Category — Construction

Although India is  noted as producing some of the best creative technologically-oriented talents in the world today, too few young professionals concentrate their education toward civil engineering. This bottlenecks the nation from realizing its full economic potential. India is challenged by inadequate roads,  as well as an electric  power system that creates the need for individual office buildings to install their own generator-powered electricity.

Money is not really the problem since the government has plans for a $500 billion infrastructure investment through 2012 and more beyond. The problem stems from a lack of qualified home-grown civil engineers. During the British Raj and for years later, civil engineers were among the most respected tecnical professionals in India.  The first engineering college in India, now known as IIT Roorkee was established primarily to educate “overseers”, highway engineers, dam builders, soil specialists and all the flavors of civil engineering.

This once-enviable profession  no longer pays as well as writing software programs for the world’s leading companies.  So, what’s a modern-construction yearning society do do?

The Indian government acknowledges a critical shortage for civil engineers. Therefore, India has set on a path creating an additional 30 universities and is examining permitting foreign educational institutions to set up campuses in the country.

Foreign investment in India’s current infrastructure needs is also being called upon since no amount of emphasis upon home-grown talent will be appropriate. Kamal Nath, minister of road transport and highways, recently said the government plans to finance a highly ambitious road-building campaign through raising capital from overseas investments that include soliciting pension plans as well as securing long-term investments.

Kamal Nath, Union Cabinet Minister of Road Transpost & Highways

Plans are also underway soliciting foreign construction company participation in development projects that have been compared to the post-World WarII U.S. Highway construction boom.

This bodes well for American, British, Canadian, Japanese, Korean and Chinese engineering and construction companies if they can invest the time and effort to understand how India functions

India needs $1 trillion in infrastructure investment, where there is still a gap of 25-30 per cent that can be filled by U.S. companies, according to the country’s Finance Minister, Pranab Mukherjee speaking at the recent U.S.-India CEOs Summit held in Washington, D.C. Infrastructure (roads, airports, bridges, railways) is often described as India’s Achilles heel, especially in comparison with its fast growing neighbor, China, whose eastern cities have become shining examples of rapid development.

The Indian federal government has been encouraging the country’s financial sector for reforms that will sustain growth, including legislation to increase the foreign investment cap in the insurance sector , from the current 26 percent. Since insurance companies invest so much of their premiums collected into the kind of long-term debt instruments that are used to fund infrastructure projects, their greater participation is seen as a lever to accelerate infrastructure development. Mukherjee said he believed delays passing this legislation have inhibited U.S. infrastructure firms from accessing the necessary insurance protection which has been a key factor inhibiting greater investment. Also, he said, many efforts have been initiated toward direct and indirect tax reformation.

When asked why India was not receiving enough US infrastructure investment, Mukherjee said, basically, that his country needed much more than was presently being funded. He said the additional sectors of road, shipping, communication and transport need long-term estimated infrastructure investment of $250-300 billion.

India’s finance minister reported his country’s economic foundations are firmly sound. He said there is great optimism for medium to long-term investment pointing to the high savings and investment rates that should keep current high-growth momentum active in the foreseeable future. Presently, India experiences a relatively high investment rate – 35 percent of GDP.