Mohamed Ali Alabbar, Director General –Department of Economic Development, Government of Dubai, and Chairman, Emaar Properties PJSC, urged India to offer differential incentives for foreign investors in infrastructure projects – a pressing need that drives India’s urbanization plans. He was leading a discussion on ‘Rural and Urban Development: India’s Dual Imperatives’ at the World Economic Forum – India Economic Summit 2007 in New Delhi.
“India needs an estimated US$500 billion for its infrastructure development programme to meet the lifestyle and aspirational needs of its fast-growing youth and middle-class population. Of this investment required, the country faces a gap of over 30 per cent, which can be narrowed by offering special incentives to foreign investors for investing in long-term infrastructural projects. Such investor-friendly policies will further open up the Indian market to Arab investors too who currently hold excess liquidity,” said Mr Alabbar.
He added: “The Arab world is deploying its surplus liquidity internationally in promising markets. India, for its obvious strengths, is a priority for investors from the Arab world. This is time for the country to grab the chance and strengthen its traditional ties with the Arab world.” Applauding the Indian growth in recent years, Mr Alabbar said the successful transformation of any economy demands strong engines of growth “such as education, healthcare, industry, airports, ports, roads and integrated housing communities,” which create opportunities for development. India expects a growing migration from rural areas to urban cities and towns.
“Only 29 per cent of the Indian population lives in urban centres as against 40 per cent in China and 50 per cent in Indonesia. The increasing pressure on urbanization can be effectively met only through the growth engines that create new ‘absorption’ points which will take the stress from the cities and facilitate stronger rural-urban linkages,” said Mr Alabbar.
He cited the development plans of Emaar’s joint venture in India - Emaar MGF Land Private Limited, which is creating new ‘absorption’ points through focused investments in residential, commercial, retail, hospitality, education, healthcare, IT parks and special economic zone projects across the country, with a focus on B and C class cities. Emaar MGF is already the largest foreign direct investor in the country’s real estate sector with a presence in over 20 cities. The company recently filed a Red Herring prospectus with the Securities and Exchange Board of India (SEBI) to go public.
Mr Alabbar also called upon India to ‘in-source’ for its own growth, with the urban centres ‘outsourcing’ their needs from rural areas. He said the average age of the Indian population will be 29 years by year 2010, which is much younger than that of China – 38 years, and Japan – 48 years. The country’s middle-income segment will also grow to 583 million by 2025 making the country the fifth largest consumer market in the world.
“However, the real challenge comes in converting the youth dividend of India to real opportunities that will sustain the 9 to 10 per cent growth in GDP of the country,” he observed.