Delays in getting approvals and complex regulatory environment in the country are major factors impeding private equity (PE) flows into the infrastructure sector, says a study.
Delay in financial closure of infrastructure projects and non-transparent bidding processes are other reasons hampering PE flow into the sector, a joint study by industry chamber ASSOCHAM and audit firm Ernst & Young said.
Absence of vibrant bond markets in India is also a handicap for private equity investment unlike other developed nations where they (bond markets) serve as an alternative avenue for financing and re-financing, the study said adding that the bond market in India has not grown substantially.
However, synergies between PE investors and the infrastructure industry in India are expected to strengthen as private equity is expected to emerge as a vital source of financing to meet major capacity expansion plans of companies, the study said.