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Road Infrastructure in India

April, 2013

Introduction

Roads are a major mode of transportation in India today, as they carry almost 90 per cent of the country's passenger traffic and about 65 per cent of its freight. The density of India's 80, 000 km-national highway (NH) network is 0.66 km of highway per square kilometre of land. It is encompassed by over 200 toll plazas, about half of which are handled by various highway developers and the rest by National Highway Authority of India (NHAI).

The Indian Government also plays a vital role in developing the road network in the country. It provides various incentives for private and foreign sector investment in the roads sector apart from allowing 100 per cent foreign direct investment (FDI) under the automatic route for support services to land transport such as operation of highway bridges, toll roads, and vehicular tunnels. Such services also include services incidental to transport such as cargo handling, construction and maintenance of roads, bridges; and construction and maintenance of roads and highways offered on build-operate-transfer (BOT) basis, including collection of toll.

Road development does not only talk about urban space, but is also very important for the growth of rural India. Budget 2013-14 has provided a renewed thrust to rural India. The allocation to rural development is higher by nearly 50 per cent with a focus on improving road infrastructure. Rural income should witness a rise in the coming years with road construction activity picking up.

The rapid expansion and strengthening is also very imperative because of increasing motorisation. The number of vehicles has been growing at an average pace of around 10 per cent per annum. In addition to it, the share of road traffic in total traffic has grown from 13.8 per cent of freight traffic and 15.4 per cent of passenger traffic in 1950-51 to an estimated 62.9 per cent of freight traffic and 90.2 per cent of passenger traffic by the end of 2009-10. Thus, road transport is a segment that needs continuous up-gradation and regulation for both present and future traffic and for better energy efficiency, less pollution and enhanced road safety.

Key Developments and Investments

Foreign direct investment (FDI) received in construction development sector from April 2000 to January 2013 stood at US$ 21.95 billion, according to Department of Industrial Policy and Promotion (DIPP).

  • Dighi Port, in which IL&FS holds 20 per cent stake, has decided to invest Rs 1,000 crore (US$ 183.38 million) for setting up a new berth and road and rail infrastructure at the port. The port has signed agreements with a consortium of banks led by Bank of India to raise Rs 700 crore (US$ 128.36 million) for the same and the promoters will invest the remaining amount
  • Meanwhile, it is very much anticipated that Larsen & Toubro (L&T) will bag a Rs 1,500 crore (US$ 275.06 million)-road project in Abu Dhabi with a local partner, marking a major achievement in its strategy to enhance foreign business. An official from Delma Engineering, L&T's partner in the United Arab Emirates (UAE), has revealed that the joint venture (JV) had emerged as the best bidder for the Abu Dhabi Department of Transport's project for widening of Mafraq to Al Ghweifat highway
  • NHAI has completed 99.99 per cent of India's much-awaited infrastructure project - the Golden Quadrilateral (GQ) highway network- connecting Delhi, Mumbai, Kolkata and Chennai. NHAI wanted to establish GQ as a benchmark of Indian highways attaining global standards while boosting local economies around it. The project also facilitated numerous opportunities for public-private partnerships (PPPs) in infrastructure building
  • People driving on the Ahmedabad-Mumbai NH will soon be able to use a common electronic tag on their vehicles to pay tolls while crossing the six toll plazas. The plazas are operated by two different road developers - L&T and IRB Infrastructure.

    The Indian Highways Management Company Ltd (IHMCL), a firm set up to implement the inter-operable electronic tolling system across the NH network, will be undertaking the job for the first time. The company is jointly owned by highway developers, financial institutions and the NHAI