The infrastructure sector’s journey over the past 25 years has been momentous, marked by several path-breaking reforms, policies and programmes, as well as landmark events that have changed the course of the sector. Indian Infrastructure recalls the 25 most noteworthy events, policies and programmes that have shaped the sector over the past two and a half decades…
Policy and Fiscal Incentives for PPPs in Port Development
The Ministry of Shipping (erstwhile Ministry of Surface Transport) introduced the first set of comprehensive guidelines for private investment in 1996. Under these guidelines, the leasing of port assets, construction or creation of new assets, leasing of equipment for port handling and floating craft, and pilotage and captive facilities for port-based industries were identified as areas for private sector participation. In 1998, the government allowed the formation of joint ventures for the development of port facilities. In the same year, further reforms were implemented, allowing 100 per cent FDI with automatic approval (against 74 per cent earlier). In June 2000, the government introduced a model concession agreement to promote private sector participation in the sector.
NELP
The New Exploration and Licensing Policy (NELP) was devised in 1997-98, essentially as an improvement over the previous policy of offering exploration blocks to companies. The NELP came into effect in 1999, offering acreages to firms through a process of open global competitive bidding. The high point of this policy was that companies were allowed full cost recovery in their exploration projects. Under the NELP, the profit surplus, calculated as a residual after the subtraction of royalty and costs, is to be shared between the exploration and production company (or the contractor) and the government (owner of the block).
Revenue Sharing Regime in Telecom
In July 1999, telecom service providers migrated from a fixed licence fee system to a revenue-sharing regime, which allowed them to pay a percentage of their revenue as licence fees, instead of a fixed amount. This was beneficial as several telecom service providers, which had committed a large quantum of licence fees, were finding it difficult to achieve financial closure.
NHDP
The National Highways Development Project (NHDP), the country’s largest highway project, was launched in 1999 with the aim of developing the national highway network in India. The Golden Quadrilateral is one of the most important projects implemented under the NHDP. Spanning 5,846 km, connecting Delhi, Kolkata, Mumbai and Chennai, it is the fifth longest highway project in the world, passing through 13 states. To further national highway development, the government, in 2017, launched the Bharatmala Pariyojana, focusing on a corridor-based approach for network expansion. Under this, 65,000 km of network will be developed to connect 600 districts with four-plus-lane highways.
Privatisation of DVB
At a time when the distribution segment in Delhi was grappling with aggregate technical and commercial losses of over 50 per cent and accumulated losses of over Rs 230 billion, the concept of privatisation of the erstwhile Delhi Vidyut Board (DVB) was introduced. Tata Power and Reliance owned-BSES were brought in and joint ventures formed with the state government in 2002. In less than five years, the privatisation initiative yielded remarkable results.
Electricity Act, 2003
The most pivotal legislative development in the power sector, the Electricity Act, 2003, brought about a paradigm change in the sector. In addition to liberalising and delicensing generation, this act eliminated the need for techno-economic clearances (with the exception of hydropower projects), liberated captive plants from controls, and allowed independent power producers to sell power directly to consumers without going through the state electricity boards, among other reforms. It was the sector’s first solid step towards establishing an efficient and competitive electricity market.
AAI (Amendment) Act, 2003
The legal framework for the entry of private players in airport development and operations was established with the introduction of the Airports Authority of India (AAI) (Amendment) Act, 2003. The act allowed airports to be leased to private entities for development and operations. It also empowered the government to levy advance development fees for the development of existing airports and for setting up new airports. Greenfield airports at Hyderabad and Bengaluru were developed under this act. Further, in 2006, operations, management and development agreements (OMDAs) were signed for Delhi and Mumbai airports. Recently, between 2020 and 2021, AAI and the Adani Group signed OMDAs for six airports – Ahmedabad, Lucknow, Mangaluru, Guwahati, Jaipur and Thiruvananthapuram.
JNNURM and AMRUT
The launch of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) in 2005 was the biggest reform initiative for the urban infrastructure sector. Despite facing several issues and challenges, the programme brought the urban sector in the spotlight and provided an impetus to PPP projects in the water and sanitation sector. It also placed a strong emphasis on enhancing the capacity of urban local bodies. After the completion of its assigned tenure by March 2012, the programme was subsequently extended twice till March 2017. The current government decided to renew the scheme by launching the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), which covered 500 cities and towns. Recently, the government launched AMRUT 2.0 to further enhance the scope and reach of the mission.
Unified Licensing Regime
The much-awaited guidelines for unified licensing for the telecom sector were notified in August 2013. These guidelines replaced the long-standing unified access service licence regime, which required operators to obtain a separate licence for each service. The new norms allowed them to offer a number of services (including internet TV) under one licence. Further, the new norms delinked spectrum from operational permits and allowed companies to offer services using any technology. The rules have been instrumental in the rapid proliferation of 4G and 5G services.
Sagarmala Programme
Launched in 2015, the Sagarmala programme is one of the government’s most ambitious initiatives for the port sector till date. It marked the first instance of the government shifting its focus from port development to port-led development. Between 2015 and 2035, the programme aims to implement more than 802 projects, involving an investment of about Rs 5.5 trillion under its four focus areas – port modernisation and new port development, port connectivity enhancement, port-linked industrialisation, and coastal community development.
