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India is a hardship posting for most expatriates and it isn't hard to understand why. In Delhi, electricity blackouts are a daily occurrence, and once last year the lights even went off, briefly, in the Prime Minister's home.
If you happen to be flying into Delhi nowadays, it's
more likely than not that you will be in a queue and circling above the airport for an extra half hour or even more. The airport, when you land, is teeming with people and more like one of India's legendary railway stations.
The picture changes when you travel a few kilometres outside the capital, but not for the better. It becomes instantly obvious that Delhi is a region of pampered luxury. In some parts of Haryana state, barely a stone's throw from the capital, the electricity comes on for only two or three hours a day and kerosene lamps still provide the light in many villages.
But these hardships are about to become the world's greatest economic opportunity. As India charges into the 21st century it will be spending billions of dollars to build or rebuild everything from airports to power stations to townships and even sewerage systems. The Government reckons the giant-sized price tag for all this will be an eye-popping $475 billion.
But that's probably a huge underestimate.
One company that spotted the opportunity long before the others is GMR, a south Indian company that was almost unknown until about seven or eight years ago. It has now spread its wings across India and is building airports, power stations, roads and also a township.
GMR has teamed up with Germany's Fraport (which runs Frankfurt Airport) to remodel Delhi Airport in time for the Commonwealth Games in 2010.
It is also partnered with Malaysia Airports to build a new international airport for Hyderabad, a city that's emerging as one of the new boom towns of the software industry.
"We figured out the opportunities in infrastructure before the others," says company spokesman Vijay Vancheswar.
Where's the money coming for all the mega-sized action? One cash-rich global player that's betting big on India's creaky infrastructure is private equity giant Blackstone, which has teamed up with Citigroup to launch a $5 billion fund for the sector. ICICI Bank also announced it would pour in about $5 billion. Similarly, British private equity player 3i has also said that it is putting together a $1 billion fund.
India's corporate titans such as the Reliance Group, the Tatas and the Anil Dhirubhai Ambani Group (ADAG) are also readying their war-chests and putting together giant diversification blueprints. The Tatas and Reliance have already put in bids to build mega-townships.
Anil Ambani of ADAG is building power plants and bidding for airport projects. He is also hoping to build a 31km elevated metro rail service in Mumbai.
The Japanese, too, have figured that it's time to move quickly and catch the Indian infrastructure bus before it leaves the stop. Last month Japanese Prime Minister Shinzo Abe was in town and he brought along a 200-strong delegation of businessmen from companies such as Mitsubishi Heavy Industries and Toyota.
High on the Indo-Japanese agenda was a $100 billion plan to build an infrastructure corridor to run all the way from Delhi to Mumbai, with several industrial hubs along the way. The hugely ambitious plan is still at a very early stage but it includes a new high-speed freight rail link, airports and several ports.
Infrastructure projects take years to get off the ground and in India they face the constant threat of being derailed by political interference. But one sector that is definitely taking off is aviation.
Work is already under way on new airports in Bangalore and Hyderabad and completely renovated ones in Mumbai and Delhi. In addition, the Government is also calling for bids to renovate and expand 35 airports in smaller cities and towns. The projects are desperately needed because it's safe to say that India's airports are probably the worst in Asia.
In contrast, look at the power sector, which remains the big black hole of the Indian economy. Power suffers because it's not controlled by the central Government and because the state electricity boards in each province simply don't pay their bills.
As a result, nobody has been able to figure out a workable model under which to bring in private companies and capital. It is reckoned that only about 50 per cent of the power generated in India is actually paid for by customers. The rest is simply stolen from the system, which in most developed countries would be an unbelievable concept.
But even in power there are ambitious plans, though they are still years away from being translated into reality. Evidence of this came on Monday when the Power Grid Corp. launched a $750 million IPO. Only about 35 per cent of the homes in rural India get electricity, so even here it's a safe bet that there'll be a boom in the coming decade.
The good news for India and many infrastructure players around the world is that the Government is no longer allergic to letting the private sector into areas like power and roads.
"Wherever private capital can contribute it should be welcomed. That will allow government resources to be diverted to agriculture and health," says Vinayak Chatterjee, chairman of Feedback Ventures, a consultancy firm that specialises in the infrastructure sector.
Chatterjee reckons there's a clear pattern in India's infrastructure development: the sectors where the public is used to paying user charges will be reformed first. Twenty-first century India, eager for six-lane highways, modern airports and electricity, could, in coming years, provide some of the greatest opportunities on the globe.
