment and fuel assemblies in India. They will expand collaboration in nuclear power plants technical maintenance and repair, modernisation and retraining of personnel. These initiatives can be expected to provide a strong fillip to the ”Make in India” initiative of the government. Russia’s VVER reactors are among the more advanced Gen III+ designs and provide clean, cheap and reliable energy.

India and Russia are cooperating under a long term agreement to expand civil nuclear collaboration free from any restrictions or curbs on India in future. In addition to establishing more nuclear power reactors, Russia has agreed to transfer the full range of nuclear energy technologies and ensure uninterrupted supply of fuel. Civil nuclear cooperation between India and Russia has been a major element in rejuvenating bilateral partnership in recent years. It heralds a glorious future in the years to come. Nuclear energy sector has the potential to be a strong bridge in partnership between India and Russia.

India’s Indigenous Nuclear Plants

In addition to the two reactors at Kudankulam, Tamil Nadu built with Russian assistance and two others at Tarapur, Maharashtra which were established in 1969 with US/Canadian assistance and are currently operating at 160/100 MW capacity, India currently has 18 indigenously developed Pressurised Heavy Water Reactors (PHWR) which are located in Maharashtra(2), Rajasthan (6), Tamil Nadu (2), Karnataka (4), UP (2) and Gujarat (2), with a total capacity of 4.44 GW. Energy generation by these reactors has reached levels of 90 per cent capacity after problems related to availability of uranium fuel were resolved consequent to the NSG waiver in 2008.

The cost of imported fuel for running nuclear reactors is low which is an important reason that nuclear power is cheaper than other fuels such as coal or natural gas.

Compared to power plants using fossil fuels, nuclear power has high initial costs. However, fuel cost is a minor expense during the nuclear plant’s life, leading to lower lifetime costs for nuclear power compared to either coal or gas.

NPCIL supplies electricity at a lower cost per unit compared to any other energy utility in the public or private sector. Given India’s status as a major importer of petroleum, natural gas and coal, greater reliance on nuclear energy could be an important way to keep energy costs in check.

In recent years, India has accorded greater importance to thorium fuels and fuel cycles because of large deposits of thorium (518,000 tonnes), a non-fissile material, in the form of monazite in beach sands as compared to modest reserves of low-grade uranium (92,000 tonnes). The long-term goal of India’s three-stage nuclear power program is to develop an advanced heavy-water thorium cycle. Thorium has the potential to provide several hundred times the energy with the same mass of fuel as uranium. The fact that thorium can theoretically be utilised in heavy water reactors has tied the development of the two types of reactors. A prototype reactor that would consume Uranium-Plutonium fuel while irradiating a thorium blanket is currently under construction at Kalpakkam. Thorium reactors would also be safer and not susceptible to production of nuclear weapons. This could be the harbinger of development of a new generation of cleaner, cheaper, safer nuclear power. India could be in a position to make thorium reactors operational by 2025.

Even in the best case scenario, share of nuclear energy in India’s total electricity mix would still be low. For example, if India’s total installed electrical capacity including all sources rises to over 1000 GW as per estimates of the World Energy Outlook, nuclear energy, at 52 GW, would still be just around five percent of the total.

With Prime Minister Modi setting an ambitious goal of tripling nuclear power over the next decade, India’s nuclear-power sector is in the best shape it has ever been to deliver that target.

India is on course to double its nuclear power generation capacity to more than 10,000 mega watts (MW) over the next five years.

Nuclear surge only way to go?

India’s energy demands are expected to rise rapidly in the coming years. Energy is required to fuel the rapid economic growth and expansion to confront the scourge of poverty that afflicts more than 150 million people in the country, provide energy to the more than 200 million population who still don’t have access to commercial electricity, and raise the per capita level of energy consumption from the current low level of 1,000 kWh to more acceptable levels closer to the world average of 3,000 kWh.

