ROADS AND HIGHWAYS

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SUMMARY
  • India has one of the largest road networks in the world. It measures 5,482,809 km.1
  • The National Highways/Expressway measure 120,543 km as of December 2018.2
  • The State Highways measure 155,222 km as of December 2018.3
  • The implementation agencies of the Ministry of Road Transport and Highways include:
    • National Highways Authority of India
    • State/Union Territories Public Works Departments
    • National Highway and Infrastructure Development Corporation Limited
    • Border Roads Organization
    • Indian Academy of Highway Engineers (IAHE)
  • Historically, investments in the transport sector have been made by the Government. However, to increase private sector participation, the Ministry has laid down comprehensive policy guidelines for private sector participation in the development of National Highways.4
REASONS TO INVEST
  • The Government offers various incentives to attract Private Investment and Foreign Direct Investment in the roads and highways sector.
    • The Government bears the following costs:
      • Project Feasibility Study
      • Land for the right of way and wayside amenities
      • Shifting of utilities
      • Environment clearance, cutting of trees, etc.
      • Subsidy up to 40 % of the project cost to make project viable
      • 100% tax exemption in any consecutive 10 years out of 20 years after commissioning of the project
      • Duty-free import of high capacity and modern road construction equipment
  • The Government of India is taking many measures to combat vehicular pollution.5
    • The Ministry of Road Transport and Highways has come up with initiatives to promote alternate fuels in vehicles. Electric Vehicles are being given a big push by the ministry. India’s first multi-nodal Electric Vehicle passenger transport project has been launched in Nagpur with an integrated solution of buses, taxis and e-rickshaws.
    • Emission norms for Tractors and Construction Equipment vehicles have been notified for low sulphur fuel, to be implemented from 01 October 2020.
    • Guidelines have been issued to project directors, contractors and field level officials working on highway projects around Delhi to keep the pollution arising from construction work under check.
  • The Government of India is in the process of implementing various roads and highway projects. Some of the projects that have been implemented/are being implemented are as follows:6
    • Bharatmala Pariyojana: The Bharatmala Pariyojana is the country’s largest ever highways development programme. It aims to optimize the efficiency of road traffic movement across the country by bridging critical infrastructure gaps. Multi-nodal integration is one of the key focuses of this programme. Around 53,000 km of National Highways (NH) have been identified to improve the efficiency of the National Corridors, out of which 24,800 km of NH are to be taken up in Phase 1. Phase 1 is being implemented over 2017-2022. The total fund provision for Phase 1 is $80.4 Bn.
    • Chennai-Nashri Tunnel: This 9 km long, twin tube, all-weather tunnel between Udhamput and Ramban in Jammu & Kashmir is India’s longest highway tunnel. It is also Asia’s longest bi-directional highway tunnel. It is built at an elevation of 1,200 m and cost $559.2 Mn. The tunnel is a part of the 286 km long Jammu-Srinagar National Highway.
    • Bhupen Hazarika Setu: The Bhupen Hazarika Setu Bridge provides 24-hour road connectivity between upper Assam and the eastern part of Arunachal Pradesh.
    • Other projects under implementation include Delhi-Meerut Expressway, Vadodra-Mumbai Expressway, Bangalore-Chennai Expressway, Eastern and Western Peripheral Expressways. Components under Bharatmala Phase 1 are:7
      • Economic Corridors Development: Length - 9,000 km Investment Outlay: $17.2 Bn
      • Inter-corridor and feeder roads - Length: 6,000 km Investment Outlay: $11.4 Bn
      • National Corridors Efficiency Improvements Length - 5,000 km Investment Outlay: $14.3 Bn
      • Border and International Connectivity Roads: Length - 2,000 km Investment Outlay: $3.6 Bn
      • Coastal and Port Connectivity Roads Length - 2,000 km Investment Outlay: $2.9 Bn
      • Expressways Length: 800 km Investment Outlay - $5.7 Bn
  • National Highways Development Project (NHDP): The Government launched NHDP to upgrade and strengthen National Highways through various phases of the project. The phase-wide details of NHDP as on 31.05.2017 are as follows:

