Indian Government has proposed to replace private sector players IL&FS and IDFC with State institutions in DMIC Development Corporation (DMICDC), an agency set up to raise $4.5 billion to fund the Delhi-Mumbai Industrial Corridor project.
“The Finance Ministry has proposed to replace IL&FS and IDFC and bring in Government-owned financial institutions in DMICDC. A Cabinet note has been moved in this regard,” the DMICDC Chief Executive Officer, Mr Amitabh Kant, told reporters on the sidelines of the India-Japan Global Partnership Summit here.
IL&FS and IDFC, according to another official who was here to participate in the meeting, could be replaced by Life Insurance Corporation and housing development company HUDCO.
The equity restructuring, Mr Kant said, is being worked out to avoid clash of interest between the project participants at a later stage.
IL&FS and IDFC have shown an interest in downstream investments along the Delhi-Mumbai Industrial Corridor, he said.
The Government has a 49 per cent stake in the DMIC project, while Infrastructure Leasing and Financial Services holds 41 per cent and Infrastructure Development Finance Company 10 per cent participating interest.
Mr Kant said India is also in talks with the Japanese Government to raise another $4.5 billion for the project. “Together, this $9 billion would be used for funding commercially non-viable infrastructure, like sewerage and drainage in the DMIC.”
Japan, he said, has huge pension and post office funds that can be channelised in the form of long-term debt for development of infrastructure in India. “In India, interest rates are very high. In Japan, interest rates are close to zero. They have huge savings.... It's possible for us to get long-term Japanese lending at reasonable rates for infrastructure creation in India,” Kant added.