Adani group row may test resilience of project exports from India

The government has been pushing to promote project exports and sees it as a next big opportunity

The Kenyan government’s decision to scrap multi-million-dollar airport expansion and energy deals with the Adani group, following bribery allegations by the US, could test the resilience of India’s fledgling project exports market.

 

“This will increase technical scrutiny for project exporters from India in the host countries, including for projects funded by multilateral agencies,” an official at a multilateral lending agency said, requesting anonymity.

 

The export of engineering goods on deferred payment terms, execution of turnkey projects, and civil construction contracts abroad are collectively referred to as ‘project exports’. With growing impetus for infrastructure projects across most developing countries and multilateral financial institutions scaling up investments in various infrastructure segments, the scale of opportunities in project exports is growing rapidly.

 

The Union government’s support to developing partner countries through the lines of credit (LOC) programme also helps create mutually beneficial partnerships with other developing countries and creates opportunities for Indian companies.

 

The government has been pushing to promote project exports, seeing it as the next big opportunity. As part of the Covid fiscal package announced in 2021, Finance Minister Nirmala Sitharaman had unveiled a Rs 33,000 crore boost for project exports through the National Exports Insurance Account (NEIA). 

 

Union Trade Minister Piyush Goyal, in an interview with Business Standard in September, had said project exports had not been much exploited. “For example, in Australia, I identified that there is a shortage of one million homes. What a great opportunity for our real estate developers to build one million homes in Australia,” he said.

 

Since project exports include both goods and services, the government has not yet captured consolidated data for this sector. However, the Project Exports Promotion Council (PEPC) estimates that project exports tripled to $17 billion in FY24 compared to the previous year, based on data from its members. Till October of FY25, project exports have reached $7.6 billion. According to PEPC, the value of project exports varies significantly from year to year due to the cyclical nature of such projects.

 

S Paramasivan, vice-chairman of PEPC and managing director of Afcons Infrastructure, said project exporters, in general, would not be affected as Adani is not considered a pure project exporter. “The Adani group is a conglomerate and is more into investment than project exports. Project exporters typically look at not necessarily investment but executing the contract. So we don’t see any problem for project executors on account of this event,” he said.

 

Adani Ports and SEZ Ltd was a member of PEPC until last year.

 

“Cancellation of projects where Adani is an investor-developer will not have any significant impact on India’s project exports. Large infra projects in Africa are often funded by Multilateral Lending Agencies, who have robust procurement processes,” said Manish Agarwal, co-founder AskHowIndia, a not for profit organisation.

 

Multilateral Development Bank (MDB)-funded projects represent a significant portion of total project exports, alongside private-to-private and overseas government-to-private deals. Africa and the West Asia, among other regions, are the main markets for Indian process and construction engineering contractors and consultants.