High operating cost, policy risks obstruct India's infra projects: Report

High operational costs along with construction and policy risks are some of the major obstacles for infrastructure projects in the country, a Colliers International report said on Wednesday.

With a likely surge in the urban population of India by 2050 to 1016 million people, an additional $402 billion is envisaged for the development of highways, airports, roadways, industrial corridors, and the smart city mission, it said.

"However, many roadblocks such as high operational costs, construction and policy risks, absence of incentives for private participation, and the lack of profitability from infrastructure projects are deterring the financing of such projects," it said.

Joe Verghese, Managing Director, Colliers International India said: "The real estate contribution to GDP is set to rise to double digits in the coming years owing to various initiatives such as smart city mission, PMAY, and mega infrastructure projects progress."

"Financing of large infrastructure projects has been one of the factors impacting execution and completion," he added.

The demand for green buildings in India is expected to draw in investments worth $1.4 trillion by 2030, railway modernization and expansion is estimated at $490 billion till 2032, the report said quoting the International Finance Corporation. 

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"With such huge investment opportunities for the private sector, we recommend various stakeholders to consider innovative financing mechanisms as the smart city mission is a need of the hour for the Indian cities," it said.