• Financing Challenges. Given the infancy of PPP projects within India, both national and local governments have provided a number of tax concessions to attract private sector funds for road development in India. In this instance, the State provided Rs 30 crore15 (300,000,000 rupees) for project-related infrastructure development.
• Risks of Introducing Tolling. Since the development of privately-owned toll roads is a new phenomenon within India, the first toll road projects have been relatively small. Profitability of toll road projects thus far has been primarily dependent on returns from associated real estate development.
• Expanding Private Sector Participation. The liberalization of the economy has resulted in a noticeable increase in private sector participation in the construction and operation of highways in India. The Indian Government has introduced measures to improve the road network, in particular, by:
- Attracting private sector financing, including providing rights to collect and retain tolls for BOT projects;
- Allowing 100 percent of a road project to be funded using foreign sources; and
- Providing generous tax exemptions on earnings and construction equipment.
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15 One crore is equivalent to 10 million (10,000,000)