Nov. 11 (Bloomberg) -- Renault SA, DHL Worldwide Express and Wal-Mart Stores Inc. plan to expand in India, betting the government will deliver on a pledge to spend $500 billion by 2014 to fill pot-holed roads and build power plants.

“I had the opportunity to meet with different ministers and it looks like everybody has sized up exactly what’s the challenge,” Renault Chief Executive Officer Carlos Ghosn said in New Delhi yesterday while unveiling plans to make ultra low cost cars in India. “Infrastructure should support the country’s growth instead of being a drag.”

India plans to build roads at the rate of 20 kilometers a day until 2014, seven times the pace since 2004, and raise the power capacity by 75 percent in the next three years. India received $120 billion of foreign direct investments this decade, Prime Minister Manmohan Singh said on the weekend, less than a quarter of the $566 billion that flowed into China.

“There is progress on critical issues such as infrastructure,” said Chetan Ahya, Singapore-based regional economist at Morgan Stanley. “With India gradually catching up to China on growth, it won’t be a surprise to see India reach very close to China on FDI inflows in the next five years.”

Finance Minister Pranab Mukherjee said yesterday that India’s economic growth may accelerate to 9 percent by 2012, a pace that China has averaged for almost three decades.

Morgan Stanley’s Ahya said that if the trend in FDI into India is maintained, the nation could this year get close to the record $33 billion it received in 2008. If re-invested earnings are included, that amount could reach $40 billion, Ahya said.

Investment Potential

The United Nations Conference on Trade and Development ranks India third after China and the U.S. for potential FDI during 2009-11.

Renault, France’s second-largest carmaker, and affiliate Nissan Motor Co. will introduce their made-in-India $3,000 car by 2012, a year later than planned, due to delays in fixing details of the product with its Indian partner.

Ghosn, who didn’t reveal the company’s investment plans, said he is attracted by the prospect the Indian automobile market may triple to 6 million in 10 years.

Renault last year said it had temporarily suspended its India investment plans in a separate venture with Nissan and would resume it when the economy and auto sales revive. Renault and Nissan originally planned to spend 45 billion rupees ($966 million) at a new plant in Chennai by 2015.

Fixing Problems

“The Prime Minister now directly oversees efforts to improve infrastructure, so what has changed is the seriousness and realization that India can only grow if roads and power are fixed,” said Malcolm Monteiro, senior vice-president and Asia Director at DHL, Deutsche Post AG’s courier unit.

“We are willing to invest more,” Monteiro said. DHL has invested $300 million in India in the past seven years.

Walmart, the world’s largest retailer that has a wholesaling venture with India’s Bharti Group, plans to open 40 more “cash & carry” stores in the South Asian country, Trade Minister Anand Sharma said Nov. 8.

Bharti Wal-Mart Pvt., in which the two companies are equal partners, opened its first Indian wholesale store in the northern city of Amritsar on May 30, with initial plans to start 10 or 15 more outlets and hire 5,000 people during the next three years.

Yum! Brands Inc. plans to open its first Taco Bell restaurant in the southern Indian city of Bangalore by the end of next year, India Managing Director Niren Chaudhary said yesterday in New Delhi. The company plans to invest $150 million in India by 2015.

“Foreign direct investment into India will increase as the infrastructure improves,” said DHL’s Monteiro. “The government must walk the talk and implement the projects efficiently.”

To contact the reporters on this story: Cherian Thomas in New Delhi at cthomas1@bloomberg.net

Last Updated: November 10, 2009 13:31 EST