Infrastructure sector in India has witnessed rapid growth in its different sectors with the development of urbanisation and increased involvement of foreign investments in this field. The Government of India has taken various steps to develop the infrastructure. Liberalisation of Foreign Direct Investment (FDI) regulations, extended tax holiday periods and introduction of Public Private Partnership (PPP) are some of the major factors that have led to the growth of this sector in India.
Major Infrastructure development requires a substantial inflow of investment capital. The policies of the Government seek to encourage investments in domestic infrastructure from both local and foreign private capital. The country is also a hot destination for foreign investors.
Some of the top infrastructure companies that are involved in infrastructure activities in India include Larsen & Toubro Ltd, Punj Lloyd Group, LancoInfratech Limited and GMR Group to name a few.
Roads are preferred over other modes of transport because they provide access to the last point of destination, as it also acts as a feeder service to railway, shipping and air traffic.
India has the world's second largest road network, aggregating over 3.34 million kilometres (km) and account for 65 per cent of freight and 80 per cent of passenger traffic, according to the National Highway Authority of India (NHAI).
The Government of India estimates approximately that US$ 90 billion investment would be required during FY07-FY12 to improve the country’s road infrastructure. Plans have been announced by the Government to increase investments for the development of road infrastructure in the country and the Government would increase funds from around US$ 15 billion per year to over US$ 23 billion in 2011-12 for the same. The amount of funds invested as part of these programmes will considerably exceed that invested in the past. Such programmes would be funded via a mix of public and private initiatives.
Recently, the Ministry of Finance approved six road proposals worth approximately Rs 9,773.85 crore (US$ 1.8 billion) under public-private partnership (PPP). The Public Private Partnership Approval Committee (PPPAC), chaired by Economic Affairs Secretary Mr R Gopalan, has granted approval to the six proposals of the Ministry of Road Transport and Highways spread across five states.
Indian Railways have generated Rs 43,107 crore (US$ 8.1 billion) of revenue earnings from commodity-wise freight traffic during April-November 2011 as compared to Rs 39,452 crore (US$ 7.5 billion) during the corresponding period in 2010, registering an increase of 9 per cent.
Railways carried 618 million tonnes of commodity traffic during the six months as compared to 593 million tonnes carried during the corresponding period in 2010, registering an increase of 4 per cent.
The net tonne kilometers (NTKM) increased from 393,111 million during April-November 2010 to 410,378 million during April-November 2011, demonstrating an increase of 4 per cent.
The World Bank has signed a US$ 975 million loan agreement with the Government of India to set-up the Eastern Dedicated Freight Corridor that will allow faster and more efficient movement of raw materials and finished goods between the Northern and Eastern parts of India.
"The Indian Railways urgently needs to add freight routes to meet the growing freight traffic in India, which is projected to increase more than 7 per cent annually. Dedicated freight corridors (DFC) will not only meet this growing freight demand, but also decongest the already saturated rail network and promote the shifting of freight transport from road to more efficient rail transport," according to Mr VenuRajamony, Joint Secretary, Department of Economic Affairs, Ministry of Finance.
Furthermore, the Delhi Metro is finally moving towards eight-coach trains. The Delhi Metro Rail Corporation (DMRC) signed a deal recently to procure 76 coaches from Bombardier. The 76 coaches will be used to operate the first eight-coach trains on the HUDA city centre-Jehnagirpuri corridor in May 2013.
Additionally, the Asian Development Bank (ADB) would extend loans of up to US$ 500 million to Indian Railways to help improve its services along some of the busiest freight and passenger transport routes in the country.
The investment would target various routes including Chhattisgarh, Orissa, Maharashtra, Karnataka and Andhra Pradesh, and also the critical 'golden quadrilateral' corridor that connects Chennai, Kolkata, Mumbai and New Delhi.