By Dipankar De Sarkar, IANS,
London : Parts of the agreement spelling out the policy and regulatory framework for foreign investment into India’s roads infrastructure will be changed by the end of September to meet investor concerns, Road Transport and Highways Minister Kamal Nath announced here Tuesday.
“There have been concerns about some aspects of our Model Concession Agreement (MCA). By the end of September we will correct all those. We are modifying these, so that these become much more investment friendly,” Kamal Nath said after a meeting with British consultants and investors.
The minister, who has brought his roadshow to London seeking investments of $10 billion over the next two years, said changes will be made in the MCA’s provisions on conflict of interest, exit policy and termination clause.
Provisions on conflict of interest had discouraged major Australian and Spanish firms from bidding for projects and disqualified others with multiple construction expertise from building roads, Kamal Nath revealed, adding: “We are rectifying this.”
Similarly, the government will “amplify” the termination clause, under which a construction company can be asked to build an extra lane if the road exceeds capacity.
With the road traffic volume in India expected to jump well over the economic growth rate over the coming years, Kamal Nath said, it was important to assure investors about the period over which they would be expected to build the extra lane and how they would be remunerated.
With a 12 percent rise in the auto sector and five new models of cars being added, “we expect a large number of roads to reach capacity much faster than projection,” he added.
He said the current exit policy would be changed to help builders “get out” of contracts that they had completed and start a fresh project if they wanted to.
“That is why the whole quantum of investors will increase substantially. I have discussed it over the past three months with all stakeholders. We are sensitising the investors and hearing their concerns,” the minister said.
Overall, the MCA was a “very good document”, but some of its provisions needed correcting, Kamal Nath said.
He said he did not see the task of attracting $10 billion as a “huge challenge” in spite of the recessionary climate in Britain.
“I see it as possible. Long-term investors were present. India remains a very attractive investment destination. In relative terms India will continue to attract investment. It’s recognised that there is no shortage in the world today of funding. There is a question of risk aversion by the banks, but I see this as possible,” he told reporters.
“I have been told by investors that they are looking at India as the best investment destination. And within that, infrastructure is the best parking lot,” he added.