Infrastructure has been recognized by the government as a key enabler for achieving India’s high GDP targets. In the annual Union Budget 2017-18, this sector was allocated ₹3,96,135 cr. Additional funding will be raised through tax-free infrastructure bonds. Ports, railways, roads, power, airports etc. are included in this sector.

Infrastructure is recognized as a key enabler of the manufacturing and industrial growth. The growth then results in improvement of job prospects, leading to overall economic development. Thus the government has increased focus on this sector.

Key Government policies favouring this sector

National Infrastructure and Investment Fund (NIIF)

This is a fund created by the Government to boost investment in this sector. This fund is launched with an initial corpus of at least Rs.40,000 crore (US$ 5.87 billion). The fund raises investment through debt and invests via equity in commercially feasible projects – both greenfield and brownfield. 

Industrial Infrastructure Upgradation Scheme (IIUS)

This bill has been undertaken for upgradation of infrastructure in existing or upcoming industrial clusters.

Infrastructure Investment Trust

The government has approved various schemes to improve the investments for the sector. Infrastructure Investment Trust (InvITs) have been set up with an aim to accept direct investments which can be of small amounts from possible investors – both retail and institutional.

Land Acquisition Bill

This bill is expect to bring relief to the projects that are stuck due to delay in land acquisition. This would help projects like industrial corridors, rural infra, defence, housing for the poor etc. 

Smart Cities Project

The Government of India (GOI) announced construction of 100 smart cities project, which is expected to boost infrastructure in the country.


100% FDI is allowed in construction sector under the automatic route. The GOI has also relaxed minimum built-up area, capital requirement and exit norms in this sector. It also allows 100% FDI in townships and settlement development projects. Capitalization requirement has also been reduced to $5mn from $10mn in these cases.

With regulatory clearance of many hurdles in the sector, it is believed to be one of the most up-coming sector in the country. To support the projected GDP, the country needs over $1.5tn in infrastructure investment over the next decade, representing a tremendous opportunity for businesses.

Impact Of Ind AS Adoption On Infrastructure Companies

PPP Arrangements

Ind AS will significantly change the recognition, measurement and disclosure aspects of revenue recognition for Public Private Partnership (PPP) arrangement.

Control Assessment

Infrastructure companies usually have complex investment structures with interests in joint ventures, special purpose vehicles, etc. Unlike the Indian GAAP, where control assessment is largely based on the proportion of voting rights in the investee; the Ind AS assess the same on factors like risk and control.

Discounting Of Long-term Payables And Receivables

New practice differs from the existing one in terms of discounting of long-term payables and receivables (including retention money) in line with market interest rates to reflect the current fair value.

Amortization Of Intangible Assets

Revenue based amortization is not permitted with respect to toll roads. Ind AS prescribes specific amortization method which can be used.

Maintenance/Resurfacing Expense

Ind AS recognizes obligations with respect to maintenance/ resurfacing expense and corresponding intangible asset at day one at discounted value.

Disclosure Requirements

Implementation of Ind AS in India will increase the disclosure requirements, in turn helping the investors know more about a company and take informed decisions before investing.


  • Capitalization of forex gains/losses on loans
  • Borrowing Cost 
  • Research and Development Cost 
  • Property, Plant and Equipment 
  • Discounting of certain items 
  • Use of fair value accounting 
  • Restatement of financial statements due to certain items and circumstances 
  • Recognition of proposed dividend 
  • Additional disclosure on related parties 
  • Segment reporting disclosures 
  • Accounting and additional disclosures on income taxes 
  • Debt equity classification 
  • Government grants

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