Currently India is highly dependent on fossil fuels like oil, gas, coal, much of which are imported. In addition to the unacceptably high quantum of outgo of foreign exchange, fossil fuels are highly polluting and have a huge detrimental impact on the environment. Business as usual is hence not possible. It is imperative for India to move to more environment friendly forms of energy which also don’t necessitate the outflow of large amounts of scarce foreign exchange resources. Renewables particularly solar and wind whose production costs have fallen significantly in recent times would be an important component of this energy mix. Nuclear energy would also be an indispensable element of the future energy generation programme.

Two aspects in this regard will need to be taken note of. Firstly to launch a concerted reach-out to those who continue to be wary and apprehensive of the safety and security of nuclear reactors and materials. It has been proven beyond all reasonable doubt that with all recent technological changes, nuclear power is as safe, if not safer than power generation through fossil fuels. There is also considerable anxiety about the manner of disposing nuclear waste and the period for which it will continue to be radio-active. Reassurance on this score by scientists, experts and those in the know of intricate issues involved should be proactively communicated to common citizens. It is pertinent to remember that notwithstanding the 2011 Fukushima disaster, Germany is the only country in the world that has turned its back on nuclear power and that also mostly for political reasons and not on scientific or technological considerations.

Currently there are more than 60 reactors being constructed in 15 countries all over the world. Out of these only five are in India. As per plans declared by the government, India intends to draw 25 per cent of its electrical energy from nuclear sources by 2050. This includes 20 GW by 2020 and 63 GW by 2032. It is doubtful whether these targets will be met. The government has already revised the targets to declare that India will produce 14.6 GW by 2021 and 27.5 GW by 2032.

Even with the rapid increase in renewable and nuclear power generation, fossil fuels will continue to be the mainstay of the Indian power scene for the foreseeable future. It is however imperative that nuclear energy which is competitive, safe, reliable and clean continues to be an increasingly important source to power the growth and development of the country.

The author is a former Ambassador of India to Kazakhstan, Sweden and Latvia. He is currently President, Institute of Global Studies.”

Morning Brief: Two ISI Agents Arrested; IOC To Lay Longest LPG Pipeline; NHAI To Monetise 40 Projects

By
Indian Infra Hub Staff
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Good Morning, Swarajya Readers! Here’s What You Need To Know Today.

Two ISI Agents Arrested

The Gujarat Anti-Terrorism Squad (ATS) arrested two Pakistani Inter-Services Intelligence (ISI) agents from the border town of Khavda in Kutch district, late on Wednesday night. ATS is learnt to have recovered several secretive documents carrying sensitive information related to the movements of Indian Army and paramilitary forces in the region.

The two men, identified as Mohammad Alana and Safur Sumara, become active after India carried out surgical strikes on Pakistan last month. In August, an ISI agent was arrested in Lucknow in a joint operation conducted by the Uttar Pradesh ATS and the Rajasthan Crime Investigation Department.

IOC To Lay Longest LPG Pipeline

The Indian Oil Corporation (IOC), which is currently planning to import LPG at Kandla in Gujarat, will build a 1,987-km pipeline to connect the port city to Gorakhpur in Uttar Pradesh. The pipeline will pass through Ahmedabad in Gujarat, Ujjain and Bhopal in Madhya Pradesh, and multiple cities in Uttar Pradesh including Allahabad, Varanasi and Lucknow.

This will be the country’s longest LPG pipeline and will carry 3.75 million tonnes of gas per annum.

NHAI To Monetise 40 Projects

National Highways Authority of India (NHAI) seeks to mop up Rs 20,000 crore from monetisation of 30 to 40 projects.

The move follows the government’s decision to authorise NHAI to monetise the public funded highway projects in August. Around 75 operational NH projects completed under public funding have been preliminarily identified for potential monetisation using the toll operate transfer model.

India’s Search For New Fighter Aircraft

According to the Diplomat, India’s Defence Ministry has issued a Request for Information to global aircraft manufacturers, seeking application from those interested in constructing medium, single-engine fighter jets for the Indian Air Force.

The Air Force is currently dealing with a serious shortfall and needs over 300 modern, medium role fighter jets to fill the growing gap between its heavier and more sophisticated Su-30MKIs and the indigenously developed light combat aircraft Tejas.

