New Delhi, Sep 11 (IANS): There is a need to create a pipeline of projects for tenders, overcome hurdles of financial closure and ensure a standardised bidding process to boost investment in infrastructure and make participation of investors broadbased, an industry lobby said Sunday.
A study by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Yes Bank said that issues such as lack of bankable projects, policy and regulatory framework, the right kind and tenure of funding and underdeveloped debt markets are the fundamental issues that need to be addressed.
The study also said that a pre-feasibility study by a reputed consultant would go a long way to ensure appropriate structuring, adding that the government needs to invest time and resources in the development stage.
It stressed on providing priority sector lending status to infrastructure lending, perhaps as a sub-limit within the existing 40 percent obligation.
"Allow banks and infrastructure focused non-banking financial companies to raise long term infrastructure bonds free of Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR) requirements for 10-15 year period, especially for infrastructure," said the report.
It also sought promotion of a specialized financing institution that could securitise the cash flow from loans in a pool of successfully operating infrastructure projects to create a wider market for infrastructure assets.
"To attract private investments, it is important to ensure that investments in infrastructure yield returns to keep the interest of investors alive," said FICCI secretary general Rajiv Kumar.
"The policy objective should be to reduce perceived risks by introducing greater clarity and providing an environment that reassures investors. Such an environment would encourage a larger number of private investors to enter the field," he added.
The private sector is envisaged to invest $500 billion in building infrastructure in the 12th Plan (2012-17), which is half the total projected investment of $1 trillion.
"India's growth story can only be sustained by removing bottlenecks that impede investment in infrastructure, wherein a stable policy framework is an essential prerequisite to attract private capital, both domestic and foreign," said Rana Kapoor, founder, managing director and chief executive officer, Yes Bank.
According to Kapoor, the focus on infrastructure and developing public private partnership projects is set to gain further traction as the government aims to double the infrastructure investment to $1 trillion in the next plan.