Boston, MA -- (SBWIRE) -- 01/25/2013 -- BMI View: We are maintaining our FY2012/13 growth forecast of 6.0% for the Indian construction sector, despite the stellar performance seen by the sector in Q1 2012/13 (April-June). This is because we believe that relatively non-conducive monetary conditions, policy inertia and lacklustre infrastructure activity will continue to dampen construction activity for the rest of FY2012/13. Having said that, we believe that the outlook for the construction sector beyond FY2012/13 is brightening up. Not only are monetary conditions likely to improve for construction companies in FY2013/14, but the government is also making pertinent efforts to remove bottlenecks that are delaying infrastructure projects in India. At present, we are forecasting real growth for India's construction sector to reach 7.6% in FY2013/14.

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The key drivers affecting growth are:

- In October 2012, the Asian Development Bank (ADB) and India Infrastructure Finance Company Limited (IIFCL) has launched the first version of the credit enhancement scheme or infrastructure bond guarantee scheme. This risk-sharing facility will partially guarantee INR7.2bn (US$128mn) of rupee-dominated bonds issued by Indian companies to finance infrastructure projects.
- In early-October 2012, the government announced that it is planning to set up a National Investment Board (NIB) to speed up infrastructure development within the country. The NIB, led by Prime Minister Manmohan Singh, will focus on fast-tracking the execution of approved projects by getting all regulatory clearances.
- In mid-October 2012, the Indian government finalised the long-delayed bill for land acquisition, paving the way for the bill to be introduced during the parliamentary session in end-November 2012. The final draft of the bill now proposes that land for public-privatepartnership (PPP) and private projects can be acquired with a two-thirds majority from affected landowners - an improvement from the earlier requirement of 80%.
- In September 2012, India's largest container port, the Jawaharlal Nehru Port Trust (JNPT), has scrapped a contract previously awarded to Singapore's PSA International and India's ABG Ports for the construction and development of its long-overdue fourth terminal. In the same month, a consortium led by the Spanish port operator Grup Maritim TCB pulled out of a IDR140bn container terminal project at Ennore, Tamil Nadu.

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