I am honoured to have been invited to deliver the keynote at Crisil’s Annual Infrastructure Summit. It is a privilege to speak at an event hosted by an institution that laid the foundation for the development of Credit Ratings and Advisory Services in India. Adani Group Chairman Gautam Adani said.
It is said that the stories of yesterday are the blueprints of tomorrow. I say this because all we need to do is look back to realize that some of the most dominating times in a nation’s history have been the times when they dominated the infrastructure landscape.
Even in the ancient world – the Romans had built out an extensive network of over 4,00,000 kilometres of roads and bridges that spanned rivers and valleys to help with the efficient movement of goods and military. This helped connect their entire empire that spread across several countries. The roads of Rome paved their path to building one of the greatest civilizations of all time.
Similarly, the great industrial revolution, which saw massive investments in roads, railroads, ports, bridges and telegraph systems, resulted in an economic boom that accelerated the path for Great Britain to become one of the most powerful nations in the world.
And in more recent times, the Chinese infrastructure reforms that started in the late 1970s led to the fastest ever build out of infrastructure. The outcomes are manifested in the progress China has visibly demonstrated.
These are all proof points of the fact that infrastructure is fundamental to any strong economy.
In my talk today, I will focus on three key areas:
- The role of government policies and governance in building infrastructure
- The future of infrastructure and its interconnection with sustainability
- Adani’s areas of focus and the role we are playing in developing national infrastructure
I can very confidently say that as we stand here today India’s infrastructure industry is undergoing a stunning change the impact of which we will be able to appreciate fully when we look back a decade later. We have kickstarted an infrastructure capex cycle never seen before, and this lays the foundation for several decades of India’s growth.
And this starts with the quality of governance. Very few sectors globally are as tightly linked with government policy as infrastructure. Therefore, before I talk about India and then the future of infrastructure, it is important that we understand how policy changes were necessary to get us here.
So, let me take you back to 1991 the year India’s economic liberalization was initiated. The reforms announced by the Late Prime Minister PV Narasimha Rao and the finance minister at that time, Dr Manmohan Singh, came to be collectively known as the LPG reforms. These stood for Liberalization, Privatization and Globalization.
The reforms marked a water-shed moment in India’s economic history and dismantled the license raj which had seen the government involved in almost every approval that businesses needed. By initiating the 1991 market friendly reforms, India unlocked the potential of its private sector and set the stage for its subsequent expansion.
The statistics tell the story. As per World Bank data:
- In the three decades prior to liberalization the Indian GDP grew by 7 times
- And in the three decades post liberalization, our GDP grew by 14 times.
There could be no better validation than these numbers on the power of liberalization.
During the License Raj, India’s business landscape was dominated by a few established business houses which navigated the heavily regulated environment by developing strong ties with the government. They tightly managed the licensing requirements. Most of these companies survived in a protected market, where entry barriers were high and there was little penalty for inefficiency. Looking back, I firmly believe that the restriction of capital flows and the tight controls on exports and imports ended up doing significant damage especially to the capital-intensive infrastructure sector.
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However, the liberalization in 1991 marked a major turning point. The breaking down of the License Raj meant that the government did away with industrial licensing for most sectors. It eliminated much of the requirement for businesses to obtain government permission to invest, or set prices, or build capacity.
All of us have heard that it is the most adaptive that survive and the post-liberalization period proved this again. The majority of the slow-moving pre-liberalization businesses failed to adapt to this market-oriented economy. They either vanished or never lived up to their full potential much in contrast to the post-liberalization Indian companies of today.
If the period between 1991 and 2014 was about putting down the foundations and building the runway the period from 2014 to 2024 has been about the aircraft taking off.
And a strong example of this ‘take off’ is the National Infrastructure Pipeline the NIP program. The core essence of the NIP is its integrated approach involving participation from both the public and private sectors with the funding model divided between the two. I consider the NIP program that has earmarked a projected investment of Rs. 111 lakh crore over the period FY20-25 as a benchmark of how a government can put in place a national view of over 9,000 infrastructure projects across sectors like energy, logistics, water, airports, and social infrastructure.
