CoreNet Global: Infrastructure Weaknesses in India Are Obstacles to Business Growth

CoreNet Global: Infrastructure Weaknesses in India Are Obstacles to Business Growth

Press Release
February 24, 2014

ATLANTA, GA (FEBRUARY 21, 2014)  -- While the government in India is working toward improving the nation’s infrastructure, more and dramatic changes are needed to sustain the rapid pace of business growth being driven by the nation’s large population and investment from multi-national corporations.

Without the improvements, companies with headquarters locations and satellite offices in India face an uncertain future, according to a research report released today by CoreNet Global, the world’s premier association for corporate real estate executives and workplace professionals.

Corporations in India face a myriad of infrastructure-related challenges:

  • Roads
    Growth in roads has not kept up with the ever-increasing demand. According to a McKinsey Global Institute’s 2013 report, traffic in India has grown more than 150 times over the last 50 years, while the roads have grown only nine times since 1951. This lack of quality highways and roads has had a significant economic impact with losses adding up to 4-7 billion USD per year.
  • Ports
    Ports play a central part in India’s position in global trade, with 95 percent of external trade in terms of volume and 75 percent in terms of value arriving via the ports. While the government has put into place several plans to increase the capacity of the ports, factors such as environmental clearances have delayed implementation.
  • Internet Connectivity
    While there have been recent signs of improvement, such as investment in high fiber networks, India still ranks well below other countries in terms of being able to provide adequate Internet speed, secure servers and low cost access.
  • Power
    Even though the situation has improved over the past couple of decades, and today 66 percent of the households in India have electricity, as opposed to 42 percent 20 years ago, there still a long way to go. The lack of a consistent and stable power supply is a constant headache for any CRE professional building or leasing a new space, and many install expensive back up power generators on their own.

What Is Being Done?

The government in India has made strides toward improving the nation’s infrastructure by creating a strategy and plan for increased spending, the creation of Special Economic Zones (SEZs), and the encouragement of public-private partnerships.

Overall progress, though, has been slow. This has been due recently in part to the fact that in 2012-2013, the economy grew at its slowest pace in a decade at five percent. High levels of inflation, slowdown in key Indian sectors, such as mining and manufacturing, as well as a sharp descent in the value of the rupee against the US Dollar (USD), have all been key factors in this slow growth

And from the perspective of the corporate real estate executive, “there needs be a large, structural overhaul (of the intfrasturcture) to deal with some of the issues faced by businesses,” according to the report. Until these issues are solved, “there is impact on short-term and long-term strategy in terms of location, workplace initiatives, and portfolio optimization, amongst others,” the report stated.

To see a copy of the full report, click here.

About CoreNet Global

CoreNet Global is the world’s leading professional association for corporate real estate (CRE) and workplace executives, service providers and economic developers. CoreNet Global’s 8,000 members, who include 70% of the top 100 U.S. companies and nearly half of the Global 2000, meet locally, globally and virtually to develop networks, share knowledge, learn and thrive professionally. For more information, please visit www.corenetglobal.org

 

 

 

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