Brownfield asset divestment to raise capital for infrastructure projects


The current infrastructure market has seen a fall in investment from 39.6% in FY12 to 31% in FY19. But with the current propositions for the smart infrastructure, private investment is a must. As a proposed method to increase the investment in the market, the Confederation of Indian Industry (CII) has called upon the Government to consider Brownfield Asset divestment. Brownfield assets include assets like ports and airports which become a low-risk investment option for the private investors and promote further investment in the infrastructure sector. The model could supposedly help the Government raise capital for its proposed infrastructure development and capital expenditure programmes at a time when there are fiscal constraints.


Chandrajit Banerjee, Director General, CII mentioned that for India to grow at 10% growth over the next five years the amount of investment has to be doubled compared to the last five years. India needs an investment of Rs 451 trillion to grow at the expected growth rate according to the CII report titled Investment Requirements in India: Roadmap for 2019/2020-2023/24. It becomes important to create a low-risk environment for private investors in order to boost infrastructure growth and achieve the smart city mission.


Brownfield assets such as ports, airports, power plants and roads could be put up for sale by the government that would bring in private investment as well as the low-risk project could attract lenders as well. Many international wealth funds and pension funds are also willing to bring in long-term funds into India for such projects. Government capital, in turn, gets freed up for fresh investments. The proceeds, however, should be earmarked for capital investments. The success of the toll operates transfer (TOT) model for the roads sector gives confidence that a well-strategized model of Brownfield Asset Recycling can work well for many sectors of the economy and hence boost infrastructure growth.


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