  • The government has taken many e-initiatives such as Project Monitoring Information System (PMIS), INAM-Pro+, Electronic Toll Collection (ETC) to simplify the processes in the roads and highways sector and bring transparency to it.
  • The Ministry of Road Transport and Highways provides financial assistance to states to strengthen the public transport system in the country. 23 projects in 17 states have been implemented to bring the latest IT related features to the road transport system in the States.
  • Under its Green Initiatives, NHAI planted over 2.5 lakh trees and has also set up a Green Highway Division.
STATISTICS
  • Up till November 2018, 5,759 km of highways have been constructed.8
  • The number of road accidents has fallen from 480,652 in 2016 to 464,910 in 2017.9 
  • The number of fatalities has fallen fron 150,785 to 147,913.10
  • More than 61,300 km length of road projects, costing more than $92.7 Bn in are progress as of December 2018.11
  • National Highways awarded in 2017-18 stood at 17,055 km, against 15,948 km in 2016 -17.
  • Setu Bharatam scheme has been launched to replace Level Crossings on National Highways by Roads Over Bridges (ROBs) or Roads Under Bridges (RUBs). Under the programme, 174 ROBs/RUBs are to be constructed. Out of these 174, 93 have been sanctioned at an estimated cost of $1 Bn. The 93 ROBs/RUBs that have been sanctioned are at various stages of progress.12
  • 30 km of highways are being built on a day basis.13
FDI POLICY
  • 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
  • Development and maintenance of road infrastructure is a key Government priority, the sector has received strong budgetary support over the years.
  • Standardised processes for PPP and public funded projects and a clear policy framework relating to bidding and tolling have been developed over the years.
  • Major policy initiatives undertaken by the Ministry of Road Transport and Highways (MoRTH) are:
    • Provision of funds to the State Government for development of state roads as per the Central Road Fund Act 2000, amended by Finance Act from time to time.
    • Introduction of Electronic Toll Collection System, FASTag by MoRTH. The success of the initiative can be witnessed in the increase in user fee collection from $27 Mn in January’ 2017 to $43 Mn in November’ 2017. The penetration during the same period increased from 11.2% to 18.5%.
    • Implementation of Value Engineering Programme in 2017 to promote use of new technologies, materials and equipment in highway projects executed either under PPP or public funding mode.
    • Automation of Regional Transport Offices under Transportation Mission Mode Project. It envisages creation of a consolidated transport database. The two flagship applications under the project are VAHAN (Vehicle Registration, Taxation, Permit, Fitness and associated services) and SARATHI (Driving License, Learner License, Driving Schools and related activities).
    • To fast track approval process, enhanced powers to NHAI, specifically for EPC (Engineering, Procurement and Construction) and PPP (Build-Operate-Transfer) projects where no Viability Gap Funding is involved.
    • Project Monitoring Information System introduced by NHAI for tracking the status of all projects, preparation of reports and online upload of important project documents like DPRs and contract documents, etc.
FINANCIAL SUPPORT

Masala Bonds

The National Highways Authority of India (NHAI) launched Masala Bonds at the London Stock Exchange in May 2017 with the aim of mobilising funds.

A total of $450.9 Mn has been collected by way of Masala Bonds. Asia contributed 60% and Europe contributed 40% to the subscription.14

 

Hybrid Annuity Model

To encourage private sector participation, the Ministry of Road Transport and Highways adopted the Hybrid Annuity Model. As per the model, 40% of the project cost is provided by the Government as ‘construction support’ to the private developer during the construction period and the balance 60% as annuity payments over the concession period along with interest on outstanding amount to the concessionaire.

The model has successfully revived PPPs in the roads and highways sector. 52 NH with a total length of around 3,200 km and having an investment outlay of around $7.8 Bn have been awarded through this model.15

 

Key Highlights of the Union Budget 2019-20

  • The union budget allocation towards the Ministry of Road Transport and Highways is $11.9 Bn.16

The revenue expenditure stands at $1.6 Bn and the capital expenditure stands at $10.3 Bn.17

  • The total budget allocation towards the National Highways Authority of India stands at $5.3 Bn.18
  • The total budget allocation towards Road Transport and Safety stands at $40 Bn.19
INVESTMENT OPPORTUNITIES

The investment opportunities in the sector include:

