Introduction
India has the world's second largest road system, with 41,00,000 km of roads, of which National Highway Authority of India’s (NHAI) share is 71,722 kilometre (km). About 60 per cent of freight and 87 per cent of passenger traffic passes on roads. Although, National Highways (NH) constitutes only about 1.7 per cent of the road network, they carry 40 per cent of the total road traffic.
The length of various categories of roads is: National Highways - 70,934 km, State Highways - 1,54,522 km, Major District Roads & Other District Roads - 25,77,396 km, Rural Roads - 14,33,577 km.
Development of roads and highways fosters inclusive growth. It promotes overall progress of the region. The immediate net benefits of upgraded highway system mostly relate to improvement in granting access to various work and educational opportunities.
Further, roads and highways not only connect different production and consumption regions but also open up new markets by gaining access to new consumers.
Sector Structure/ Market Size
In a country as large as India, roads and highways are the arterial lifelines of economic growth. As the road network expands, opportunities for the automotive sector too rise concomitantly across the domains of passenger vehicles of all sizes, commercial vehicles, and auto parts, according to Dr C P Joshi, the Union Minister of Road Transport and Highways.
- India’s construction sector is expected to grow at about 35 per cent between 2008–09 and 2012–13. The private sector is expected to contribute 44 per cent of the total projected spend of US$ 100 billion on roads and highways over the Twelfth Five Year Plan (2012-17) period
- The Union Budget 2012- 13 is a pragmatic and growth-oriented one. "Infrastructure sector has been given due thrust in the budget. Doubling the infrastructure tax-free bond amount to Rs 60,000 crore (US$ 11.73 billion), 8,800 km highway coverage target, " according to C S Verma, Chairman, SAIL
- The Government of India has decided to fast-track the clearance of roads and highways projects in the remaining months of the current financial year. "This will ensure the target for the current financial year of 7,999 km is met on time," as per a release from the Prime Minister's Office (PMO)
- The Ministry of Road Transport and Highways has decided to award 15 major projects, totalling 1,547 km of roads, this financial year. Another 11 road projects (1,731 km) would be considered by the public-private partnership (PPP) approval committee
- Allocation of funds worth Rs 1,027.25 crore (US$ 200.83 million) was awarded to the Ministry of Road Transport & Highways, for maintenance and repair (M&R) of National Highways (NHs)
Growth Potential
- Japan is keen to increase its investments in the roads and maritime sectors in India. In the past Japan has part-funded the dedicated rail freight corridor and the Delhi Metro Rail system. It is also keen on funding the proposed high-speed train projects
- The Government has also proposed an increase in the existing highway network of 71,772 km to about 85,000 km in the 12th Five Year Plan period
- The Government of Maharashtra is looking beyond its proposed coastal road plan to develop a comprehensive network of urban freeways and highways connecting the financial capital of the country-Mumbai, to major satellite townships. The 1,740 km highway corridor will be developed by 2030. Of the total network of Highway Corridor, nearly 539 km will be newly developed, another 782 km of existing arterial road will be upgraded or extended, arterial corridors and links to the length of 420 km will be constructed
- Foreign direct investment (FDI) received in the construction activities (including roads and highways) sector during April 2011 to January 2012 stood at US$ 2,230 million, according to statistics released by the Department of Industrial Policy and Promotion (DIPP)
Private Sector Investments
- A subsidiary of GVK Power & Infrastructure Ltd - GVK Shivpuri Dewas Expressway Pvt Ltd and construction major Larsen & Toubro (L&T) has signed a pact for execution of a Rs 1,937 crore (US$ 378.69 million) order for a road project in Madhya Pradesh (MP). The concession period for the project is for 30 years including construction period of 30 months. This road project is part of the phase IV of the National Highway Development Programme (NHDP). This road project is among three mega projects of NHAI. L&T is associated with all of them
- The Ministry of Road Transport plans to increase private investment in highway construction during the 12th Five Year Plan from April 2012. The expenditure in road sector in the 12th Five Year Plan will double from Rs 152,201 crore (US$ 29.75 billion) to Rs 323,000 crore (US$ 63.15 billion). This projected increase in private investment will raise the percentage of private sector contribution in the highway sector to 51 from the present 41
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