Indian Cabinet’s Project Monitoring Group Lifts Barriers on 217 Developments

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Billions of investment dollars set to flow as Government cracks down on red tape

Sept. 9 – The Indian government has recently removed several procedural hurdles that were responsible for bottlenecking large infrastructure projects worth a total of US$26 billion. Power projects saw the greatest liberation, which includes 17 developments previously stalled due to red tape. These projects, worth US$18 billion, will begin starting next quarter and will help meet India’s growing energy needs.

The Project Monitoring Group (PMG), which was established by the Cabinet Committee on Investment to monitor and resolve several bottlenecks affecting domestic infrastructure projects, is now overseeing 217 projects worth US$200 billion. The PMG is tasked with streamlining inefficient multi-ministerial procedures and onerous red tape restrictions as a part of Prime Minister Manmohan Singh’s plan to boost India’s economy through greater investment and infrastructure development.

Due to India’s growing energy needs, the power sector has received the greatest attention from the PMG. Power projects have suffered from fuel supply shortages and other material bottlenecks. In order to resolve these issues, the PMG has facilitated direct communication between project developers and the Ministry of Coal to assure the sufficient supply of resources needed to fuel these projects.

Most recently, the PMG and the Ministry of Coal have entered into a fuel supply agreement with the Talwandi Power plant, a project worth US$10 billion. The fuel supply agreement has become a valuable tool of the PMG, allowing them to address the needs facing these power projects.

“In 16 cases, fuel supply agreements have actually been signed and timelines fixed for power generation,” commented a PMG officer.

The PMG is also working with the steel sector to resolve issues affecting the supply of fuel to several mining companies, which have operational facilities but no fuel to process the steel. To resolve this issue, the Ministry of Steel is allowing several affected plants to access coal from neighboring mines in order to meet demand.

The PMG has also helped furnish 10 projects in the oil, road and railway sectors with environmental clearances. These clearances will help put investments of nearly US$15 billion to work in India.

Chris Devonshire-Ellis, Managing Partner of Dezan Shira & Associates’ India Operations, comments: “It seems the Indian Cabinet has been finally able to knock some ministerial and bureaucratic heads together and crack the whip. This has been long overdue. Hopefully streamlining inter-governmental communications will also follow. These actions free up tens of billions of dollars in the Indian economy and will have a positive effect upon GDP growth as the impacts filter down into all areas of industry. It is most welcome after several weeks of discouraging performances.”

The PMG’s activities come on the heel of falling domestic productivity, which has been exacerbated recently by a sharp decline in the rupees’ value.

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.

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