Indo-US Business Confidence Index

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President Message

Indian infrastructure and real estate sector

Development of infrastructure is critical to India’s development in many ways. First, the projected GDP growth of 9- 9.5 percent is possible only when the manufacturing, services and agriculture and allied sectors are provided with a strong infrastructure backbone. Secondly, foreign investors look for a comfortable infrastructure network before they decide to channel their investments into the country. Thirdly, huge expenditure entailed by the infrastructure creates employment, income and wealth to the people leading to inclusive growth.

IACC has been focusing on infrastructure and real estate, particularly for building strong public and partnerships between the Indian and the US enterprises. Infrastructure has been the focus of the IACC pioneered Indo-US Economic Summits. We have discussed threadbare and delineated action frame for promoting partnerships in areas like roads, civil aviation, ports sector and real estate. As a follow up of the Indo-US Economic Summit 2007, this year we have organized an aviation Summit, which was a confluence of the major Indian and US civil Aviation interests. Significantly, IACC is now the host agency for the Aviation cooperation Program (ACP) a joint initiative between India and the US for promoting Cooperation between the two countries in civil aviation. I am delighted to inform you many important programs and initiatives will be taken up under this banner shortly.


Let me now touch upon some of the challenges that we face in the infrastructure sector. In the next five years or so, India requires an investment of US$ 500 billion or so in the infrastructure sector including the real estate sector.

Internal mobilization of such a huge fund is difficult since sectors like manufacturing, power generation, services and agriculture also will compete for their share of investment. Undeniably, these vital sectors are also starved of funds. The gestation period for the infrastructure sector is very high and returns initially are very low. This will hold back the private sector investments. To overcome this, we have to attract major companies, which have a good track record of investing in infrastructure, be it roads, ports, real estate or civil aviation. These companies have to be sensitized about the projects on shelf, Government policies, advantages of taking up projects in India, tax breaks etc. I am happy that IACC has been able to initiate a dialogue with the US companies in making them aware of the huge pay-offs of the infrastructure sector. The well researched paper that we have brought out titled ‘Building Strong Partnerships’ documents business opportunities that exist in the diverse fields of infrastructure.


Real estate, I believe, holds considerable growth prospects in the future. With one in every six human beings on earth an Indian, we face a shortage of housing. The Government estimates that India requires 26.53 million units by 2012. A study by the NCAER puts that nearly 52 percent of the urban and 44.8 percent of the rural population save in the hope of building a house. Still, we will be falling short in terms of financing the resource requirement of adding close to a million houses every year. We have to evolve imaginative schemes to attract funds. Happily, there is a widespread interest by the Indians and foreign investors to invest in the real estate funds in the country. We have to promote such investments, of course with checks and balances, to regulate them in a meaningful manner.

I am happy that this issue is focusing on infrastructure and real estate. We have to discern the business opportunities, challenges ahead and also the policy glitches that inhibit the growth through informed dialogue. I shall be happy to receive your valuable comments and suggestions on the subject since we are contemplating to focus on the subject at the next Summit for US-India Trade & Economics (SUITE) 2008 to be held on September 8-9, 2008 at the Mid America Club, Chicago, Illinois this year.

In the last few months IACC organized the Second Legal Conference on “Doing Business with India” on April 8–9, 2008 at Plano, Texas ; a conference on Indo-U.S. Aviation Cooperation - Growth of Civil Aviation in India: Challenges & Opportunities on April 09, 2008 in New Delhi ; mounted the largest ever delegation and participation at NABSHOW in Las Vegas from April 11-17, 2008 ; the Environmental Resource Center (ERC) organized the visit of delegation to Waste Expo from May 5-8, 2008 to Chicago, Illinois, USA.

Farokh Balsara | View President Mr. Farokh T. Balsara's Profile