SOURCE: India Globalization Capital, Inc.

India Globalization Capital, Inc.

June 17, 2009 08:30 ET

New Congress and Stimulus Keeps India's Growth in Fast Lane With China

BETHESDA, MD--(Marketwire - June 17, 2009) - India Globalization Capital, Inc. (NYSE Amex: IGC), a leading infrastructure and materials company competing in the rapidly growing infrastructure industry in India, today commented on India's new Congress Party, the stimulus packages approved and their effect on infrastructure growth.

Modernizing infrastructure in India is crucial to keeping India's economy in the fast lane with China. The recent victory of India's Congress party in last month's general elections may help restore the flow of capital to India and reduce the stress on capital-starved companies and the banking system, and provides a clear mandate for economic reform with privatization and infrastructure development as its top priorities. The government of India said that the economy grew at 6.7 % in the last fiscal year and is hinting at a growth rate as high as 8% for the current fiscal year. The interim budget calls for spending as much as 9% of the GDP on infrastructure by the year 2014. The full budget is expected in a few weeks.

"As India's new Congress gears-up the stimulus packages, and spending on infrastructure begins, our materials and infrastructure operations will directly benefit. We are positioned to take advantage of almost $475 billion being allocated to India's infrastructure over the next five years," said Ram Mukunda, Chief Executive Officer of India Globalization Capital.

One of the key factors in India's growth is the movement of labor to more productive jobs in city centers. Nearly 140 million people who currently live in rural areas will move to urban centers by 2020 according to Goldman Sachs, and 700 million people will have "urbanized" by 2050; a problem solved only by an aggressive infrastructure build-out. Mark Mobius, manager of the Templeton Emerging Market fund said, "There is full realization that infrastructure is in dire need. Even if they get half of what they would like to get done, that will represent a lot of progress. Spreads on emerging-market debt are coming down, so it will be easier [for India to fund infrastructure development], and to the degree that government can push through public/private partnerships, which was difficult with Communists on board, it will be significant."

About:

India Globalization Capital is an infrastructure and materials company operating in India, which builds roads, bridges and highways, and provides materials to the infrastructure industry in India and China.

The company has offices in Maryland, Mauritius, Nagpur, Cochin, Delhi, and Bangalore. Copies of the Form S-3 and India Globalization Capital's other filings with the SEC containing information about India Globalization Capital, our Indian operations and other relevant documents, are available at no charge on the SEC's website (http://www.sec.gov).

For more information about India Globalization Capital, visit the company's web site at: www.indiaglobalcap.com.

Forward-Looking Statements:

This press release may contain forward-looking statements. These statements reflect management's current views and are subject to risks and uncertainties that could cause actual results to differ materially from those projected, expressed or implied in these statements. Factors that could cause actual results to differ, relate to: (i) ability of the parties to successfully execute on contracts and business plans, (ii) ability to raise capital and the structure of such capital including the exercise of warrants, and (iii) exchange rate changes between the U.S. dollar and the Indian Rupee. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise. Other factors and risks that could cause or contribute to actual results differing materially from such forward looking statements have been discussed in greater detail in the company's definitive proxy statement and supplement filed with the SEC and incorporated by reference into the Form S-3.

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