India plans to upgrade Kolkata, Chennai airports

KUALA LUMPUR — India will invite private investors to help modernise two major airports in March, Prime Minister Manmohan Singh said yesterday, stepping up efforts to modernise the country’s infrastructure.

By (Reuters)

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Published: Tue 13 Dec 2005, 9:36 AM

Last updated: Thu 2 Apr 2015, 4:18 PM

India, Asia’s third-largest economy, is trying to revamp or privatise state-run airports to keep pace with the increase in passengers, but reform has been slow.

India would have to invest a minimum of $150 billion over the next seven or eight years to modernise its infrastructure, Singh told businessmen gathered in the Malaysian capital for a meeting of the Association of South East Asian Nations (ASEAN).

“In March or thereabouts we will throw open the expansion and modernisation of Calcutta and Madras airports to public-private partnerships,” Singh said, giving no further details.

Calcutta is the old name for the eastern city of Kolkata and Madras for the southern city of Chennai.

With Indian airports handling nearly 60 million passengers in 2004/05, compared with 40 million a year earlier, the need for revamps is pressing.

Contracts to modernise two key airports in the capital, Delhi and in the commercial hub of Mumbai, are expected to be awarded by the end of December, aviation minister Praful Patel said last month.

The government aims to set up two joint venture companies to hold the leases to operate the two airports and is offering 74 per cent stakes in them. Foreign firms can hold up to 49 per cent, while private Indian companies must hold at least 25 per cent.

Singh said India, with a $700 billion economy, was now growing at the rate of about seven per cent a year, and aimed to accelerate that even further.

“It is our ambition in the next three or four years to raise India’s rate of growth to nine to 10 per cent per annum.”

But analysts across the world warn that growth could be a vain hope if Singh’s government did not tackle India’s shambling communications and transport systems immediately.

India’s airports and railways sectors need around $55 billion over the next decade, the power sector needs $75 billion, while telecoms need $25 billion over the next 5 years, analysts say.

Helping resolve India’s infrastructure problems offered businessmen a huge opportunity, Singh said, though he admitted concerns persisted over red tape and issues of competitiveness.

“We are today engaged in the most ambitious road expansion programme in India’s history,” he said, referring to a 540-billion-rupee ($12 billion) programme begun in 1999 to widen more than 13,000 km (8,125 miles) of highways from two to four lanes.

India’s railway system would soon be streamlined along a similar pattern, Singh said, with the completion of a dedicated freight corridor linking the cities of Mumbai, Delhi and Kolkata.

“Liberalisation is not a process of mechanical economic policy-making, but a struggle for the minds of our people, and we do believe we are succeeding,” Singh said.

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