ROADS AND HIGHWAYS
SUMMARY
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USD 3.8 Billion outlay planned for highways.
5.23 Million kms of roads and highways.
USD 19 Billion infrastructure development between 2012-17.
1,00,087 kms of National Highways.
112 completed Public Private Partnership Projects and 149 Public Private
Partnership (PPP) projects under progress.
REASONS TO INVEST
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The transport sector constitutes 6% of the country's GDP and 70% of the
share of the roads sector.
India has an extensive road network of 5.23 Million kms which is the
second largest in the world.
More than 60vo of freight and 90% of the passenger traffic in the country
is handled by road.
The Government of India has launched major initiatives to upgrade and
strengthen highways and expressways in the country.
The private sector has emerged as a key player in the development of road
infrastructure.
The value of roadways and bridge infrastructure in India is expected to
grow at a CAGR of 17.4% between 2012-17, to reach USD 10 Billion.
STATISTICS
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The length of National Highways's has grown from 92,850 kms in 2013-14
to 1,00,087 kms till date.
India has completed 112 PPP projects and 149 are ongoing as of August
2015.
The type of PPP modules used in the highways sector are Build Operate
Transfer (BOT) toll and BOT annuity.
During the next five years, investment through PPPs are expected to be in
the region of USD 31 Billion for National highways.
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The National Highway Authority of India (NHAI) and the Ministry of Road
Transport & Highways had sanctioned projects for 3161 kms in 2014-15.
& 2337 in 2015-16.
GROWTH DRIVERS
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For 2015-16, an outlay of USD 3.8 Billion for the highways sector has been
provided.
During 2015-16, around 6,300 kms of National Highways are to be
completed along with eight bypasses.
The NHAI aims to award 5,000 kms of projects in 2015-16 and another
5,000 kms will be awarded by MoRT&H directly.
The government of India aims to develop a total of 57,653 kms of National
Highways under various programmes such as The National Highway
Development Project (NHDP), Special Accelerated Road Development
Program for the North-east region and Left Wing Extremist (SARDP-NE),
National Highways Interconnectivity Improvement Project (NHIIP).
The NHDP, an INR 2,47,635 Crore, seven phase programme-one of the
largest in the world-focuses on the widening, upgradation and
rehabilitation of 54,478 kms of National Highways.
The rise in two wheeler and four wheeler vehicles, increasing freight
traffic, strong trade and tourist flows between states are all set to
augment growth.
The Cabinet Committee on Economic Affairs (CCEA) has approved six
highway projects totalling 712 kms with an investment of INR 12,646
crore (USD 2 Billion) in March 2015. These projects, to be awarded under
the Engineering Procurement and Construction (EPC) model, are divided
into 10 packages under the NHDP in states such as Uttar Pradesh, Madhya
Pradesh, Odisha, Himachal pradesh, and West Bengal.
The Delhi Panipat stretch of NH-1 would be expanded to an eight-laned
dedicated highways in the next three years from April 2015. To meet the
increasing demand of traffic growth, NHAI is set to award this project on
toll mode by the end of March/NHAI has awarded this project on EPC
mode in June.
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Chhattisgarh is planning to invest INR 9,500 crore (USD 1.5 Billion) to
upgrade 44 roads in the state.
The Governement is set to offer the final batch of road projects for FY15.
A total of nine, with a cumulative length of 895 kms and project cost of
INR 17,815 crore (USD 2.82 Billion), are to be offered soon. Three are
expected under a BOT model. The other six are understood to be put out
under Engineering Procurement and Construction (EPC).
FDI POLICY
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100% Foreign Direct Investment (FDI) is allowed under the automatic
route in the road and highways sector, subject to applicable laws and
regulation.
SECTOR POLICY
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Road infrastructure is a key government priority – the sector has received
strong budgetary support over the years.
Standardised processes for PPP projects - a clear policy framework
relating to bidding and tolling.
A regulatory authority is being constituted for the road sector.
Environmental clearance is de-linked from forest clearance.
Harmonious substitute of concessionaires is permitted in ongoing and
completed projects for improving the availability of equity in the market
for re-investment in highway projects.
An entity NHIDCL exclusively for the development of roads in the Northeastern region and border areas is being created under MoRT&H.
The Prime Minister Gram Sadak Yojana (PMGSY) and Construction of
Rural Road Project (CRRP) focuses on the development of rural roads.
The Central Road Fund assists the state government and union territories
in the development of state roads.
Policy initiatives for attracting private investment:
Government will carry out all preparatory work including land acquisition
and utility removal' Right of Way (RoW) to be made available to
concessionaires free from all encumbrances.
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NHAI/GOI to provide capital grant up to 40% of project cost to enhance
viability on a case to case basis.
100% tax exemption for five years and 30% relief for next five years which
may be availed of in 20 years.
Concession period allowed upto 30 years
Arbitration and conciliation act 1996 based on UNICITRAL provisions.
In BOT projects entrepreneur are allowed to collect and retain tolls
Duty free import of specified modern high capacity equipment's for
highways construction
FINANCIAL SUPPORT
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Total budgetary allocation for the sector increased by INR 140.31 Billion
(27%) to INR 662.7 Billion in FY16 from INR 552.39 Billion in FY15.
Conversion of INR 4 per litre of excise duty on petrol and diesel into Road
Cess to provide additional INR 400 Billion to fund investment in roads and
other infrastructure
Revisiting PPP model with list rebalancing wherein Government will beer
a major part of the link.
Rationalisation of the capital gains for the sponsors exiting at the time of
listing of the units of InvITs.
Setting up National Infrastructure Fund (NIF) with intital funding of INR
200 Billion from the Government.
Announcement of tax free bonds infra bonds for road sector projects.
Proposal to introduce Public Contracts (Resolution of Disputes) Bill for
speedy dispute resolution.
To Complete 1,00,000 kms of under construction roads and providing
sanction for another 1,00,000 kms.
INVESTMENT OPPORTUNITIES
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The PPP model will continue to be the favoured way of executing the
remaining NHDP phases.
Priority expressway project for implementation on the PPP Mode.
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The Eastern Peripheral Expressway – a 135 km-long, six lane expressway
with a total project cost of USD 750 Million that will decongest Delhi. An
agreement signed and EPC - INR 5763 Crore.
The Delhi–Meerut Expressway (a 150 kms long project with a total project
cost of USD 1 Billion).
The Vadodra-Mumbai Expressway, a 473 kms expressway with a total
project cost of USD 4.3 Billion will provide faster access to the economic
hubs of Mumbai, Vadodara and Ahmedabad.
The Special Accelerated Road Development Programme for the Northeastern region (SARDP-NE) is aimed at developing road connectivity
between remote areas in the North-eastern region with state capitals and
district headquarters – a three phase project; facilitating connectivity of
88 district headquarters in the North – eastern state to the nearest
national highways.
FOREIGN INVESTORS
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Jiangsu (China)
PLUS Expressway Bcrhad Consortium (Malaysia)
Hyundai Engineering Construction Company Ltd. (Korea)
Isolux (Spain)
Yongma Engineering Company Ltd. (Korea)
Apollo, JLI & LOR (UK)
OJSC Consortium, SIBMOST (Russia)
GALFAR Consortium (UAE)
Zignego Company Inc. (USA)
Galfar Engineering and Contracting, SAOG (Oman)
ITD (Thailand)
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