Smart Cities Mission
Launched in 2015, the Smart Cities Mission aims to develop 100 smart cities by deploying smart solutions to provide core infrastructure and improve the quality of life of citizens. Projects being implemented under the mission include affordable housing, integrated multimodal transport, creation and preservation of open spaces, and waste and traffic management.
HAM and TOT Models
In 2016, the government approved the hybrid annuity model (HAM) as one of the modes for implementing highway projects. This was a time when lender and developer interest in pure BOT contracts had almost dried up. HAM successfully increased the pace of project awards. Sharing of financial risks between the government and private players is the primary advantage of this model. During the same year, NHAI was authorised to monetise national highway projects under the toll-operate-transfer (TOT) model. The launch of the TOT model opened up opportunities for monetising brownfield assets.
IBC, 2016
Considered a transformational law for the speedy resolution of stressed assets, the Insolvency and Bankruptcy Code (IBC), 2016 has brought about a significant change in the balance of power between creditors and debtors. The IBC focuses on a turnaround plan with a deadline for stressed assets. Failure to meet these deadlines leads to liquidation.
NCAP, 2016
The National Civil Aviation Policy (NCAP), 2016 comprehensively covered several key areas including maintenance, repair, overhaul (MRO), ground handling services, helicopters and charters, bilateral traffic rights and route dispersal guidelines. The Regional Connectivity Scheme (RCS-UDAN), encapsulated under NCAP, 2016, has been a game changer for air connectivity. It focuses on improving air connectivity in Tier II and Tier III cities, and subsidising air travel on these routes.
OALP
Introduced in 2017, the Open Acreage Licensing Policy (OALP) aims to boost domestic hydrocarbon production. The OALP regime gives oil and gas companies the freedom to select blocks or areas for exploration and production (E&P). The new policy framework provides a revenue-sharing model for oil and gas blocks, besides providing marketing and pricing freedom for the oil and gas produced. So far, 134 E&P blocks have been awarded through seven bidding rounds.
Saubhagya
The Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya) is recognised as the biggest electrification initiative of its kind, delivering the fastest expansion of electricity access. The scheme was launched in 2017 with the objective of achieving universal household electrification through last-mile connectivity. Having achieved its objective in 2019, the scheme has set the stage for the crucial task of ensuring 24×7 quality power supply to all.
NIP
The National Infrastructure Pipeline (NIP) is a key step towards infrastructure development. Launched in 2019, it envisions an infrastructure investment of Rs 111 trillion over a five-year period from 2019-20 to 2024-25.
Vande Bharat Trains
The semi-high-speed train, Vande Bharat was introduced in 2019 and is one of the most prominent products of the Make in India programme. Manufactured entirely in India, the train features world-class amenities and advanced technologies. Currently, 25 Vande Bharat trains are operational on 50 routes across the country.
IGX
Established in 2020, Indian Gas Exchange Limited (IGX) is India’s first automated national-level gas exchange for physical delivery of natural gas. It is a transparent marketplace for trading spot and forward gas contracts. It aims to promote and sustain an efficient and robust gas market and foster gas trading.
RDSS
In the fourth attempt to turn around the power distribution segment, the results-linked Revamped Distribution Sector Scheme (RDSS) was launched in 2021 with a corpus of over Rs 3 trillion. Since the new scheme is reforms based and results linked, it does seem to have the necessary ingredients to achieve real improvements in the distribution segment. Instead of a one-size-fits-all approach, this scheme is based on action plans tailored to each state.
NMP
The National Monetisation Pipeline (NMP) was launched in 2021 to unlock the value of brownfield public sector assets by leveraging institutional and long-term capital. It estimates an aggregate monetisation potential of Rs 6 trillion via core assets of the central government over a four-year period, from 2021-22 to 2024-25. The top five sectors identified under the NMP are roads, railways, power, oil and gas pipelines, and telecom, accounting for nearly 83 per cent of the aggregate pipeline value.
FASTag made Mandatory
The electronic toll collection programme, FASTag, was rolled out in 2016 to facilitate faster movement of traffic on highways. In a big move, FASTags were made mandatory for all vehicles in 2021, significantly enhancing the travel experience, reducing congestion at toll plazas and making the toll collection process efficient and transparent.
PM Gati Shakti
In order to promote multimodal connectivity and coordination among different ministries and departments, the government launched the PM Gati Shakti-National Master Plan in 2021. The digital platform brings together 16 ministries for integrated planning and coordinated implementation of infrastructure connectivity projects. The plan was further supported by the launch of the National Logistics Policy in 2022. Its key objective is to lower logistics costs.
COP26 Commitment
In a big step towards decarbonisation, India committed to achieve net zero emissions by 2070 at the COP26 summit in Glasgow in 2021. Further, targets have been set to achieve a non-fossil energy capacity of 500 GW and to fulfil 50 per cent of the country’s energy requirements from renewable sources by 2030.
5G Launch
High speed, low latency, next-generation 5G services were launched in October 2022. The country has seen one of the fastest 5G roll-outs in the world, notching up 100 million users within eight months. The launch of 5G has opened up new avenues for various sectors, including manufacturing, healthcare, augmented entertainment, and smart city applications.
Green Hydrogen Mission
The National Green Hydrogen Mission was launched in January 2023, with a target of setting up at least 5 mmt of annual green hydrogen production capacity and adding 125 GW of associated renewable energy capacity by the year 2030. The National Green Hydrogen Mission will facilitate demand creation, production, utilisation and export of green hydrogen through its various components.
