The economic fallout of the Covid-19 pandemic is compelling governments around the world to launch the largest round of infrastructure investment since the post 2008 financial crisis stimulus measures, research by Export Import (Exim) Bank of India says.
The research brief stressed the need to develop sectoral capabilities where presence of Indian companies is currently limited vis-à-vis other top competitors such as China and the need to diversify the markets for project exports and tap relatively lesser explored geographies in Latin America and the Caribbean, East Asia and Pacific, and Central Asia.
“With growing impetus being given for infrastructure projects across most countries, and multilateral financial institutions scaling up investments across various infrastructure segments, the scale of opportunities in project exports is expected to grow manifold. Project exports include exports of engineering goods on deferred payment terms and execution of turnkey projects and civil construction contracts abroad. Indian companies are well placed to leverage the emerging opportunities for project exports,” the brief says.
The brief highlighted the need to strengthen export credit agencies, widening the scope of concessional lending, risk mitigating instruments in foreign currency, review of minimum local content requirement, considering project exports in free trade agreement negotiations etc as some of the measures that can help boost project exports from India.
Quoting the data from the Project Exports Promotion Council (PEPC), the research highlighted that project exports from India registered a y-o-y growth of 10.6% to reach $4.3 billion in 2019- 20. The project exports moderated to $1.8 billion in 2020-21, recovering thereafter in 2021-22 to reach $2.7 billion. As per PEPC data, Middle East is among the top markets for project exports from India, with Saudi Arabia being the topmost destination for Indian project exporters, accounting for 20.6% of the total value of contracts secured by Indian project exporters cumulatively during 2016-17 to 2021-22.
The brief said that multilateral development banks (MDBs) funded projects represent a significant part of the total project exports undertaken across the globe. During 2017- 2021, the overall value of contracts awarded in projects financed by the major MDBs, viz. the World Bank (WB), the Asian Development Bank (ADB), the African Development Bank Group (AfDB), the Inter-American Development Bank (IDB) and the European Bank for Reconstruction and Development (EBRD) cumulatively amounted to nearly $191 billion, it says. During the period, Indian companies secured contracts valued at $26.1 billion in the projects funded by WB, ADB, AfDB and EBRD. A significant share of the projects has been secured through international competitive bidding, the report noted.