Paulson calls attention to India’s infrastructure needs

Paulson calls attention to India’s infrastructure needs U.S. companies can help India build the infrastructure platform necessary to propel its economy forward, but the government needs to take steps to encourage private investment, Treasury Secretary Henry Paulson said on the eve a trip to the Southeast Asian nation.
   India achieved 10 percent growth in its gross domestic product in 2006 on the strength of technology services and structural reforms that have unleashed a strong domestic consumer market. Experts project India’s economy will continue to grow at an 8 percent annual clip.
   But India’s development as a low-cost manufacturing alternative to China has been stymied so far by rudimentary transportation infrastructure that cannot be relied on to export goods in an efficient manner.
   Imports are rising, but India’s exports are tiny compared with many nations. In fact, many global manufacturers are shifting back to China because of the difficulty getting their goods to ports and out of the country, said Anthony Chiarello, a senior vice president at AMB Property Corp. and former head of Maersk Logistics, during a panel discussion at the Council of Supply Chain Management Professionals annual conference in Philadelphia this week.
   The Indian government estimates that it needs to spend about $500 billion during the next five years to build energy and transportation infrastructure that will help raise the standard of living in the country. The government said it needs the private sector to fund up to one-third of that amount due to its fiscal constraints.
   Paulson, in a speech before the Council of Foreign Relations in Washington, encouraged India to create a positive investment, regulatory and financial climate that will make private financing of large projects easier. Easing capital limitations, establishing regulatory consistency and legal reforms to ensure contracts are enforceable are key ingredients to attract infrastructure investment, he said.
   “This infrastructure investment is important to helping India achieve its second Green Revolution, as Prime Minister Singh has called for. Our private sectors must take an active role in developing a sophisticated agricultural market in India, where farmers can tap modern supply chains and processing technologies to improve their productivity and the lives of their families,” said Paulson, who will participate in the India Infrastructure Finance Conference in Mumbai during his trip.