Renault Recalls 50,000 Kwids

The French car giant has recalled over 50,000 units of Kwid, its best-selling car in the country, after reports emerged in the media claiming that the car carries a faulty fuel system and hose clip.

The recall will affect Kwids produced till 18 May 2016, Renault said, adding that the company wants to carry out ‘preemptive and voluntary inspection of the 800cc vehicle’ and will add a fuel hose clip and check the fuel system.

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We hope you enjoyed reading our morning brief. Have a great day ahead!

The Coastal Economic Zone Push: Why Confine Reforms And Infrastructure To Enclaves?

By
Indian Infra Hub Staff
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0
Snapshot
  • It may be faster to link markets in the interiors with ports rather than approving and setting up CEZs and making them operational.

    Instead of pushing ideas that have the potential of turning into real estate rackets or tax break rackets, it might be best for NITI Aayog to push for speedier implementation of highways and port connectivity projects.

The NITI Aayog is pushing big time for the setting up of coastal economic zones (CEZs). According to a media report, at the recently concluded fourth Strategic Economic Dialogue between India and China, the Aayog sought the cooperation of its Chinese counterpart, the National Development and Reforms Commission, to develop CEZs in India on the lines of Chinese enclaves like Shenzen and Guangzhou.

Another report in September had said that the NITI Aayog was seeking a 10-year corporation tax holiday for CEZs.

Clearly, the Aayog vice-chairman Arvind Panagariya, who first floated the idea last year as a blog on the Aayog’s website, wants to see it succeed. He appears to see it as part of a larger coastal area development strategy that India should adopt and, as the discussion paper shows, believes this is the right way to get large firms into employment-intensive sectors, which also happen to have enormous export potential. He links it with the Sagarmala programme (focussing on port connectivity and modernisation) of the government being helmed by Nitin Gadkari, minister for shipping, road transport and highways.

Panagariya makes a pitch for one Shenzen-style CEZ each on the eastern and western coasts, which would be very large economic enclaves with a business-friendly environment. To this end, while briefing journalists about the Strategic Economic Dialogue, he also spoke about implementing difficult land and labour reforms that are not possible in other parts of the country in these enclaves.

Hang on, isn’t that what the special economic zones (SEZs) were supposed to be all about – economic enclaves getting handsome tax sops, with better infrastructure and friendlier labour laws and other business-related regulations in order to push exports-focussed manufacturing? What became of them? It’s not clear how the CEZs Panagariya envisions is vastly different from the SEZs, apart from the obvious fact that the former are to be in the coastal areas.

The SEZs, an idea first mooted by the first National Democratic Alliance (NDA-1) government in 2000, became a reality when the United Progressive Alliance (UPA) government passed the Special Economic Zones Act in 2005. But both the idea and the implementation faced rough weather from the start. There were charges that fertile agricultural land was being taken away for the SEZs, there were disputes between the commerce and finance ministry about likely revenue loss, there was resistance to the relaxation of labour laws.

Land acquisition proved problematic and the promised state-of-the-art infrastructure didn’t quite materialise. Later tax incentives on minimum alternate tax and dividend distribution tax were withdrawn. And then exporters outside the SEZs got even better incentives. So companies and exporters lost interest in these enclaves.

Ultimately (and unfortunately), the SEZs became associated with land and tax avoidance scams. In late 2014, the Comptroller and Auditor General (CAG) gave a damning indictment of the programme. Over 50 per cent of the land allotted remained idle six years after approval was given; land acquired for public purposes was later not used and de-notified with real estate developers making a killing from the escalated price of land.

Sure, the share of exports from SEZs have increased from between 5 per cent and 11 per cent in the first four years to the 24-27 per cent range between 2009-10 and 2016-17, but those who have studied SEZs closely say the bulk of this is from a handful of SEZs and most of these are the export processing zones (EPZs) that were established much before the SEZ Act was passed.

Even as the SEZs were floundering, the National Manufacturing Policy 2011 mooted the idea of National Investment and Manufacturing Zones (NIMZs). These, too, were supposed to be large enclaves of at least 50 square km with top notch infrastructure, tax breaks, faster clearances and a hassle-free operating environment. The guidelines for the NIMZ came through in 2013, but the scheme also faced problems relating to land acquisition and environmental clearances.

