India Transport Minister Kamal Nath said the fund was first proposed in an October meeting with Temasek Chief Executive Officer Ho Ching. [Bloomberg]
SINGAPORE - Indian Transport Minister Kamal Nath said he met with Temasek Holdings Pte to discuss the "idea" of setting up a fund to invest in roads, ports and airports as the country seeks to improve infrastructure.
The minister said he met with the Singapore state-owned investment company on Wednesday, when asked about a Wall Street Journal report on Tuesday that India is in talks about creating a $2 billion fund. Jeffrey Fang, a spokesman for Temasek, declined to comment when contacted by Bloomberg News.
India made the proposal in an October meeting with Temasek Chief Executive Officer Ho Ching, Nath told reporters in Singapore. The South Asian country said in May it plans to set up a 500 billion-rupee ($11 billion) debt fund to upgrade infrastructure and fuel economic growth. India is the world's second-fastest growing major economy.
"We decided to explore this further, it's premature right now," Nath said. "We are exploring a series of models and I don't want to go into details right now. We will hold further discussions, exchange papers and move forward to see how we can go on with this."
India, ranked below war-ravaged Ivory Coast for the quality of its infrastructure, is seeking to attract foreign capital after a $5 billion fund planned in 2007 with Citigroup Inc and Blackstone Group LP was shelved. The country got as much as $3 billion from overseas investors in roads in the past year, Nath said. The nation is meeting its target of building 20 kilometers of roads and highways every day, Nath said.
The National Highway Authority of India has sought bids for 18 projects with a combined length of 1,576.6 kilometers, according to an official statement on June 3. The project is worth 138.9 billion rupees.
Finance Minister Pranab Mukherjee in February offered tax breaks to individuals and companies to encourage infrastructure investments. The country is ranked 89 out of 133 nations for its infrastructure, according to the World Economic Forum's Global Competitiveness Index.
Roads, used for transporting 65 percent of India's freight, are plagued by single lanes and irregular surfaces that slow trucks to an average speed of about 20 kilometers per hour, according to a 2009 study by the Indian Institute of Management Calcutta and Transport Corp of India Ltd.
India will need to borrow 100 billion rupees to 200 billion rupees annually from domestic and global markets for the next 15 years to fund the road building projects, the National Highway Authority said last month.