Finance Minister Nirmala Sitharaman said on Tuesday that the government hopes to raise three trillion rupees through the Development Finance Institution (DFI) for improving the country’s infrastructure sector.
The government has approved a proposed law to set up such an institution that can facilitate investments in the infrastructure sector. The infrastructure sector has been the prime focus for the government because it will be critical to fulfill the ambition of the country emerging as a global hub for manufacturing.
India has also announced a single market for agriculture produce across the country in order to boost farmers’ income and cut out middlemen. Improving the roads, railways, and ports network will be equally important for achieving the goal.
“The Cabinet has cleared this bill through which we will have an institution and institutional arrangement which will help in increasing long-term funds,” Sitharaman said.
The government has identified about 7,000 projects under the National Infrastructure Pipeline (NIP) with a projected investment of a 111 trillion rupees until 2025.
The Development Finance Institutions will be offered certain tax benefits for ten years. Analysts say that rival China has an edge over India in manufacturing because of its superior infrastructure, even though wage costs have been mounting in the world’s No. 2 economy.
With the onset of the pandemic, however, several global companies have been looking to set up bases in India and having a robust infrastructure or at least the promise of one is likely to be a strong attraction.