It’s not very clear how the CEZs that Panagariya is rooting for will be vastly different in design from the SEZs and the NIMZs, if they too are going to be dependent on tax breaks and an easier legal and regulatory regime. Since these are to be greenfield enclaves, the process of setting them up and operationalising them will be time consuming and potential benefits may take a while to flow in. The issue of land acquisition may dog these too.

So, to repeat a question that was often asked in the early days of the SEZ programme – why not make the entire country a SEZ, why not have an easier business environment, great infrastructure and flexible labour laws across the country?

In the briefing on the Strategic Economic Dialogue, Panagariya has said that the coastal states CEZs could implement the land and labour law reform that would be difficult in the rest of the country. But why does one need the excuse of a CEZ to do that? States are still free to reform these laws and some states like Rajasthan have taken the initiative. If they carry out these reforms and provide good infrastructure across the state, that will bring faster dividends than carving out areas for and setting up CEZs.

It is possible that CEZs could gain from the Sagarmala project and the emphasis on developing ports and connecting them with the hinterland. Poor port infrastructure was another reason why the SEZs failed. But why should separate CEZs be needed to propel this? Gadkari is going full steam ahead on port connectivity and on highways. So it may be possible to link markets in the interiors with ports faster than approving and setting up CEZs and making them operational.

Instead of pushing ideas that have the potential of turning into real estate rackets or tax break rackets, it might be best for NITI Aayog to push for speedier implementation of highways and port connectivity projects and for states to reform the land and labour laws.

Seetha is a senior journalist and author

Rampant Planning Is Impeding The Development Of Urban Infrastructure In India

By
Indian Infra Hub Staff
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0
Snapshot
  • Electricity, water supply and sewage infrastructure related issues will be explored in the second part of this series on urban governance in India.

Our planners and politicians have long held an urge to continue to make sorry attempts at building necessary city infrastructure. They ensure through legislation that the government is the only body which can deliver most of it. That, in short, ensures that we have bad urban infrastructure. PropTiger’s Shanu Athiparampath explains this quite well:

“We have hardly experienced the shortage of laptop mouses. Even though laptops and mouses are complementary products with different manufacturers, the market coordinates fairly well. No, the market is not perfect, but the coordination in the market is so good that even the best economists do not understand this completely.

However, there is one sphere in which the supply does not keep up with demand: infrastructure. In India, water supply, electricity, and transportation networks do not keep up with the demand. Infrastructure is largely provided by the government. The government operates outside the market system, and is insulated to signals of the market like profits, losses and revenues.”

Electricity is mostly produced and distributed by government-run electricity supply companies. Water supply and sewage in most Indian cities is the exclusive domain of municipal-level water supply and sewage boards. After Indira Gandhi’s bank nationalisation, most of the Indian banking sector is owned by the government. In the same 10 years, during which we saw nearly every Indian acquiring a mobile phone, all that these folks could accomplish was poor improvement in infrastructure access.

In 2013, Gururgram, the millennium city, had more private electricity generation through diesel generation sets (2000 mw) capacity than public capacity. The Central Electricity Regulatory Commission, in 2014, estimated that the Diesel GenSet capacity was growing at 5000-8000 mw. With the state abandoning the role it had appropriated for itself through legislation— providing electricity infrastructure— the private sector had to find a work around. The resulting hotchpotch ensured that urban areas like Gurugram have more capacity than they need but end up paying exorbitantly and has dangerous externalities like increased PM 2.5 and PM 10 emissions, and the resulting increase in healthcare costs.

The condition of water supply isn’t that different. A report on Indian Urban Infrastructure and Services, by the High Powered Expert Comittee led by I.J. Ahluwalia, tells us that nearly 70 percent of water intake by the supplying body is either lost in transmission or cannot be accounted for. Revenue is earned only from 22 percent of the total water and, that too, is subject to delayed payment of subsidies by the state governments. An ADB report, in 2007, said that water utilities in India only see about 30-35 of their Operations and Maintenance costs coming back, compared to 100 percent in Cambodia and Philippines. Even Bangladeshi utilities recover about 64 percent of their Operations and Maintenance costs.

