Relax regulations for PE flow in infra

A recently released joint study by Assocham & E&Y has pointed out that rigid regulatory regime is delaying private equity flows in infrastructure projects. Delays in getting approvals and complex regulatory environment impact, besides regulatory procedures and long payback periods are the key obstacles highlighted in the study according to a statement.
The study further highlights that tardy progress has been observed in recent times in accumulating PE investments to upgrade India’s infrastructure in key areas of roads, highways including railways is also due to exit time frames and other hurdles that set aside investment in infrastructure sector apart from other sectors.
Absence of vibrant bond markets in India is also a handicap for private equities to keep off India and therefore, it is highlighted that under developed bond market in India impacts financing of infrastructure projects – according to an Assocham spokesperson.
Unlike other developed nations where vibrant bond markets serves as an alternative avenue for financing and re-financing, the bond market in India has not grown substantially, the spokesman added.
PE investors often cite concerns such as unavailability of long-term fixed rates financing over a long term concession period as one of the impending factors in infrastructure financing, pointed out the study.
The study concluded that exit time frames and regulatory hurdles associated with infrastructure projects are the characteristics that distinguish investment in this sector from the rest.
On the future outlook of PE investments, the study, however, added that despite credit crisis, PE investors could be positive about returns expected from their investments in infrastructure projects as India assures lot of prospects in it as it is its focused area for development.