And like I said in my view, the single most important catalyst enabling this take-off has been the quality of ‘governance’ that we have witnessed over the past decade, and the metrics speak for themselves.
India’s fiscal investment has doubled, from 1.6% of GDP to 3.3% of GDP.
Corporate Income Tax rates have fallen from 30% to 22%, creating headroom for corporates to invest.
And the current account deficit fell from 3.5% of GDP to 0.8% of GDP.
These outcomes are fundamentally rooted in this government’s effectiveness in institutionalising policy for transforming our nation’s landscape from one of challenges to one of possibilities. And the results are visible to all. Let me elaborate more on three areas I commonly hear.
First, almost every foreign visitor that I meet these days talks about the extraordinary infrastructure growth they see in India be it the quality of the multi-lane highways, the massive construction projects all over the country, access to ports across the nation’s coastline, the rapid penetration of green energy, a world class and modern transmission grid, dedicated freight corridors, the quality and access to airports across the country, several new metro rail networks, and the massive trans-sea links.
Second the Indian Government’s Aadhaar UPI infrastructure has transformed the financial ecosystem in India. This system has democratized access to financial services to such an extreme level that it has allowed even the previously unbanked population to participate in the digital economy. While it may only be perceived as a verification and payment layer, the implications of UPI have been far larger in terms of productivity gains and formalization of the economy. This has led to the stronger tax collections that we have already started to witness. It has also spurred the growth of fintech companies, streamlined subsidy distribution, and enhanced transparency, contributing significantly to the country’s digital transformation and economic growth.
And third is the very visible aspect about the ‘young-ness’ of India that we formally call ‘demographic dividend’. India’s median age stands at less than 29 years, while China’s median age today is already at 39. What is more remarkable is that even in 2050, India’s median age will be just 39 years. This means that India will be at its peak consumption for at least the next three to four decades. No other nation will have this scale advantage of domestic demand.
In terms of numbers, our estimates show that by the end of FY32 the year India has targeted to become a 10 trillion-dollar economy the cumulative spend on infrastructure will exceed 2.5 trillion dollars. These are all indicative of the potential of India, and I can confidently state that the platform to create totally new market spaces in India is now in place.
While every conventional infrastructure sector continues to show strong growth, the two emerging ones that I am most excited about are:
- Infrastructure to enable Energy Transition, and
- Digital Infrastructure
And both of these areas are fast converging and reshaping the landscape of sustainability to create unprecedented market opportunities. The rapid shift to renewable energy sources, coupled with the digitization of industries, is not just a technological evolution but also a profound transformation of our entire society. This dynamic intersection is driving innovation in energy efficiency, smart grids, and green technologies, and unlocking new value chains. And as data centres and digital infrastructure demand more energy, the push for sustainable solutions becomes even more critical.
The scale of opportunities that these new transformations present for businesses in India is expected to be in trillions of dollars over the next three decades.
Let me first expand on the energy transition space. This will fundamentally change the global energy landscape for ever. The global transition market was valued at approximately 3 trillion dollars in 2023 and is expected to grow to nearly 6 trillion dollars by 2030, and thereafter double every 10 years till 2050.
As many of you know, in the case of India, our country aims to install 500 gigawatts of renewable energy capacity by 2030. This ambitious target will require annual investments of over 150 billion dollars. The transition to green energy in India is expected to generate millions of new jobs in sectors such as solar and wind, energy storage, hydrogen and its derivatives, EV charging stations, as well as grid infrastructure development.
The energy businesses that help to enable this transition will also create opportunities to monetize carbon credits. In fact, the Taskforce on Scaling Voluntary Carbon Markets estimates that the demand for carbon credits could grow at over 30% and exceed 3 trillion dollars by 2030.
Therefore, I would go as far as to say that in the days ahead, the availability of the green electron will be the primary driver of a nation’s economic progress. And in my opinion the market size for the green electron as of now has no limits.
Now, let me talk about the ‘digital infrastructure’ space and the emerging opportunity here.
As all of us increasingly rely on digital platforms for almost everything we do it is leading to an explosive growth in data generation. Data is indeed the new oil and this has meant that we have now arrived at a world where the AI revolution sits at the core of every digital initiative.
