The government has proposed to replace private sector players IL&FS and IDFC with state-owned institutions in DMIC Development Corporation (DMICDC), an agency which was set up to raise USD 4.5 billion to fund the ambitious Delhi-Mumbai Industrial Corridor (DMIC) project.
"The Finance Ministry has proposed to replace IL&FS and IDFC and bring in government-owned financial institutions in DMICDC. A Cabinet note has been moved in this regard," DMICDC Chief Executive Officer Amitabh Kant told reporters on the sidelines of the India-Japan Global Partnership Summit here.
IL&FS and IDFC, according to another official that was here to participate in the meeting, could be replaced by Life Insurance Corporation (LIC) and housing development company HUDCO in the DMICDC.
The equity restructuring, Kant said, is being proposed to avoid any clash of interest between the project participants at a later stage.
IL&FS and IDFC, it may be mentioned, have shown an interest in downstream investments along the Delhi-Mumbai Industrial Corridor, he said.
The government has a 49% stake in the DMIC project, while Infrastructure Leasing and Financial Services (IL&FS) holds 41% and Infrastructure Development Finance Company (IDFC) the remaining 10% participating interest.
Kant further said India is also in talks with the Japanese government to raise another USD 4.5 billion for the project.
"Together, this USD 9 billion would be used for funding commercially non-viable infrastructure, like sewerage and drainage in the DMIC," he added.
Japan, he further said, has huge pension and post office funds which could channelised in the form of long-term debt for development of infrastructure in India.
"In India, interest rates are very high. In Japan, interest rates are close to zero. They have huge savings...it's possible for us to get long-term Japanese lending at reasonable rates for infrastructure creation in India," Kant added.
Conceived five years ago, the DMIC is aimed at setting up an industrial corridor between Delhi and Mumbai at an estimated cost of USD 90 billion. Besides Delhi, the project will cover Uttar Pradesh, Haryana, Rajasthan, Gujarat, Maharashtra and Madhya Pradesh.