Development Watch – Week #4 Sept ’24
Development News
Public Infra at risk due to climate change and urbanization
India is experiencing a significant increase in both natural and man-made disasters, posing a significant threat to the economy, population and sustainable long-term development. Approximately 50% of public infra in India lacks sufficient disaster planning and management measures. This is as per a report by CBRE and CII. Vulnerability to disasters is also exacerbated by changing demographic and socio-economic conditions, unplanned urbanization, development in high-risk zones, environmental degradation, climate change, and geological hazards. The country is increasingly exposed to man-made risks such as industrial accidents, cyberattacks, and public health emergencies. Better risk management practices can contribute to the longevity of assets. Regular inspections, maintenance and upgrades can help identify and address potential vulnerabilities, reducing the likelihood of damage and ensuring continued functionality of critical public infrastructure.
Swiss company supplies Ukraine-made wheels to Indian Railways
Switzerland’s KLW Wheelco has supplied 2,000 Ukrainian-made forged wheels to the Indian Railways in the past few weeks, as per a senior Indian government official. This is a first such delivery from the war-torn nation since the Russia-Ukraine conflict started in early 2022. Another 3,500 forged wheels are on their way from Ukraine. Orders for 10,000 forged wheels worth Rs. 72 Crores have been placed with the Swiss company earlier this year. The wheels are being manufactured in Dnipro (Ukraine) by Interpipe Group, a global producer of steel pipes and railway wheels. The wheels are for Bogie Open Wagon with Air Braker (BOXN wagons). These are largely used for carrying goods such as coal, and are being loaded from an Ukrainian port in the Black Sea.
Government aims to promote Yatch tourism
The government is working on a plan to promote the ecosystem of yacht tourism and personal boating. India with its 7,500 km long coastline does not have a single international-standard marina. A marina is a dock, especially a fancy one used for sailboats and yatchs. Even a small country like Croatia has space for parking of 15,000 yachts. Yacht tourism will create employment opportunities are each yacht employs 20 people. Croatia and Italy have taken advantage of their vast coastline by constructing marina projects.
India 3rd in cross-border capital destinations
In the first half of the year 2024, India stood out by securing the 3rd position in the list of global cross-border capital destinations for land/development sites. This is according to Collier’s Global Capital Flows Report, H1 2024. Asia Pacific region is a significant source of global cross-border capital. Singapore, Hong Kong, Japan and China rank among top 10. Japan and China were among the top 5 destinations globally for global capital targeting standing assets. In H1 2024, nearly 70% of the total foreign inflows in India’s real estate sector were directed towards industrial and warehousing assets. Some recent notable asset-level deals by foreign funds include Daibiru Corporation, investing Rs. 1,000 Crores in an under construction office complex in Gurgaon being developed by DLF-Hines. ADIA and KKR have invested Rs. 121,864 Crores in Reliance Retail warehousing assets.
L&T to build advanced grid system
The Power and Transmission & Distribution (PT&) vertical has secured major contracts in the Middle East to expand and fortify high-voltage electricity grids with an estimated value of Rs. 10,000 to Rs. 15,000 Crores. The projects. considered mega orders, include High Voltage Direct Current (HVDC) transmission systems and Gas Insulated Substations. L&T has also been tasked with establishing 500kV HVDC transmission links. These links are crucial in interconnecting different operating regions within the national electricity network. This enables seamless power exchange and bolstering grid stability. This contract aligns with Saudi Arabia’s broader vision to modernize its infrastructure while integrating renewable energy sources. In Abu Dhabi, L&T has been awarded a contract to build two critical 400kV gas-insulated substations. The scope of work includes the installation of series current-limiting reactors, auto transformers, advanced control and protection systems, and substation monitoring tools.
NBCC to build AIIMS in Darbhanga
State-owned company NBCC’s arm HSCC has bagged a Rs. 1,261 Crores contract to establish AIIMS hospital in Darbhanga in Bihar. In a regulatory filing, NBCC informed that HSCC (India) Ltd., its wholly-owned subsidiary, has recently been awarded establishment work of AIIMS. The value of the contract is Rs. 1,261 Crores. NBCC is mainly into project management consultancy (PMC) and real estate business.
Promoting green funding for transition finance
The government is examining recommendations to promote transition finance. It is aimed at helping high carbon-emitting industries fund their shift towards decarbonization at lower interest rates. One of the suggestions is to create a specific fund set up by state-run financial institutions for lending and refinance to smaller and emerging companies. The proposed fund structure aims to help smaller companies scale up green operations and secure lower-cost credit, tied to meeting specific carbon emission reduction targets. The green fund would be set up by firms like IIFCL, IREDA and NaBFID. MSMEs account for around 38% of India’s manufacturing output: GTRI report. India needs Rs. 30 lakh crores from FY 2024-2030 to meet its COP climate pledges.
Transforming India Post into a Logistics firm
The government is looking to transform India Post into a logistics company and increase the revenue of the department by 50-60% in the next 3-4 years. While speaking at a Public Affairs forum of India, the telecom minister said about 25,000 villages in India that do not have mobile networks will be connected by next year. Postal department in moving leaps and bounds. Turnover is close to about Rs. 12,000 Crores per annum. The postal department has potential to take services to the doorsteps of people in rural and remote areas. To look towards a transformation from “mail and letter” business into a logistics company. This would entail route optimization, multiple sources to be able to transport the services. The government is spending a large amount in building huge infrastructure in the NE region, including investment of Rs. 48,000 Crores on road network. 6,000 villages in the NE and 25k villages across India do not have mobile towers.
Rural gold demand to boost festive season
The World Gold Council (WGC) has reported that rural gold purchases of gold during the festive season will provide fresh momentum to gold demand in India. WGC has earlier revised the demand for gold this year to 850 tonnes from 750 tonnes. The factors are associated with favorable monsoons and higher crop sowing this year. This has led to improvement in economic conditions. This could lead to increased gold buying interest. Gold jewelry buying and investment is expected to continue and rural buying would provide impetus. Gold experience strong gains in August, international prices rising by 3.7% and domestic prices by 3.9% driven by expectation of easing interest rates in the US. There has also been a resultant drop in the US Dollar. Meanwhile, India’s gold imports in August surged to 123-127 tonnes, nearly tripling from July and significantly up from 89.4 tonnes a year ago.
Local Feedback
LocalFeedback.org aims to track and document actionable parameters that help improve urban and rural infrastructure. The founder, Susmita, has juggled diverse roles in real estate, project budgeting, valuation and execution on construction sites. Having traveled to more than 20 countries, she has worked across 4 regions in India. Her areas of interest include sustainable buildings, electric mobility and urban development. She visited top-ranking cities on livability indices and has presented published papers at international conferences.