Delhi Building Terminal Faster Than Beijing to Spur Development

Manmohan Singh, India's prime minister
Manmohan Singh, India's prime minister, attends a news conference in New Delhi on May 24, 2010. Photographer: Pankaj Nangia/Bloomberg

Passengers on international flights to and from New Delhi will soon no longer walk through the overcrowded building that has been the Indian capital’s gateway to the world for 24 years.

From July 14, they will instead enter a terminal designed by London architects HOK International and encased in sheets of glass etched with images of Indian dancers. With 78 gates, 97 automated walkways, 95 immigration counters, 20,000 square meters of retail space, and parking for 4,300 cars, the building is comparable to the aviation hubs of Dubai, Hong Kong, and Singapore, Bloomberg Businessweek reports in its July 5 issue.

“For the first time, we will have a world-class hub,” said Binit Somaia, director for South Asia at the Sydney-based Centre for Asia Pacific Aviation.

The terminal, which with other renovations cost $2.2 billion, is a sign that India may be turning the corner on solving one of its most intractable problems, its notoriously poor infrastructure.

The facility took only 37 months to build. That’s faster than the 45 months China took to complete the terminal in Beijing that opened in time for the 2008 Olympics.

“The Delhi airport is going to transform India” as it will create a benchmark for major projects in the country, said T.V. Mohandas Pai, head of human resources at Infosys Technologies Ltd.

Slow Ports

India spends 6.5 percent of its gross domestic product on infrastructure, compared with 11 percent in China, according to consulting firm Ernst & Young, and undeveloped facilities have limited the country’s growth. The average turnaround time for ships unloading and loading cargo at India’s major ports is 3.8 days; in Hong Kong it’s 10 hours.

Improving India’s airports, roads, seaports and utilities may boost growth and help attract investment, said Jahangir Aziz, India chief economist at JPMorgan Chase & Co.

“You don’t want foreign investors to get stuck behind immigration lines for two and a half hours” when trying to persuade companies to put money into India, he said.

New Delhi’s old airport definitely has affected the economy, said Rahul Bajoria, an economist in Singapore with Barclays Plc.

“Beijing and Shanghai have fabulous airports, and they are much more linked to the global economy than Delhi is,” he said.

Bangalore, Hyderabad

The government of Prime Minister Manmohan Singh has focused airport projects on cities investors are most likely to visit. New airports already are operating in Bangalore and Hyderabad, the hubs for India’s IT and pharmaceutical industries. The improvements mean passengers can now more easily fly directly from Bangalore to overseas destinations. Previously, travelers usually had to catch connecting flights elsewhere.

“The improved connectivity is a very attractive proposition,” said Manan Bhatt, senior vice president for external relations at Avesthagen Ltd., a Bangalore-based biotech company. “Foreign companies can come to Bangalore on shorter notice now.”

Due next for an upgrade is Mumbai, the financial capital, which will get a new terminal in 2012. The price tag to expand and upgrade Indian airports by 2020 is likely to be $20 billion, according to a Centre for Asia Pacific Aviation report.

With India needing to spend more than $1 trillion on ports, roads, utilities, and other infrastructure, the government plans to cooperate with private companies for funding and knowhow. The Delhi terminal was built by a private-public group overseen by infrastructure builder GMR Group.

Bureaucracy, Land Ownership

Not all Indian developments are completed as quickly as Delhi’s new terminal. Of the 618 big infrastructure projects monitored by the government, 323 were behind schedule as of March 1, some by as much as 60 months. That’s led to $12.3 billion in cost overruns.

Builders face delays from bureaucracy and land-ownership disputes. Tata Motors Ltd. abandoned construction of a car factory in Singur, West Bengal state in 2008 after violent protests from farmers seeking the return of land acquired for the plant.

Plans to privatize other airports in India are also yet to reach fruition, even as overseas companies, including Fraport AG, the operator of Germany’s busiest airport and part of the group managing the Delhi terminal, look for investments.

“None of those projects has materialized,” said Ansgar Sickert, head of Fraport in India. “We are not clear where the opportunities really lie in India.”

More projects like Delhi may clarify things.

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