8 ASIAN LEGAL BUSINESS – INDIA E-MAGAZINE MAY-JUNE 2024 On Jun. 4, both BJP supporters and holders of infrastructure shares sat in front of their televisions with a sinking feeling in their stomach. Narendra Modi-led BJP had unexpectedly fallen well short of the absolute majority mark, and consequent sentiments were causing the stock market to have its worst day in four years. Infrastructure, in particular, fell 10.2 percent compared to an overall 6 percent drop, recording its worst session since Mar. 2020. Infrastructure is so strongly linked to the Modi-led India growth story, that even a reduction in the ruling party’s strength threatened to erode millions in stock value. Modi’s infrastructure drive over the last ten years has been built on three fundamental objectives: First, India is rapidly urbanising, with over 42 percent of the population expected to live in urban lion) in the interim budget, up 11 percent from the previous fiscal year, boosting the funds available for the sector for the fourth consecutive year. The government set up a National Infrastructure Pipeline (NIP) and National Monetization Pipeline to stimulate infrastructure investment. Currently, the NIP has 9743 projects with a capital outlay of $1.3 trillion at various stages of development. INCREASING FOREIGN INTEREST Rapidly increasing budgets, regulatory reforms, rising subsidies, high-yielding infra-assets and professionalisation of the business-facing government machinery have combined to deliver a clarion call for global investors to flock to India. The increased focus on connectivity projects and renewable energy is also bringing in domestic and international investments. In FY 2024, FDI inflows into the infrastructure sector hit $4.2 billion, up from $1.7 billion in the previous fiscal year. This push to be business-friendly is bringing more investors to the subcontinent, rather than any regulatory reforms. Parveet Singh Gandoak, an M&A and private equity-focused partner at U.S. law firm King & Spalding’s Singapore office, says he’s been increasingly busy with infrastructure and renewables work. “Infrastructure has become a sweet spot because our clients are looking at it for attractive investment opportunities, and with geopolitics, demographics, and a leadership committed to development, it’s India’s time in the sun,” Gandoak says. Gandoak points to increased certainty in tax regulation and policymaking, better timelines for approvals, streamlining clearances and registrations, lower government intervention in projects and a high-performing stock market as some of the key reasons behind increased global interest in India’s infrastructure market. “Regulators have become much more market-savvy, and we are seeing the government appointing more industry experts to ensure better governance,” he adds. Another big impetus is the introduction of infrastructure investment trusts BUILDING GROWTH India’s economic growth is intrinsically linked to its infrastructure development, and the government is doing everything possible and more to attract private investment. However, concerns about a weaker NDA alliance, high counterparty risk, and a slow court system remain high on investors’ minds. BY NIMITT DIXIT Image: Sirius Films/Shutterstock.com centres by 2030. Infrastructure to support this higher standard of living needs to be built. Second, economic growth will soon be directly linked to sustainable, affordable energy. Building infrastructure to reduce foreign energy reliance is key. And, third, infrastructure is an enabler of growth. It adds employment, eases business logistical requirements and contributes significantly to the country’s gross domestic product, even in slow growth periods. Despite subdued private investment, the BJP-led government has increased its capital outlay and expenditure on infrastructure development almost each year to stimulate economic growth. For FY 2025, Finance Minister Nirmala Sitharaman raised capital spending on infrastructure to 11.1 trillion rupees ($134 bil-
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