India with a total road network of 5.5 mn Km comprises of national & state highways and urban & rural roads. National highways account for 2% of the total road network and carry over 40% of total traffic.
The construction of highways reached 9,829 km during 2017-18, with an all-time high average pace of 27 km per day. This represents 20% growth over 2016-17, when 8,231 km of highways were constructed. During 2017-18, 17,055 km road length was awarded as against 15,948 km in the previous year. The construction of national highways entailed an expenditure of $ 18 bn during 2017-18.
India has a well-developed framework for Public-Private-Partnerships (PPP) in the highway sector. Asian Development Bank ranked India at first spot in PPP operational maturity and also designated India as a developed market for PPPs.
The Government of India (GoI) is planning to expand the national highway network to over 200,000 km. The Government launched the Bharatmala Pariyojana, which aims to build 66,100 km of economic corridors, border and coastal roads, and expressways to boost the highway network. It is envisaged that the programme will provide 4-lane connectivity to 550 districts, increase the vehicular speed by 20-25% and reduce the supply chain costs by 5-6%. The first phase of the programme will bring in $ 82 bn investments by 2022 for the development of 34,800 km of highways.
100% FDI allowed under automatic route.
For further details, please refer FDI Policy
Avg. highway constructed per day
National highway construction
Share of GDP on logistics & transportation
Projects awarded under PPP
$ 82 bn to be invested by 2022 under Bharatmala Pariyojana
Highest ever construction of 133 km per day of rural roads in 2016-17
National highways construction in India is targeted at 40 km a day in 2018-19
The government plans to invest $ 22.4 bn towards road infrastructure in the North-East region of India during 2018-2020.
The market for roads and highways is projected to exhibit a CAGR of 36.16% during 2016-2025, on account of growing government initiatives to improve transportation infrastructure in the country. Almost half (742) of the 1,531 PPP projects awarded in India until March 2018 were related to roads.
The highways sector in India has been at the forefront of performance and innovation. The government has successfully rolled out over 60 projects worth over $ 10 bn based on the Hybrid Annuity Model (HAM). HAM has balanced risk appropriately between private and public partners and boosted PPP activity in the sector.
Asset recycling, through the toll-operate-transfer (ToT) model has been taken up by the National Highways Authority of India (NHAI) for 100 highways. The first bundle of 9 highways with an aggregate length of about 680 km was monetized successfully for an investment of $ 1.45 bn.
National investment and Infrastructure Fund (NIIF) and Canadian PSP Investment's wholly owned subsidiary Roadis have announced a platform that will invest upto $ 2 bn of equity in road projects in India.
Spanish infrastructure firm Abertis Infraestructuras SA has agreed to buy two operational toll road assets in south India from Macquarie Group Ltd for about $ 150 mn
A consortium of investors led by Goldman Sachs Inc has agreed to invest $ 220 mn in Essel Highways, the road infrastructure holding company of Subhash Chandra controlled Essel Group.
Brookfield Asset Management made its first significant investment in Indian infrastructure, buying six roads and three power projects from Gammon Infrastructure Projects Limited for $ 1 bn.
I Squared acquired 100% of Jaipur Mahua Tollway Pvt Ltd (JMTPL) from Malaysia-based IJM Corporation for about $ 85 mn.
66,100 km of national highways to be constructed
Hybrid Annuity Model (HAM), Toll-Operate-Transfer (TOT)
NHAI facilitating the availability of FASTags for electronic toll collection
Bharatmala Project is a new highways development programme, wherein the plan is to develop road length 44,000 kms at an estimated cost of $ 97.20 bn.
Government of India aims to develop a total of 63,591 kms of National Highways under various programmes such as:
1) National Highways Development Project (NHDP).
2) Special Accelerated Road Development Program for the North-East region (SARDP-NE).
3) Development of roads in Left Wing Extremism (LWE) affected areas.
4) National Highways Interconnectivity Improvement Project (NHIIP).hways interconnectivity Improvement Project (NHIIP)
This is a Policy to promote greening of highway corridors with participation of the community, farmers, private sector, NGOs, and government institutions. Further, the policy provides comprehensive guidelines to ensure uniformity of operations pertaining to enhancement of highway landscapes. The community shall be benefited in terms of huge generation of employment opportunities, entrepreneurship development and environmental benefits. Overall, adoption of the policy will contribute to economic development of the country and the local groups can access their rights to the non-timber produce from the trees.
Fiscal incentives for the sector are as follows:
1) 100% FDI through automatic route allowed subject to applicable laws and regulation.
2) Right of way (RoW) for project land made available to concessionaires free from all encumbrances.
3) NHAI/GOI to provide capital grant (Viability Gap Funding/Cash Support) up to 40% of project cost to enhance viability on a case to case basis.
4) 100% tax exemption for five years and 30% relief for next five years, which may be availed of in 20 years.
5) Duty free import of modern high capacity construction equipment.
Government of India has undertaken major initiatives to upgrade and strengthen highways and expressways in the country including enabling policy measures to facilitate private investments in this sector. Some of the key initiatives include Bharatmala, National Highway Development Program, E-Highway. In addition to highway development, focus remains on efficient operations & network management for improving logistics efficiency, which shall give rise to new investment opportunities.
By: Invest India
By: Invest India
By: Invest India
By: Invest India
By: Sanchi Padia
By: Shivam Batham
By: Preet Deep Singh
By: Anusha Agarwal
By: Shivam Batham
