For funds, India is where the returns are, not China

Asia’s developing economies need to spend about $22.6 trillion on infrastructure projects like roads, bridges, ports and railways over the next 15 years to 2030, in order to maintain economic growth and reduce poverty, according to the Asian Development Bank.

India is being seen as a land of opportunities by some of Asia’s biggest infrastructure investors. On the contrary, funds are taking a rather dim view of China’s mammoth Belt-and-Road initiative as far as investment opportunities go. 
According to media reports, Macquarie Group views India as a key market, thanks to its strong economic growth and state asset sales. This explains its recent purchase of nine toll-roads with charges indexed to inflation. 
Media reports quoted Frank Kwok, co-head of Asia Pacific at Macquarie Infrastructure & Real Assets as saying that Belt-and-Road is “very much a China-led initiative, but really it’s about the entire region.” He added that since Belt-and-Road  initiative is China’s means of exerting influence over the region, “financial returns are probably not the top priority”. 
He stressed that China’s Belt-and-Road was driven by geopolitics rather than investment returns.
Kwok was speaking at the Bloomberg Invest Australia summit in Sydney on Wednesday. 
It is pertinent to note here that Asia’s developing economies need to spend about $22.6 trillion on infrastructure  projects like roads, bridges, ports and railways over the next 15 years to 2030, in order to maintain economic growth and reduce poverty, according to the Asian Development Bank. 
China’s Belt-and-Road is aimed at funding some of those investments. 
President Xi first proposed the one belt one road vision in 2013 and since then it has become enshrined in the Communist Party’s constitution. The initiative involves an investment of around $1.2 trillion on railways, roads, ports and power grids over the next decade, according to Morgan Stanley. 
The initiative aims to open new business opportunities for domestic companies and extend China’s reach. It is to be noted that the planned route cuts through multiple conflict zones and some of the world’s most corrupt countries. 
As regards India, despite the opportunities it offers, it also presents its own set of challenges, as said Cyril Cabanes, head of Asia Pacific infrastructure transactions at Caisse de Depot et Placement du Quebec, which is Canada’s second-biggest pension-fund manager. Media reports quoted Cabanes as saying that the India opportunity is apparent, but the deals are slow in coming. 
“The size of the market is well known, but the velocity of deals coming to market and getting done has been generally fairly low,” he said. “It’s not just about putting capital in, it’s about generating returns and then moving on to the next opportunity, which India hasn’t quite graduated to,” Cabanes said.
 
(Source: Economic Times, media reports)

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