Connectivity is a key component of development, it is the pillar on which economy grows and development is witnessed. Roads formulate the path to the holistic development of the nation. Roads in India are the most preferred mode of transportation. Easy availability, adaptability to individual needs and cost savings are some of the factors working in favour of road transport. It is for this reason the rural economy is so dependent on this infrastructure component. Through Bharat Nirman, the Government has made an important commitment to invest in rural connectivity – connectivity through power, connectivity through telephones and connectivity through roads in India. “Rural road connectivity is a critical component of our overall strategy for rural development. It promotes access to economic and social services and facilitates the growth processes in our rural economy”, according to Hon’ble Prime Minister Dr Manmohan Singh’s address note at the National Conference on Rural Roads.
Sector Structure/Market Size
India has the world's second largest road network, aggregating over 3.34 million kilometers (km) and carry about 65 per cent of freight and 85 per cent of passenger traffic, according to the National Highway Authority of India (NHAI). Road transport also acts as a feeder service to railway, shipping and air traffic.
In order to give impetus to the economic development of the country, the Government has embarked upon a massive National Highways Development Project (NHDP) in the country. Under the first two phases of the project i.e. NHDP Phase-I & NHDP Phase-II, about 14,279 km length of National Highways (NH) are proposed to be upgraded to 4 or 6 lane at a total estimated cost of Rs 64,639 crore (US$ 14.56 billion). The Government of India (GoI) plans to develop 35,000 km of highways by 2014 under the NHDP.
Foreign direct investment (FDI) received US$ 1,125 million in construction activities (including roads and highways) sector from April 2010 to March 2011. The cumulative inflows amounted to US$ 9,491 million, accounting for 7 per cent of the total FDI equity inflows, according to data released by Department of Industrial Policy and Promotion (DIPP).
A US$ 301.38 million worth project, ending 2016, for construction, upgradation and improvement of 433 km long road in six North-East States, assisted by Asian Development Bank (ADB) was approved by the Cabinet Committee on Economic Affairs (CCEA).
Seven projects which include widening of roads in five states were approved by a panel in the Ministry of Finance at an estimated cost of US$ 1.69 billion and will be built under public-private partnership (PPP) mode. Five projects are associated with the Ministry of Road Transport and Highways and two with the Ministry of Home Affairs (MHA).
The Ministry of Road Transport and Highways is planning to award road projects covering 10,000 km of highways in 2011-12. About 80 per cent of these road projects in India would be distributed on the build-operate-transfer (BOT) basis.