  • Project Highways – Construction and Operations & Maintenance:
    • New Expressway projects under Bharatmala Pariyojana Project Phase 1:
      • Delhi-Jaipur Expressway (Greenfield – 196 km)
      • Delhi-Amritsar-Katra Expressway (600 km)
      • Vadodra-Mumbai Expressway (650 km)
      • Hyderabad-Vijayawada-Amravathi Expressway (300 km)
      • Nagpur-Hyderabad-Bangalore Express way (1,100 km)
      • Kanpur Lucknow Expressway (75 km) Amravath Ring road/Expressway (186 km)
  • 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.20
  • Multi-modal logistic parks: 35 Multinodal Logistics Parks have been identified for development in Phase-1 of Bharatmala Pariyojana.
  • Revival of languishing stalled projects: The Ministry has identified 73 projects, which cover 8,187 km, worth an estimated investment of $14.3 Bn as Languishing Projects. The reasons for the delay in these projects have been identified and the requisite measures are being taken to address the same.
  • Toll-Operate-Transfer Model: The Ministry is monetizing road assets constructed using public funds by way of the Toll-Operate-Transfer (ToT) scheme. The scheme proposes bidding of bundled national highways for a concession period of 30 years.
FOREIGN INVESTORS
  • CIDBI Malaysia (Malaysia)
  • ERA-SIBMOST (Russia)
  • Essel Infra & CR-18 Consortium (China)
  • Gamuda Malaysia 0 WCT Malaysia (Malaysia)
  • GMR-Tuni-Ankapalli Express Ltd (Malaysia)
  • Hindustan Construction Company Ltd-Laing Sadbhav Consortium (UK)
SOURCES
  1. “Ministry of Road Transport and Highways”, Annual Report 2017-18, http://www.morth.nic.in/showfile.asp?lid=3152, accessed on 08 June 2019
  2. “Ministry of Road Transport and Highways”, Annual Report 2017-18, http://www.morth.nic.in/showfile.asp?lid=3152, accessed on 08 June 2019
  3. “Ministry of Road Transport and Highways”, Annual Report 2017-18, http://www.morth.nic.in/showfile.asp?lid=3152, accessed on 08 June 2019
  4. “Ministry of Road Transport and Highways”, Annual Report 2017-18, http://www.morth.nic.in/showfile.asp?lid=3152, accessed on 08 June 2019
  5. “Ministry of Road Transport and Highways”, Annual Report 2017-18, http://www.morth.nic.in/showfile.asp?lid=3152, accessed on 08 June 2019
  6. “Ministry of Road Transport and Highways”, Annual Report 2017-18, http://www.morth.nic.in/showfile.asp?lid=3152, accessed on 08 June 2019
  7. *“Ministry of Road Transport and Highways”, Annual Report 2017-18, http://www.morth.nic.in/showfile.asp?lid=3152, accessed on 08 June 2019

  8. “Ministry of Road Transport and Highways”, Ministry of Road Transport and Highways 2018: the Highway Construction Year http://pib.nic.in/newsite/PrintRelease.aspx?relid=186932, accessed on 08 June 2019

  9. ”Ministry of Road Transport and Highways”, Year End Review: Ministry of Road Transport and Highways 2018: the Highway Construction Year, http://pib.nic.in/newsite/PrintRelease.aspx?relid=186932, accessed on 08 June 2019

  10. ”Ministry of Road Transport and Highways”, Year End Review: Ministry of Road Transport and Highways 2018: the Highway Construction Year, http://pib.nic.in/newsite/PrintRelease.aspx?relid=186932, accessed on 08 June 2019

  11. ”Ministry of Road Transport and Highways”, Mandaviya Says, All Level Crossings on National Highways to be replaced by Overbridges and Underbridges, http://pib.nic.in/newsite/PrintRelease.aspx?relid=187001, accessed on 08 June 2019

  12. ”Ministry of Road Transport and Highways”, Year End Review: Ministry of Road Transport and Highways 2018: the Highway Construction Year, http://pib.nic.in/newsite/PrintRelease.aspx?relid=186932, accessed on 08 June 2019

  13. “Ministry of Road Transport and Highways”, Shri Nitin Gadkari Lays the Foundation Stone for Highways Project to Decongest Ashram-Badarpur-Faridabad-Ballabhgarh in Delhi, http://www.pib.nic.in/Pressreleaseshare.aspx?PRID=1567035, accessed on 08 June 2019

  14. “Ministry of Road Transport and Highways”, Annual Report 2017-18, http://www.morth.nic.in/showfile.asp?lid=3152, accessed on 08 June 2019

  15. “Ministry of Road Transport and Highways”, Annual Report 2017-18, http://www.morth.nic.in/showfile.asp?lid=3152, accessed on 08 June 2019

  16. “India Budget”, Ministry of Road Transport and Highways, https://www.indiabudget.gov.in/ub2019-20/eb/sbe81.pdf, accessed on 08 June 2019

  17. “India Budget”, Ministry of Road Transport and Highways, https://www.indiabudget.gov.in/ub2019-20/eb/sbe81.pdf, accessed on 08 June 2019

  18. “India Budget”, Ministry of Road Transport and Highways, https://www.indiabudget.gov.in/ub2019-20/eb/sbe81.pdf, accessed on 08 June 2019

  19. “India Budget”, Ministry of Road Transport and Highways, https://www.indiabudget.gov.in/ub2019-20/eb/sbe81.pdf, accessed on 08 June 2019

  20. ”Make in India”, Roads and Highways, https://dipp.gov.in/sites/default/files/roads.pdf, accessed on 08 June 2019

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