No one in Bombay feels more responsible for making a good first impression on behalf of India’s financial capital than Sanjay Reddy. As the man in charge of a $2 billion (£949 million) overhaul of the city’s airport, India’s busiest and probably the world’s most congested, his decisions have affected 26 million passengers this year alone.

That number is set to reach a saturation point of 40 million a year by 2013, just a year after the consortium involving Mr Reddy’s GVK Industries and Airports Company South Africa is scheduled to finish India’s most complex infrastructure project.

The upgrade of the 800-hectare (2,000acre) site, which houses both the international and domestic terminals, is being closely watched by foreign companies keen to invest in a compelling growth story but wary of the pitfalls that bedevil big projects in the world’s largest democracy. It is a test case for India, where the Government estimates that $488 billion is required over the next five years to sustain economic growth of 9 per cent a year.

P. Chidambaram, the Finance Minister, said last week it was “imperative” to raise infrastructure spending from 5 per cent to 9 per cent of GDP by 2012. Nearly three quarters of the investment is being sought from the private sector.

Mr Reddy, a US-educated engineer, said: “It is more than a project. It’s a message that we can build world-class infrastructure. When we won it, people wrote it off as impossible. But we are confident it will get done – that is why we are here.”

Since the contract was awarded in May 2006, there have been some tangible improvements to a decrepit airport that sends many first-time visitors into a state of shock as they descend over a sea of slums.

Two months ago, a swanky domestic arrivals hall opened to widespread relief from commuters conditioned to a chaotic encounter with creaking luggage carousels and lurking taxi hustlers. On the international side, the situation is not so glossy although speedier immigration and baggage handling means passengers spend as little time there as possible.

An integrated terminal is due by 2012 but, in the meantime, the consortium - a joint venture with the state-run Airports Authority of India – is spending $100 million to upgrade a building it will have to demolish. “What can I do? No one wants crappy facilities,” said Mr Reddy. “Indians have had enough of feeling guilty and ashamed landing in their own country.”

A $2.2 billion airport is planned across the water from the overcrowded city peninsula. The Government will soon appoint consultants for the 2,000-hectare greenfield site, which will share capacity of 86 million passengers by 2025.

The opportunities for overseas companies, either winning contracts or investing in the Indians that do, should be vast. But infrastructure development in India is complicated by land ownership disputes and corruption. When GVK took on the airport, there were 220 outstanding court cases. A ten-strong in-house team does little but process mounting actions. More than 12 hectares of land are under judgment.

The consortium’s most sensitive issue relates to the estimated 350,000 slumdwellers illegally encamped on 112 hectares. For political reasons, it cannot turf them out. It has out-sourced the problem to a developer that will rehouse them over the next five years in exchange for commercial rights to much-needed facilities such as hotels and hangar space.

The overstretched airport handles 630 take-offs and landings every day but can offer its 55 client airlines access to only 84 parking bays. There are just 24 vacant hectares for development so GVK has to work around existing facilities, including a less-than-ideal cross-runway system. The task is like trying to balance an elephant on a one-rupee coin. “We are building a new airport on an old airport,” Mr Reddy said. BAA has sold its interest in six Australian airports for A$775 million (£340 million) to a group managed by Hastings Fund Management.

Flying ahead

—Delhi airport is undergoing $2 billion revamp for the 2010 Commonwealth Games. More than 5,000 workers are on site

—Bangalore, India’s IT hub, will get a $228 million international airport by 2008 but it will take more than two hours to reach it because the modern access road has not yet cleared legal hurdles

—More than 30 non metro airports are to be modernised by March 2010 at cost of $1.2 billion

—India’s airports handled 90.4 million passengers in 2006 compared with 68 million the previous year

—Indian airlines plan to add 400 aircraft over the next five years to meet the boom in demand for air travel

—Bombay has a $60 billion plan to turn the city into a global financial hub in the next decade

Source: KPMG, Airports Authority of India, Times research

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