And at the heart of all this action is the Data Centre the critical infrastructure needed to power all forms of computational needs especially AI workloads for machine learning algorithms, natural language processing, computer vision, and deep learning. All of this is dependent on the ability to process data at unprecedented speed and scale which are the precise capabilities that data centres provide. However, this will need massive amounts of energy, making the data centre business the largest energy consuming industry in the world.
This makes the energy transition even more complex and is raising electricity prices thereby adding to the already high prices because of the combined impact of climate change and demand growth.
The fact is that the infrastructure required for energy transition and the infrastructure required for digital transformation are now inseparable as the technology sector becomes the largest consumer of the precious green electrons.
We are well aware that there is no greater multiplier for GDP growth than that delivered by infrastructure investment. It is the foundation that allows efficient and frictionless flow the flow of goods, electrons, molecules, data and people and all of these flows are either core business drivers or enable adjacent business for the Adani Group.
And over the past 30 years we have leveraged these drivers to become:
- The world’s second largest solar power company.
- India’s largest airport operator with 25% of passenger traffic and 40% of air cargo.
- India’s largest Ports & Logistics company with 30% of national market share.
- India’s largest integrated energy player spanning across generation, transmission & distribution, LNG and LPG terminals, and city gas & piped gas distribution.
- India’s second largest cement manufacturer.
- And several other new sectors including metals, petrochemicals, aerospace and defence, super apps, and industrial clouds.
However, while our past stands as a monument to our resilience and success, the emerging future opportunities are even more exciting. And nothing holds more potential than the two I have outlined the energy transition space and the digital infrastructure space. These are trillion-dollar opportunities to capitalize on and will transform India both at a local and at a global scale.
This is why the Adani Group is making massive investments in both these areas.
The next decade will see us invest more than 100 billion dollars in the energy transition space and further expand our integrated renewable energy value chain that today already spans the manufacturing of every major component required for green energy generation.
We are confident that we will produce the world’s least expensive green electron that will become the feedstock for several sectors that must meet the sustainability mandate.
And to make this happen, we are already building the world’s largest single site renewable energy park in Khavda, in the district of Kutch. Just this single location will generate 30 GW of power, thereby taking our total renewable energy capacity to 50 GW by 2030.
And when it comes to our digital footprint this is already in the works and will span:
- Industrial clouds across each of our businesses that we will productize and then take to market,
- Operational Technology Cybersecurity offerings, given our expertise in managing a vast variety of critical infrastructure operations,
- Super apps, to leverage our B2C businesses across our wide variety of consumer facing businesses,
- Artificial Intelligence labs, to capitalize on India’s fast emerging expertise to provide AI services to the world, and
- Data Centres that will form the backbone of the energy intensive digital revolution.
In fact, it is anticipated that by the year 2030, the world will need 100 to 150 GW of additional green energy just for the AI data centres. We already have India’s largest order book for data centres and are now in discussions for additional gigawatt-scale green AI data centres which we are uniquely positioned to deliver.
As I start wrapping up, allow me to summarize with some bold thoughts. Our democracy is 76 years old. It took us 58 years to get to our first trillion dollars of GDP, 12 years to get to the next trillion and just five years for the third trillion. Given the pace at which India is growing and the way the Government has been executing social and economic reforms, I anticipate that, within the next decade, India will start adding a trillion dollars to its GDP every 12 to 18 months. This will put us well on track to be a 30 trillion-dollar economy by 2050. At this time, I expect the stock market capitalization to have exceeded 40 trillion dollars. What this effectively means is that over the next 26 years, India will potentially add 36 trillion dollars to its stock market capitalization.
No other nation is remotely close to such a scale of possibility.
So, let me conclude by painting a picture for all of us. Imagine for a moment, standing at the edge of a vast ocean, our dreams on the far shore across the waters.
The waters are turbulent at times. Yet, here we are, ready to build the bridge to cross it, our hopes, our optimism, our beliefs, and our spirits aligned to fulfil our aspirations as we work together to bring India back to its full glory.
This is why I say – there has never been a better time to be Indian!