This ensures that utilities do not enough money to expand and, therefore, those of us who can’t afford to live in the infrastructure-rich city centre are forced to source our water supplies from costlier sources.

Water utilities in most Indian cities are run by governments. Jamshedpur has a private utility supplying water, i.e water good enough to be drunk as soon as it’s out of the tap. The utility is expanding to supply water out of Jamshedpur municipal limits too.

The problems emanating from government ownership of public utilities has been compounded by another facet of growth in urban India— suburbanisation. India’s restrictive land use policies prevent construction of more housing units in city centres. City centres are usually the only parts of the city where infrastructure already exists or can be built, or can be expanded cost-effectively as more units are constructed. Making new construction difficult in the city centre forces developers to the outskirts and this is increasing.

Take the example of the recent flooding of Gurugram and Bengaluru. One of the oft quoted causes was “rampant real estate development.” This was a classic case of— “If I do it, it is a necessity, if you do it, it is greed.” The real estate development in the edges of these cities, low-lying areas, other places without good infrastructure and in the case of Bengaluru— encroachment of rajakaluve (storm water drains) happened for a reason— exhibits an unmet demand for good housing. This is compounded by severe restrictions of supply in the areas of the city with good infrastructure. If those greedy people who bought houses in those areas had an option of buying a similar priced one near the city centre, they would have taken it. To be honest, this is a case of “rampant planning”.

The effects of “rampant planning” is not only seen in suburbanisation of housing but also in the suburbanisation of the industry. Over the years, the Indian urban planning consensus of decongestion via satellite towns, industrial parks in less developed districts and incentivising the above through tax subsidies has resulted in the suburbanisation of the industry too. As with housing suburbanisation, this increases the cost of providing necessary infrastructure and impedes efforts to make such infrastructure to the public.

One has to recognise that public investment in water supply and sewage infrastructure has many benefits. The most important of these benefits is the reduced healthcare cost and spread of infectious diseases. We also need to recognise that the social costs of the subsidies and corruption which come with such investment might just nullify those benefits. As with many other things Indian, we have found a jugaad to balance these costs and benefits.

Many private societies, if sufficiently large enough or rich enough, develop their own water supply and sewage systems. The reason for private investment in such infrastructure is that demand for housing units without such facilities is quite low—unless they are aimed at the poor. Many universities and industrial units invest in their own infrastructure if they are far enough from the city centre.This feature of the housing market can be leveraged by city or state governments to create certain common standards in collaboration with developer associations and industrial associations. This will facilitate:

(i) coordination and proper pricing in distribution of water to households

(ii) collection, transport and treatment of sewage

Half the job is already done in Gurugram where the absence of sewage and water supply infrastructure forced many developers to jugaad. The problem was that an informal system developed wherein many would transport the sewerage, make the necessary payments to government officials and dispose it in the commons. Moreover,in most cases the private networks aren’t connected with the public networks which is most probably due to the government utility being uninterested. The resulting smell, pollution of vast areas and health costs are obvious externalities of this situation.

The presence of vast commons, which are badly maintained by the government, and the absence of any concerted drive to connect these private networks with the public networks reduces any incentive the private developers and industrialists might have to internalise those externalities, i.e invest their resources to reduce or eliminate the externalities. Parts of outer Bengaluru and other major cities see something similar. One way to increase the incentive to invest is to sell the commons to private developers on the condition that such dumping stops, and strive to connect public and private networks. This needs to be supplemented by efforts to create common standards for such infrastructure investment and corporatisation of utilities. In fact, the Atal Mission for Rejuvenation and Urban Transformation is headed in this direction.

Governments, state and city, need to rethink the role they want to play in providing city infrastructure. They can either go it alone, thereby, spending heavily and achieving little or they can harness market process to develop the said infrastructure on the cheap and, thus, achieve more.

You can read Part I of this series here.

*The writer got a lot of information and ideas from Alex Tabarrok and Sruthi Rajagopalan’s Lessons from Gurgaon, India’s Private City.

