With US$460 billion set to flow into infrastructure development over the next five years, India represents an opportunity for Chinese companies to profit from the expertise they have acquired at home.
How best to exploit this opportunity was the topic of discussion at a CHINA ECONOMIC REVIEW conference held in Shanghai on December 11. The event was sponsored by ESSAR, the Indian conglomerate, and supported by the Confederation for Indian Industry.
Making his keynote address, Prakash Gupta, consul and head of chancery at Consulate General of India, spelled out the Indian government’s mandate for infrastructure investment.
“India can certainly learn from China in terms of infrastructure investment,” he said, highlighting the adept manner in which China has put in place the transport links and utility networks so crucial to its economic development.
These sentiments were echoed by Jagdish Acharya, CII chairman, who noted that India plans to increase the infrastructure investment share of its GDP from 5% to 9% by 2012. Private sector involvement in airports, roads, power and telecom could account for as much as a third of the total.
India’s highway network, which is supposed to expand by 10,000 kilometers at a cost of US$76 billion over the next five years, was singled out as an example of how Chinese firms can get involved.
“We need to construct a 300-kilometer highway within two years, and we need Chinese companies to help do this. In terms of cost, speed and technology, what can you [China] offer to us?” J.J. Shrikhande, China head of Indian construction and engineering firm Larsen & Toubro, asked some Chinese highway contractors present at the event.
Given the challenges both countries face in curbing pollution, the environment was also a popular topic, with James Abraham, an India-based director with the Boston Consulting Group, explaining the potential in India for Chinese firms able to develop “green infrastructure.”
Asked by Shrikhande if he had the technology to do this, Geng Xiaoping, general manager of a highway contractor tied to the Jiangsu provincial government, boasted that his firm’s R&D capabilities were among the best in China.
“We want to enter into the Indian market, but at this point we are still worried about the potential risk,” Geng said. “That’s why we want to start by selling our services to Indian companies.”