The McKinsey Quarterly reports that burdensome government restrictions are choking the potential of India’s mineral resources:
Regulatory approval for mining projects takes three to seven years in India, compared with about 18 months in Australia. Such delays tie up capital, raise project costs and increase uncertainty among investors…
They also blame poor infrastructure:
Inadequate infrastructure… [undercuts] the natural advantage [India] should enjoy over faraway suppliers such as Australia and Brazil – particularly in selling to China. Inland freight and port costs for the best-run Indian ore mines are nearly $10 a ton, almost five times higher than those in Australia and Brazil.
Estimates suggest that developing the untapped mineral resources could have a dramatic positive effect ten years from now: contributing 5% to GDP, providing over 2 million jobs, and attracting between $75-$150 billion in private investments. India’s combination of rich reserves, low labor, capital, production and operating costs and the surging domestic and global demand is an ideal mix for attracting investment once the above constraints are addressed.
Update 1: See also this MQ interview with Indian PM Manmohan Singh. He discusses poverty alleviation, infrastructure backlogs, FDI needs and privatization challenges. (Thanks Josselyn)
Update 2: All of the above links are now available for free, courtesy of MQ.
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