Sep 14, 2010
McKinsey, envisions a way for India over the next 20 years to turn that influx of young population into a quadrupling. This growth hinges on adequate investment in cities so they can handle the surge in people and the simultaneous increased demand on services. The urban migration, if properly handled, could generate 70% of net new jobs and produce 70% of India's GDP.
To meet their needs, McKinsey suggests that India must build--every year for the next 20 years--between 7 billion and 9 billion square feet of real estate (the equivalent of one Chicago) a year; 220 to 250 miles of metros and subways (more than 20 times what it has built in the past decade); and between 12,000 and 15,000 miles of road lanes.
Multinationals like Aecom, Veolias and Bombardier are in the process of bidding for various projects, including building portions of metro rails in Chennai and Kolkatta and supplying rail cars to Delhi's expanding metro network. Aecom was recently awarded a contract to do the master plan for two of the six satellite industrial cities India plans to build along the 1,700-mile Delhi-to-Mumbai corridor. Each city will house 5 million people.
"This is a huge investment opportunity, but you need to cherry-pick your cities," says Vaidya. He recommends focusing on tier-2 cities like Pune in Maharashtra and Surat in Gujarat and investing in projects like ports and special economic zones (which typically build sector specific manufacturing or research hubs), and in affordable housing, as 90% of the demand is for those.
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