Indian ports sector: sailing through choppy waters

India’s minister for urban development and parliamentary affairs, Kamal Nath, recently announced that the country will spend US$1,000 billion on infrastructure development for the next five years, with 40% of the required investment expected to be raised from the private sector. The announcement provides the broader context for an earlier statement by the prime minister on public-private partnerships being envisaged for 42 ports for the 2012-13 fiscal year, valued at ₹145 billion (US$2.6 billion) and with a capacity of 244 million tonnes.

Given these ambitious targets, there is a need to look at whether the government is likely to achieve its vision for the ports sector in the existing environment for private investment in the sector.

Why private investment?

The government’s foreign direct investment (FDI) policy allows 100% FDI for port development projects as well as 100% income tax exemption for 10 years.

Akshay Jaitly is a partner at Trilegal and Megha Kaladharan is an associate. Trilegal is a full-service law firm with offices in Delhi, Mumbai, Bangalore and Hyderabad.