Infrastructure Leasing & Financial Services (IL&FS) and DLF have won a concession from India’s
Haryana State government to build and operate a metro system in Gurgaon, one of the state’s 81 cities.
The Gurgaon metro system will have a route length of 6.1 kilometres and six stations and is to be completed within 30 months. The project marks the first time in India that a public transport system is to be managed by the private sector.
IL&FS and DLF will form a special purpose vehicle to invest INR9 billion ($187 million; €131 million) in the project. IL&FS will hold a 74 percent stake in the joint venture and DLF will hold the remaining 26 percent stake, according to a joint statement from IL&FS and DLF.
The joint venture intends to raise up to INR7 billion for the project, with the time frame and fundraising ways to be decided later, a DLF executive told the Wall Street Journal.
While the project will primarily serve Gurgaon, it will also benefit Delhi, Harayana and the National Capital Region, which includes neighbouring states Uttar Pradesh and Rajasthan, AS Minocha, chairman of DLF Commercial Developers, said in a statement.
The deal also includes a provision to extend the system in either direction, the statement said. DLF’s vice chairman Rajiv Singh said the project may be extended to more than 20 kilometres with an investment of between INR20 billion and INR30 billion, the newspaper reported.
India’s rapid economic growth is being impeded by a lack of adequate infrastructure, which requires an estimated investment of $475 billion to keep up with the country's growth. The government is unable to fully fund the cost of new infrastructure with budgetary resources alone and has stated that it will increasingly invest alongside or even take a backseat to private sector investments.
Mumbai-headquartered IL&FS is an Indian infrastructure development and finance company. DLF is India’s largest real estate company in terms of revenue, market capitalisation and developable real estate, according to the firm.