The present paper takes note of the currently fragmented framework of laws that exist to manage infrastructure development in India, alongside the recent measures undertaken in furtherance of the same. Upon initially looking at the regulatory environment of infrastructure policies first in the United Kingdom, a comparison is drawn between the infrastructure regulations of India and the United Kingdom, expounding the various similarities as well as the few stark differences between the regulatory frameworks of both nations. This article thereafter segues into an analysis as to why a consolidated infrastructure law in India is the need of the hour and attempts to put forth various compelling arguments to substantiate the same. The article concludes with the hope that the legislature will take note of the need for a dedicated infrastructure law, and act accordingly at the earliest to facilitate India’s economic and developmental aspirations.
Keywords: Infrastructure development, regulatory environment, consolidated legislation, economic growth, United Kingdom, comparative analysis.
Infrastructure has and will continue to play an important role in generating wealth in any nation. Development of infrastructure remains essential to sustain and facilitate economic growth. As Indiaaims to enter the coveted club of being a USD 5 trillion economy, infrastructure development plays a crucial role in realizing this dream. Its role in the same has been acknowledged andcan be evidenced by the focus this sector has received in the latest Union Budget, presented on 1 February 2023 which hiked capital expenditure in this sector by over 33%. Although there has been significant development in and reinvigoration of this sector since 2015, when it was included in the five-year plan of the time, a glaring lacuna is seen in the Indian legislative framework since there is no consolidated Indian law on infrastructure to protect the interest of all stakeholders. The laws governing infrastructure development in India are multifarious and fragmented. Although well-intentioned, these laws are often insufficient for the efficient growth of infrastructure development due to the vast focus it needs in every aspect.
The year 2023 marks eighteen years since the India Infrastructure Finance Company Ltd. (IIFCL) was founded. At an event celebrating the same, the Managing Director, PR Jaishankaraverred the need for India to have a dedicated infrastructure law. This would protect the interests of various stakeholders and assist in the economic development of India, thereby allowing it to come closer to its economic aspirations. These stakeholders include the government, private sector parties including contractors, insurers, and financiers involved in the project, and the environment. Thus, protecting the interests of the stakeholders would mean balancing the economic, social, and environmental repercussions of all infrastructure developments.
With this background, this Blog Post looks at the regulatory environment surrounding Infrastructure Law in the United Kingdom (“UK”) and the current framework of infrastructure law in India and highlights the recent developments taken by India to strengthen its system. It comparatively analyses the regulatory environment in India with that in the UK, making a case for the institution of a dedicated infrastructure law to boost development.
2. The United Kingdom & Infrastructure Law
Infrastructure Development has received a significant amount of attention in the UK in the recent past. There are various laws governing the development, financing, and operation of infrastructure laws in India. With thePlanning Act, 2008 (“Planning Act”) is the base legislation, the UK has moved towards having laws solely dedicated to infrastructure development. With the Planning Act as the preliminary legislation, other prominent legislations within this sphere include the Growth and Infrastructure Act, 2013, and theInfrastructure Act, 2015. Other sources of infrastructure include the Rules and Regulations framed therein including theInfrastructure Planning (Environmental Impact Assessment) Regulations, 2017, and theInfrastructure Planning (Interested Parties and Miscellaneous Prescribed Provisions) Regulations, 2015.
These comprehensive legislations are aimed at providing a framework for infrastructure development that balances economic, environmental, and social considerations under one umbrella legislation. This is to ensure that the UK’s infrastructure needs are met sustainably and responsibly. Key elements of the infrastructure regulatory environment in the UK are as follows:
a.National Infrastructure Commission (“NIC”): The NIC is an independent body that provides advice to the UK government on infrastructure investment and policy. The NIC is tasked with identifying the long-term infrastructure needs of the UK and making recommendations on how these needs can be met.
b.National Policy Statement Regime (“NPSR”): The NPSR sets out the government’s policy for nationally significant infrastructure projects and streamlines their planning process. It aims to make major infrastructure projects cost and time efficient.
c.Strategic Environment Assessment (“SEA”): It is a requirement that an SEA is carried out for certain types of infrastructure projects to assess the potential environmental impact of the project and to ensure that it is compatible with sustainability goals. Thus,it balances environmental protection with economic development adequately.
Thus, it is observed the UK does not have a fragmented regulatory environment regarding Infrastructure Laws, but rather has a planned and organized system of laws and systems in place. This comprehensive regulatory legal environment on infrastructure governs and protects the interests of all major stakeholders in infrastructure projects and ensures that development does not further the rights of one while compromising on other factors while also having a simple and streamlined process for those seeking the development. Therefore, these laws further the efficiency of infrastructure development in every aspect and lead to equitable development.
