Rail stations, cable cars on infra list

There are 5 main items and 33 sub-sectors in the list that was first notified in 2012

The government has included railway station redevelopment and cable cars for tourism in the definition of infrastructure. 

However, Energy Efficiency Services’ (EESL’s) push for including energy efficiency in a list of industries qualifying as infrastructure is unlikely to find favour with a committee of regulators and the finance ministry.

The finance ministry earlier this month amended a harmonised list to include ropeways and cable cars, besides railway terminal infrastructure, including stations and adjoining commercial infrastructure.

A sub-category of terminal infrastructure, including stations and adjoining commercial infrastructure, has been added in the category of transport, implying real estate development will also benefit from this categorisation.

Prior to the new notification, there was a sub-category of hotels classified three stars and higher located outside cities with populations of over 1 million within the category of social and commercial infrastructure. The sub-category is now called tourism infrastructure. Ropeways and cable cars have been included in this sub-category.

A committee headed by the economic affairs secretary with representatives from other departments of the finance ministry, Reserve Bank of India (RBI), Irda, PFRDA, Sebi and the NITI Aayog decides on what to include in the list for the infrastructure sector.

Infrastructure status helps operators in accessing credit, including cheap foreign loans.

Saurabh Kumar, managing director, EESL, had earlier told Business Standard that they were looking to be included in the infrastructure category in order to access more funds. “Under the current RBI guidelines, only firms with the infrastructure sector are allowed to raise any form of external commercial borrowing. Unfortunately, energy efficiency is not defined under the term infrastructure. So that’s the challenge. We approached the RBI and was told this definition is done by the Ministry of Finance.”

Officials, however, said energy efficiency was more of a service and did not involve creation of infrastructure. Besides, there are set criteria for inclusion in the list.

While banks have sectoral limits, which most have exceeded for infrastructure lending, inclusion in the list helps companies to tap other funding avenues. 

According to Shubham Jain, vice-president and sector head, corporate ratings, Icra, the inclusion of new sectors is a reflection on the government focus areas.

“The railways have not been able to attract private investment in station redevelopment except at two places. The inclusion of station redevelopment will help make funds more accessible,” he said.

Infrastructure industries also receive income tax breaks. The list was earlier amended to include affordable housing in March 2017 and shipyards in May 2016.

“These sectors continue to have their own specific issues. Just by labelling them infrastructure does not bring major benefits, but it is an enabler,” Jain pointed out.

Prior to March 2012, when the Union government came out with a list identifying infrastructure industries, there was only a loose definition of infrastructure.  The RBI later harmonised its list with that of the government.