Hello dear readers,In the last two weeks I've read several stories about infrastructure in India that I couldn't resist myself to tell you about.If Kamal Nath is worried beacuse of something, this is investors putting money in the indan infrastructure sector. As there are many deveopers willing to build roads,airports and railways, Kamal Nath is worried about long-term investors. Another issue is eqity available in the market.Pension funds are starting to invest on infrastructure lately, (SEE THIS POST ABOUT DALLAS POLICE&FIRE PENSION FUND INVESTING IN THE NORTH TARRANT EXPRESS HIGHWAY IN TEXAS,USA). There are two ways they can use to do it:a) They can take a stake in a consortium developing a greenfield project.b) They can buy long term debt in case there is some available. This should be the case of bonds, if the developer has financed a part of the debt structure in the capital markets, the pension fund can just go ahead and buy those bonds.After the credit crunch many people want them to be part of this funding infrastructure game. Their long-term sense matches very well with the time equity takes to be returned from infrastructure investments.In my opinion they are to play a crucial role in the development of infrastructure in developed countries. I have some doubts of them entrying in emerging countries as they ussualy make not very risky investments. The question for them is: What internal rate of return are developers asking for in infrastructure projects in India? Do they want this rate of return or a lower one?CANADIAN PENSION FUNDS INVITED TO INVEST IN INFRASTRUCTURE IN INDIAUnion Road Transport and Highways Minister Kamal Nath last Thursday invited the Canadian pension funds and financial institutions to participate in the National Highway Development Project (NHDP).Kamal Nath held discussions with Empire Financial Group, Aviva Investors, Aegon Capital Management Incorporation, Ontario Teachers Pension Plan Board, Hospitals of Ontario Pension Plan, TD Asset Management Incorporation, Fairfax Financial Holdings Limited, BMO Capital Markets, CI Investments, and RBC Global Investment Management etc.According to the Ministry, during these interactions, the representatives of various financial institutions appreciated some of the recent steps taken by the Indian Government such as modifications in the MCA especially with regard to termination clause and introduction of an exit clause.They also appreciated efforts taken by the government in addressing most of the concerns regarding procedural impediments, and making the policy framework and contractual documents more investor friendly.He highlighted the massive opportunity for Canadian investors as 60 percent of the Highway Projects are being undertaken on BOT (Toll) and 25 percent on BOT(Annuity) , and invited the private entities to come forward and become a partner in propelling one of the fastest growing engines of global economy.PRIVATE INFRASTRUCTURE BONDS TOO ELIGIBLE FOR TAX BREAKThe Finance Minister, Mr Pranab Mukherjee, said on March the 24th that infrastructure bonds issued by both the public as well as private sector entities will qualify for the additional tax deduction of Rs 20,000 proposed in Budget 2010-11."In this year's Budget, we have encouraged people to invest in infrastructure development and avail themselves of additional tax savings." Mr Mukherjee said.Later, the Finance Minister said on the sidelines of the conference that the Centre may allow private financial institutions to raise funds through infrastructure bonds (under this proposed Section 80CCF) so long as the funds are deployed in the core sector.Meanwhile, in his introductory remarks at the conference, Mr Mukherjee said that the Centre plans to launch a national capacity building programme for public private partnerships (PPPs) in the middle of the year. He also said that the Government intends to encourage PPPs in many unexplored sectors.Another piece of news related to funding infrastructure projects in India is the following:JAPAN CREDIT FOR SIX INFRASTRUCTURE PROJECTS Japan on Monday agreed to give financial assistance worth over Rs.10,500 crore to fund six infrastructure projects in India, which includes various phases of Metro rail projects in Delhi, Chennai and Kolkata. With this, the official development assistance (ODA) from Japan will cross Rs.1.55-lakh crore, making India the highest recipient of ODA from Japan. Japan has agreed to give Rs.1,648 crore to construct 121-km. of new rail lines in the National Capital Region under the second phase of the Delhi Metro rail project. Similarly, Japan will give over Rs.2,932 for Chennai Metro project with the objective to cope with the increase of traffic demand in Chennai metropolitan area by extending the mass rapid transportation system. Another Rs.1,146 crore will go towards Calcutta East-West Metro project phase II.