Did you know that the new Afghan Parliament building was built by India? The Salma Dam, also known as Afghanistan-India Friendship Dam, was rebuilt by India and provides 42 MW of hydro-electric power and irrigation to 75,000 hectares of farmland in western Afghanistan. Indian companies are also keen to tap Afghanistan’s mining potential and steel and power plants are planned in the country by Indian public sector and private sector companies.
India has for long been involved in executing projects overseas, given its strong engineering and project management experience, but this segment somehow doesn’t capture the imagination of most when we talk about exports. There are typically four types of project related exports—engineering & construction, turnkey, technical & consulting contracts and project supplies.
Engineering & construction projects entail civil works, structural works and supply of materials and equipments for infrastructure development. Turnkey projects involve design, engineering, construction, equipment supply and commissioning of power plants, distribution networks and so on. Consulting contracts usually require providing of know-how, training and supervision of planning and execution of projects. Supplies relating to a projects mostly include steel slabs, manufacturing equipment, gensets, compressors and pumps.
For project exporters, finance to start the delivery process and following project export are extremely important, and they usually seek out banks and financiers who can also support them with finance as well as in other ways.
Pre-shipment credit helps the exporter to purchase the materials and components required to manufacture the equipment or to mobilise the resources for construction projects. Postshipment credit is available to exporters following the shipment. This can also be used to provide term credit to the importer. Export cash flow deficit finance is also made available to exporters during contract execution overseas.
In addition to the above financing needs, exporters also often seek support on international competitive bidding and in bidding for multilateral funded projects in India.
India’s advancements in high technology areas and the “Make in India” initiative, which aims at production and technology transfer, can further strengthen its position in the overseas projects market. The Indian Space Research Organisation launching satellites to serve other countries is just one instance of the country’s execution capabilities.
India’s project exports are set to gain traction with support from international trade financiers, especially with other nations clearly recognising its developmental role in nation building.