3. India & Infrastructure Law
Infrastructure Law in India refers to the legal framework that governs the planning, development, and operation of infrastructure projects in India. Thus, within the ambit of infrastructure law in India comes laws related to land acquisition such asThe Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013; laws related to the environment which ensure that infrastructure projects are delivered in an environmentally sustainable way including theWater (Prevention and Control of Pollution) Act, 1974, The Forest (Conservation) Act, 1980, and theNational Green Tribunal Act, 2010. Infrastructure law also includes legal provisions governing Public-Private Partnerships (“PPPs”), Project Financing, and the regulation and overseeing of infrastructure projects. Several regulatory bodies have also been established to oversee the planning and delivery of infrastructure projects such as the National Highways Authority of India (“NHAI”) and the Central Electricity Regulatory Commission (“CERC”).
1. A Slew of Reforms in the Recent Past
To achieve planned and consistent economic development, the infrastructure sector in India has witnessed several reforms in the recent past. A gradual shift can be noticed wherein our economy has evolved from being a controlled one to an open market, which involves foreign investors and private players in vital roles. A snapshot of the government’s efforts in promoting infrastructure development is provided below:
a.National Infrastructure Pipeline (“NIP”): In 2019, the Government of India launched the NIP. This aims to provide a roadmap for infrastructure development in the country by outlining a pipeline of infrastructure projects which are to be implemented from 2020 to 2025. This initiative is a first of its kind in India, aiming to improve project preparation while attracting investments into infrastructure.
b. Streamline Infrastructure Development: The Government of India has taken several steps to expedite the processes surrounding infrastructure development. This includes theRight to Fair Compensation and Transparency in Land Acquisition,Rehabilitation, and Resettlement (Second Amendment) Bill, 2015, which proposed to exempt 5 categories of infrastructure projects from certain requirements which would expedite the process of land acquisition. Theseinclude defense, rural infrastructure, affordable housing, industrial corridors, and infrastructure including PPPs where government owns the land.
c.PPP Framework: Public Private Partnerships have seen a drastic boost over the globe. This upward trend makes it imperative for a broad and robust policy framework governing these partnerships. India’s framework makes it attractive for private investors to participate in infrastructure development. This framework has the inclusion of measures such as risk sharing, reduction of project approvals, and focus on outcome-based contracts among other attractive features.
d. Foreign Direct Investments (“FDI”) in Infrastructure: Since 1991, the government has been relaxing rules related to FDI, making it easier for foreign investors to participate in the Indian economy. This effort can also be seen in the infrastructure sector where foreign investors can get automatic approval for certain types of infrastructure projects and there is a streamlined approval process making investments in infrastructure time and cost-efficient.
e.Gati Shakti Masterplan: The Prime MinisterGati ShaktiMaster Plan for Multimodal connectivity aims at improving India’s transportation infrastructure. This brings 16 ministries together for integrated planning andthe coordinated implementation of infrastructure connectivity projects.
f.The National Monetization Pipeline (“NMP”): The NMP was launched in furtherance of the mandate for “Asset Monetization” stipulated under the 2021-22 Union Budget. It aims to tap private sector investments to create new infrastructure and result in high economic growth and public welfare.
g. Environmental regulations: With the introduction of theNational Green Tribunal (“NGT”), infrastructure projects are aimed to be developed in an environmentally responsible manner, with cases about the samebeing disposed of effectively and expeditiously.
4. Comparative Analysis
Adhering to its aim of economic development focusing on infrastructure, India has made significant progress to mirror the infrastructure policies set out by the UK in its legislation. A specific comparison between the infrastructure law of the UK and Indian laws is presented hereunder:
a. NIC:The NIC in the UK has no specific counterpart in Indian law. However, the objectives which the NIC seeks to fulfill are placed upon several bodies in India such as the Ministry of Road Transport and Highways, the National Highways Authority of India, and the National Institution for Transforming India (“NITI”) Aayog, among others.
b. NPSR: While the NPSR sets out the Government’s policy for significant infrastructure projects in the UK, in India, there are various plans which set out the vision and goals for infrastructure development in a specific region. The NIP in India is a close equivalent of the NPSR. Other policy statements in India include theNational Policy on Biofuel, 2018.
c. Strategic Environment Assessment: The Indian counterpart of the SEA is the Environmental Impact Assessment (“EIA”). The EIA is a process to evaluate the potential environmental impacts of a proposed development project. After such evaluation, clearance must be sought for the project from the Ministry of Environment, Forest, and Climate Change. Both processes are extremely similar in ensuring that environmental concerns are considered and addressed before an infrastructure project is approved and implemented.
5. Why India Needs a Consolidated Infrastructure Law
Upon doing a comparative analysis, it is observed overarchingly that policies and frameworks set out by the consolidated and dedicated infrastructure law in the UK have Indian counterparts which largely serve the same purpose. At this point, it may be argued that there exists no need for a consolidated framework when the fragmented regulatory environment in India serves the same purpose. However, this claim stands wholly refuted by the Authors.
