Mumbai: Union Minister Nitin Gadkari on Friday assured investors that the internal rate of return (IRR) of infrastructure projects in the country is very high and they should not worry about their investments in the sector. “The internal rate of return (IRR) is very high and so there is no issue with economic viability (of infrastructure projects in the country),” the road transport and highways minister said.
He was speaking at a national conference on investment opportunities in highways, transport and logistics.
He said the Mumbai-Pune Express Highway, which was built at a cost of Rs 1,600 crore, was first monetised for Rs 3,000 crore and later for Rs 8,000 crore.
The government does not allocate projects until 90 per cent of land is acquired and forest and railways clearances are in place, he said.
Gadkari assured investors that with all clearances in place, there is minimal chance of any infrastructure project getting stalled in the country.
He further said reduction in cost of logistics can boost economic growth.
While the logistics cost in China is in the range of 8-10 per cent and 12-13 per cent in America and Europe, it is 14-16 per cent in India.
The reason for high logistics cost in India is due to lack of roads and railway infrastructure, the minister explained.
According to him, the size of the automobile sector in the country may reach Rs 15 lakh crore over the next five years, compared to Rs 7.5 lakh crore at present.
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Gadkari said India too will be a prosperous and successful country in the coming years as Indian road infrastructure will be up to the standards of the US and Europe. Citing reasons for delay in road projects prior to 2014, the minister said the pace of construction was 12.7 km per day then and many projects had stalled due to land acquisition, court cases and financial problems.
The minister also informed that a total length of 6,722.31 km has been completed out of 7,245.07 km of National Highway projects under build-operate-transfer (BOT-annuity) and build-operate-transfer (BOT-Toll) mode.