Read Also:

1. Smart Cities – Reimagining Urban Transportation

2. Challenges In Financing Smart City Projects In India

Shreyas Bharadwaj is a Hindutvawadi from Mysuru who is interested in writing about cities and public policy.

Lesson From Amtrak’s Failure: Invest Heavily In Railways

By
Indian Infra Hub Staff
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0
Snapshot
    • The United States has a very substandard network of railways; substandard for its stature and substandard in comparison to other countries.
    • Both America’s Amtrak and Indian Railways struggle due to lack of investment, but while the US has opted for faster air transport, India has just struggled.
    • However, under Suresh Prabhu, Indian Railways has seen a major change, with an investment of $140 billion being planned over a five year period.

The National Railroad Passenger Corporation, which does business as Amtrak in the US, turned 45 last week. For those who don’t know, Amtrak is a partially government-owned body in the United States and is the American equivalent of Indian Railways (IR).

For quick comparison, Amtrak currently owns 2,142 railway cars and 425 locomotives. In contrast, IR, in 2012, owned 46,722 passenger coaches alone, along with 2,39,321 goods coaches.

Further, Amtrak operates electric locomotives only on the Northeast Corridor from Boston to Washington DC and the Philadelphia to Harrisburg main line. The rest of the network is serviced by diesel locomotives. India, on the other hand, has electrified 38 percent of its railway lines, and is constantly working on increasing this number.

The United States considered a global superpower has a very substandard network of railways; substandard for its stature and substandard in comparison to other countries. Smaller nations such as Spain, Japan and even France, have a better, faster and more reliable network.

The northeast corridor of Amtrak is similar in many ways to the Mumbai-Ahmedabad region of the Western Railways. Both were built in and around the 19th century, and helped shape the pattern of development in the region. However, this was the cause of their undoing in later years. Due to high population densities in these areas, governments are not willing to foot the extremely large bills on expansion and upgradation (too expensive to buy/acquire land).

Both Amtrak and IR fell victims to lack of investment. The US, being such a vast country, opted for faster air-based transport, while India just struggled due to bad governance. IR had a slight push in progress when Nitish Kumar was made the railway minister, but subsequent bad administration and populist measures under Lalu Prasad Yadav and Mamata Banerjee brought everything to a grinding halt. However, under Suresh Prabhu, the railways has seen a major change, with an investment of $140 billion being planned over a five year period.

There are several corridors where both Amtrak and IR fail miserably in comparison to other modes of terrestrial transport. The trip from Washington DC to Pittsburgh, a 250 mile journey, takes four hours by car and nearly eight by Amtrak. A bus trip costs merely one-fifth of the rail journey and is significantly faster. Similarly, in India, the 1000 km Mumbai-Bangalore corridor is dominated by buses, both private and state owned, who are able to cover the distance in 17 hours, while the fastest train journey takes no less than 24 hours. Private bus operators lobbied hard to ensure that several crucial railway lines were never doubled or electrified and this has taken its toll on the highway network instead.

What both Amtrak and IR require is a lot of investment. Investment in infrastructure, technology, locomotives and rolling stock. This investment should ideally be a partnership between the public and the private sector. Air based transport cannot be sustained for a long time over terrestrial, land-based transport. Rail triumphs over road due to its speed and cost in the long run. While the US can certainly take a leaf out of India’s book, India has a larger lesson to learn from the United States and needs to invest more in its railways in order to build a sustainable transport network for its budding manufacturing sector.

It is worthwhile to note that Japan, despite being the victim of two nuclear bombs, set up the world’s fastest railway line as far back as in 1964 when the Tokyo-Osaka line opened up. Operating initially at a speed of 210 kmph, it currently runs at 285 kmph, thereby covering a distance of 550 km in 2 hours and 22 minutes, with an average fare of 25 yen or 14 rupees per kilometre. It would be worthwhile for India to emulate this in the form of a High Speed Rail line rather than promoting the highly fuel-intensive aviation sector, especially with fuel reserves slowly dwindling.

Srikanth’s interests include public transit, urban management and transportation infrastructure.

