Indian Minister: Temasek-linked GLCs agree to "amicably back out" of Amaravati project

It was reported in Parliament yesterday (3 Sep) that Minister-in-Charge of trade relations S Iswaran said no state expenditure was involved in the Indian capital city Amaravati development.
Under the previous Indian state government of Andhra Pradesh, it was decided that Amaravati would be the location of the new Indian state capital. Temasek-linked entities Ascendas-Singbridge, now under CapitalLand, and Sembcorp Development have been roped in to help develop Amaravati with the “blessings” of the Singapore government.
After the new state government of Andhra Pradesh, under now Chief Minister Reddy of YSR Congress party, took over the state after the Indian’s general election in May, the Amaravati project has hung in the balance. The new Chief Minister was not keen to pursue the development, seen as a brainchild of the previous Chief Minister.
An Indian Minister of Reddy’s state government even hinted recently that they might drop Amaravati as the new state capital, thereby threatening the investments of those Temasek-linked companies. The new state government has also accused the previous Chief Minister of corruption regarding the way land was acquired, as well as other improprieties including insider trading.
In any case, responding to a question from WP NCMP Leon Perera yesterday, Minister Iswaran assured the House that “the answer is no” as to “whether there were any subsidies or grants by the Government for investments in the [Andhra Pradesh] state”.
Earlier last month, Singapore High Commissioner to India Lim Thuan Kuan, alongside officials from Singapore’s Ministry of Trade and Industry, met Chief Minister Reddy in a bid to improve soured relations resulting from the takeover.
The High Commissioner reportedly told the Chief Minister that over Rs20,000 crore (S$4 billion) worth of investments made by Singapore companies in Andhra Pradesh have contributed to the creation of “a substantial number of jobs across the state”. No doubt, of the S$4 billion, the majority would have come from those Temasek-linked companies.
The uncertainty over the fate of Amaravati’s development is said to have led to a sharp fall in land prices across the state in the last two months. It’s not known how the fall in land prices would affect the bottom-lines of those GLCs.
Singapore quietly “backing out”
Meanwhile, the New Indian Express reported today that Singapore companies have told the Reddy’s government that it is pulling out of the Amaravati development (‘Singapore Consortium plans in Amravati capital project hang in balance‘, 4 Sep).
“Speculation is rife that govt may drop Start-up area plan and consortium is ready to exit project amicably,” reported the Indian media.
“Even though the agreement between Singapore Amaravati Investment Holdings Ltd (SAIH) and Amaravati Development Corporation Ltd (ADCL) was signed in June 2018, when Iswaran announced that significant progress would be made in six months, the project remained a non-starter,” reported the New Indian Express.
“With the change of guard in the State in May this year, the Singapore government has been closely watching the developments with the new dispensation deciding to review all the capital city projects and put Amaravati on the back burner.”
However, the New Indian Express also reported that when a key minister of Reddy’s state government was asked about the status of the agreement with Singaporean GLCs, he hinted that the project would not be taken up.
He told the New Indian Express, “The Singapore firms know what they have to do. They have agreed to amicably back out.”
To a query on the international arbitration at London clause in the agreement, the minister said, “All issues are being examined to see that it is a win-win situation for both the parties.”