A whole lotta change
Following several years of frustration and delay, in which critics have continually warned that investors will lose interest as vital projects have failed to materialise, India’s Planning Commission announced at the end of August that it was looking at ways to boost confidence in the PPP market.
This was followed by the approval in September of a land acquisition bill designed to protect farmers in PPP deals; the Water Infrastructure Now Public-Private Partnership Act in the same month; and proposals to tighten the country’s laws around bidding procedures in October.
In some ways, the moves are perfectly understandable as the country seeks to drive through the changes necessary to infrastructure investment – and it is certainly not the only Asian country to run into difficulties by attempting to deliver a PPP programme before it is ready. The Philippines, for example, has faced a number of delays to its projects as bidders have pointed to holes in the documentation that have needed some attention.
But the Indian federal changes are coming at the same time as various changes at state level, as different states look to improve their own procedures. For investors, there is a danger that all this upheaval looks just a little too intimidating to get involved in at the moment, particularly when the region is offering other opportunities.
India was once regarded as the ‘next big thing’ when it came to PPP investment – its strong links to the Commonwealth and good English skills made it the perfect location for those who had proven themselves in the PPP strongholds of the UK and Australia to take the leap onto the Asian mainland.
But as delays have mounted, interest in the country has waned and the likes of the Philippines – which has its own problems on the bidding side but is at least pushing projects through the pipeline – interest has waned.
So while it may be good news that a new bill on the tribunal process for PPP projects was finalised in October, what most investors would like to see is a strong commitment to projects.
In time, India may well get there and the market could indeed then flourish on the basis of a clear and understandable legal basis covering a wide range of areas.
After all the focus on new laws, let’s hope the Indian government begins to pay a little more attention on the infrastructure it so badly needs if it is to deliver on its potential as one of the world’s up-and-coming economic powerhouses.