The Upcoming Urban Landscape Of India

By
Indian Infra Hub Staff
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0

As part of the Smart City series, Swarajya brings a simple yet informative listicle of the types of cities India has, classified on the basis of the way they have evolved, their governance system and the activities they major in.

1. The Present Metropolis

Our existing cities – New Delhi, Mumbai, Kolkata, Chennai and Bengaluru are the ones included in this category. Most will agree that these cities are presently decaying. Even worse are the conditions of what are classified as Tier-II, Tier-III and census towns.

2. The New Town or Satellite Town Concept

The ‘new town’ concept has been around for a long time. The idea is to counter urban decay by creating new planned settlements far away from the big metropolitan cities, in order to avoid population aggregation in a packed urban space.

It was believed that these would over time help in building new communities and ensure that the parent metropolis remained healthy and survived longer. At times, new towns have also come to be called ‘satellite towns’, as they are attached to – and function along with – a parent metropolis.

Existing cities have had huge extensions similar to new towns. Some examples are Rohini, Dwarka and Narela as extensions to Delhi; Navi Mumbai to Mumbai; Salt Lake City to Kolkata; and Yelahanka and Kengeri to Bangalore. Noida, Greater Noida, Manesar, Pimpri-Chinchwad, Rajarhat, Dankuni, etc are other examples of such new towns.

What needs to be noted here is the active and prime moving role of the government. Unless the government takes a keen interest in the development of new towns, the procurement of large tracts of land and the inclusive development of a town will not be possible.

Most states in India today have township policies. State governments, instead of developing land themselves, have now started encouraging the private real estate sector to develop them. The West Bengal government for example is now encouraging real estate builders into the cities of Siliguri, Bolpur, Asansol-Durgapur, Gajaldoba (Malda), Garia and Kalyani.

But often, conflicts arise and the basic motive of profit makes the realisation of the social objectives secondary. Unfortunately, most private sector real estate initiatives have ended up in developments which are too small and fragmented, and mostly catering to the wealthy population, making them far from inclusive.

3. Industrial Townships

Many industrial townships as part of steel plants or large PSUs have also been developed on modern lines from scratch. Bokaro, Bhilai, Rourkela and Vizag are such examples. In the private sector, Tata Steel’s town at Jamshedpur was the pioneer, and other large Indian corporates have also contributed to town building, largely to house their employees close to their factories. Over a period of time, these industrial townships have successfully provided a reasonably good quality of life to their residents.

4. Private Cities

The concept of private cities is gradually gaining acceptance in India. If all goes well, India should have at least 30 private cities across the country by the end of this decade. Today, there are private housing and commercial enclaves like those of DLF in Delhi and Hiranandani in Mumbai where the entire security, street maintenance and administration of the estate is managed by the developer.

5. Cities along the High-Speed Corridor

In many cases, if not all, retrofitting old cities with improved infrastructure and playing the ‘catch-up’ game is more expensive and difficult to implement. It is logical and quicker to build entire new smart cities from scratch instead. These new cities can take advantage of new transport infrastructure, such as the high-speed rail (HSR) on the Mumbai-Ahmedabad route. Studies have also been commissioned on six other high speed corridors after which implementation of these projects would begin.

The urban sprawl presently limited to 30-50 km from the city centre will change into 300-500 km long conurbations linking central business districts of multiple cities, forming urban economies of global scale and size. Once complete, HSR will convert southern cities such as Thiruvananthapuram, Bangalore and Chennai into one urban agglomeration with combined economies comparable to state-level GSDPs. Similarly, Delhi will be linked right up to Amritsar via Chandigarh and Ludhiana. People will live in Pune or Ahmedabad and work in Mumbai with HSR making this daily commute possible between cities.

These cities would also be frontiers of modern technology and forward looking urban planning techniques developed around HSR stations. These cities would typically house 0.5- 1.0 million residents over the next 10-15 years, spread over around 100 sq km, similar to the ones being developed along the Delhi Mumbai Industrial Corridor.