While it is seen that India has taken large strides to further the regulatory environment of infrastructure development, due to a lack of comprehensive legislation governing all the stakeholders, these developments are fragmented, each focusing only on a certain angle, unable to protect all the stakeholders in one go, and thus fail to achieve the farsighted goals set out for them. For instance, the NMP set out the estimated aggregate monetization potential but is likely to miss the Fiscal Year 2023 (“FY-23”) target due to the monetization of assetsbeing lower than predicted. Moreover, it ispredicted that green bonds will only hit the market around the fourth quarter of FY-23.Thus, there is an unfortunate gap in the vision set out by the fragmented laws, and the actual implementation of the same.
There are several reasons as to why having a consolidated dedicated infrastructure law like the UK’s Infrastructure Act, 2015 has several benefits over the fragmented legal framework for infrastructure development in India. These are:
a. Clarity and Consistency: A consolidated infrastructure law would provide clarity and consistency in the legal framework for infrastructure development. This would make it easier for the various stakeholders to understand their rights and obligations, thereby improving the predictability of the legal and regulatory environment, reducing the risk of disputes, and boosting the level of investment in infrastructure development.
b. Increased Efficiency and Implementation: A dedicated, and consolidated infrastructure law shall be able to streamline approval and implementation processes for infrastructure projects. It shall do so by reducing the number of approvals and licenses involved since a single legislation shall govern and protect all interested parties instead of several various legislations. Thus, stakeholders would have a simple, time and cost-effective approval framework which would improve the efficiency of the infrastructure development process. Further, having only one legislation would reduce the red-tapism surrounding infrastructure projects, and reduce the scope for corruption in such areas, boosting efficiency.
c. Protection of public interests: A dedicated law for infrastructure development would help better protect public interests by providing a clear framework for the assessment and mitigation of the impacts of infrastructure projects in several spheres. This would allow the authorities to better protect public interests allowing them to view and balance all the benefits of infrastructure development against all its costs. Further, a single legislation would benefit the public since it would provide a clear and uniform method of due diligence, and also expedite and simplify methods of dispute resolution on every level.
d. Minimizing gaps and overlaps in the laws: In the status quo, it is wholly likely that there are gaps in the law owing to the fragmented nature of the existing legislation. Moreover, multiple laws dealing with broadly the same subject matter may give rise to overlaps and ambiguity. With a dedicated law for infrastructure, all the stakeholders’ interests shall fall within a single umbrella legislation. This shall help minimize instances where there are gaps or overlaps in laws.
e. Dynamism: In today’s world, the corporate and economic conditions in India are dynamic. The law must be flexible to keep up with the world. Having a dedicated infrastructure law would make the legislative framework dynamic in nature. Indian lawmakers would have ease in making changes and revisions to it where the impact spans across stakeholders. Further, having one umbrella legislation would improve coordination amongst the Centre, State, and Private Participants since it would provide a streamlined and uniform approach to be taken for any project making it easier to ensure that all stakeholders have the same understanding and consensus.
Infrastructure development undoubtedly forms a part of the backbone of economic development. India, in the recent past, has embarked on a journey to attain economic nirvana, and in this process made committed efforts to boost infrastructure development. While seeking development on any front, the development of the law plays a crucial aspect. For India, it is evident that the laws have failed to find a systematized and consolidated base.
The path ahead for India is studded with tremendous opportunities. The greatest opportunity herein lies in the form of a cohesive and progressive piece of legislation, which will bring the numerous recent developments in the field of infrastructure development under a common ambit. The importance of this proposed legal cohesion is reflected in contemporary global developments. To illustrate, at the very commencement of United States President Joe Biden’s tenure, Bipartisan Infrastructure Law (Infrastructure Investment and Jobs Act) was introduced. This law serves to put into effect cohesive measures to consolidate America’s hard infrastructure, and further economic development by strengthening supply chains and easing inflation. This will serve to not only benefit various non-governmental stakeholders such as investors and infrastructure developers but also result in administrative ease for the government. With the whole world opening its eyes to the essentiality of consolidated legal frameworks to regulate infrastructure, it is about time that India does the same.
What remains to be seen is whether Indian lawmakers will act on thesage advice of the Managing Director of the IIFCL in bringing about a consolidated infrastructure law. Upon failure to do so, India may be stuck in the rut of insufficiently developed infrastructure for years to come. However, should India successfully amalgamate its infrastructure laws into one comprehensive framework, the benefits outlined above are sure to take India far in terms of development, economic and otherwise.
About the Authors
Ms. Mahek Shivnani and Ms. Aashna Mansta are law students from Symbiosis Law School, Pune.
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Preferred Method of Citation
Mahek Shivnani and Aashna Mansta, “Consolidating the Regulatory Environment of Infrastructure Laws in India: The Need of the Hour” (IJPIEL, 17 March 2023)