6. Upcoming Smart City Projects along the Delhi Mumbai Industrial Corridor

Then there are cities along the Delhi-Mumbai Industrial Corridor (DMIC), which will criss-cross six states.

These eco-friendly cities would provide world-class facilities with 24-hour power supply and drinking water, mass rapid urban transportation, with bicycle and walking tracks, complete waste and water recycling, systems for smart grids – digitally managed systems to control energy consumption – and smart metering.

The first of these cities would come up in Dholera investment region in Gujarat, 110 km from Ahmedabad. Others are Manesar-Bawal in Haryana, Indore-Mhow in Madhya Pradesh, and Dighi and Nasik-Igatpuri in Maharashtra — all along the DMIC.

Later, 17 more cities are planned to be developed along a similar pattern. A total of 24 such new generation cities are being planned for phased development across UP, Haryana, Rajasthan, Madhya Pradesh, Gujarat and Maharashtra. The first phase will see seven of them opening their doors by 2018-19. The processes of acquiring land, getting government clearances and generating investment have already started. Plans are also in place to integrate these cities through new airports, new rail links and arteries of ten-lane highways.

The estimated cost of building the new cities varies from Rs 30,000 crore to Rs 75,000 crore at current prices, depending on their size. The central and state governments will carry the burden of financing trunk infrastructure while a public-private partnership model is being tried out for the first time to build houses, schools, hospitals and other facilities.

For the first time probably, an effort has been made to look at the future by putting in infrastructure ahead of the demand. Each city will have underground utility corridors for parking, sewage disposal and communication lines to give it a neat look and leave enough space for facilities that are missing in most existing cities, like pavements, parks and cycle tracks. Public transportation is designed to discourage the use of private vehicles. Planners have tried to ensure that some form of public transport is available within a 10-minute walk from home or office.

Such cities can also become benchmarks for older cities to adopt, or risk losing people as they would move away to these new centres.

7. Other Planned Corridor Projects

Following the successful operationalization of the Delhi-Mumbai Corridor, similar projects have been planned pan-India. On these lines, the Chennai-Bangalore Industrial corridor and Chennai-Hyderabad Industrial Corridors are being developed. The focus of these corridors will be automobile and ancillaries in Chennai, aerospace in Bangalore and pharmaceuticals in Hyderabad. The Chennai-Bangalore Industrial corridor is expected to cover the cities of Ranipet and Hosur.

Social infrastructure is also encouraged along this corridor, being an integral part of any industrialization. The Karnataka government wants to extend this corridor to Belgaum and Mangalore with plans to integrate mining, food parks and cements as part of the corridor industries. Tamil Nadu government is also planning industrial corridors along the Chennai- Madurai-Tuticorin-Tirunelveli corridor and the Coimbatore-Salem corridor. These corridors are expected to encourage industrialization and integration of regional economies.

8. Lavasa: India’s first fully planned Hill Station

Billed as India’s first hill city since Independence, Lavasa is developed primarily by Hindustan Construction Company (HCC), India and is set amidst 7 hills and 60 km of lakefront and spread over 25,000 acres.

This hill station in Maharashtra has diverse work possibilities appealing to the IT and biotech industry, KPOs and R&D companies, and the world of art, fashion and animation. One of the largest private infrastructure projects in India, the city is planned for a permanent population of 0.2 million residents and a tourism inflow envisaged at 2 million per annum.

9. Gujarat International Finance Tech City (GIFT)

Gujarat International Finance Tech-City or GIFT is an under-construction city, about 12 kms from Ahmedabad International Airport. It will be built on 500 acres of land. Its main purpose is to provide high quality physical infrastructure (electricity, water, gas, district cooling, roads, telecoms and broadband), so that finance and technology firms can relocate their operations there from Mumbai, Bangalore and Gurgaon, where infrastructure is either inadequate or very expensive.

GIFT is conceptualized as a global financial and IT services hub, a first of its kind in India, designed to be at or above par with globally benchmarked financial centers such as Shinjuku, Tokyo, Lujiazui, Shanghai, La Defense, Paris, London Dockyards etc.

This listicle is an edited version of the report published by the Dutch Ministry of Economic Affairs

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