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The Government of India has allocated Rs. 111 lakh crore (US$ 13.14 billion) under the National Infrastructure Pipeline for FY 2019-25. The Roads sector is expected to account for 18% capital expenditure over FY 2019-25

Road Infrastructure in India

    Last updated on Jun, 14 2021

Indian Road Industry Report  (Size: 534.93 KB ) (April, 2021)

Introduction

India has the second-largest road network in the world, spanning a total of 5.89 million kilometres (kms). This road network transports 64.5% of all goods in the country and 90% of India’s total passenger traffic uses road network to commute. Road transportation has gradually increased over the years with improvement in connectivity between cities, towns and villages in the country.

In India, sale of automobiles and movement of freight by roads is growing at a rapid rate.

Market size

Highway construction in India increased at 17.00% CAGR between FY16-FY21. Despite pandemic and lockdown, India has constructed 13,298 km of highways in FY21.

In October 2020, the foundation stone was established for nine National Highway projects—with a total length of ~262 kms—worth >Rs. 2752 crore (US$ 371.13 million) in Tripura.

The Government of India has allocated Rs. 111 lakh crore (US$ 1.4 trillion) under the National Infrastructure Pipeline for FY 2019-25. The roads sector is likely to account for 18% capital expenditure over FY 2019-25.

In October 2020, The National Investment and Infrastructure Fund (NIIF) is making progress towards integrating its road and highway portfolio. The NIIF has acquired Essel Devanahalli Tollway and Essel Dichpally Tollway through the NIIF master fund. These road infra-projects will be supported by Athaang Infrastructure, NIIF's proprietary road network, assisted by a team of established professionals with diverse domain expertise in the transport field.

Key Investments/Developments

The Union Minister of State for Road, Transport and Shipping has stated that the Government aims to boost corporate investment in roads and shipping sector, along with introducing business-friendly strategies, that will balance profitability with effective project execution. According to the data released by Department for Promotion of Industry and Internal Trade Policy (DPIIT), construction development^ sector attracted Foreign Direct Investment (FDI) inflow worth US$ 25.93 billion in the between April 2000 and December 2020.

Government Initiatives

Some of the recent Government initiatives are as follows:

  • In April 2021, the NHAI has decided to deploy Network Survey Vehicle (NSV) to enhance quality of the national highways. Carrying out road condition survey using NSV on the national highways was made mandatory for certifying completion of the project and every six months thereafter.
  • In March 2021, the Mizoram-Myanmar road project, which was launched under SARDP-NE, completed 92% work and is scheduled to be completed by June 2021.
  • Under the Union Budget 2021-22, the Government of India has allocated Rs. 108,230 crore (US$ 14.85 billion) to the Ministry of Road Transport and Highways.
  • The NHAI awarded 1,330 km of highways in the first half of FY21, which was 1.6x of the total awards in FY20 and 3.5x of the FY19-levels. NHAI, the nodal authority for building highways across the country, has set a target of awarding 4,500km of projects in FY21.
  • In February 2021, The Minister for MSMEs and Road Transport & Highways Mr. Nitin Gadkari approved construction of the 158-kms ring road worth Rs 10,000 crore (US$ 1.37) in Telangana.
  • In January 2021, the Government of India and New Development Bank (NDB) signed two loan agreements for US$ 646 million for upgrading the state highway network and district road network in Andhra Pradesh.
  • In December 2020, the MoRTH proposed to develop additional 60,000 kms of national highways (in the next five years), of which 2,500 kms are expressways/access controlled highways, 9,000 kms are economic corridors, 2,000 kms are coastal and port connectivity highways and 2,000 kms are border road/strategic highways. The ministry also intends to improve connectivity for 100 tourist destinations and construct bypasses for 45 towns/cities.
  • In December 2020, Mr. Nitin Gadkari, Union Minister of Road Transport and Highways inaugurated the three lane 1.5 km long Koilwar bridge over Sone river in Bihar.
  • In December 2020, Union Minister of Road Transport and Highways, Mr. Nitin Gadkari laid foundation stones for 15 National Highways projects with a total length of 266 km, worth Rs. 4,127 crore (US$ 560.88 million) in Nagaland.
  • In December 2020, the Ministry of Road Transport and Highways signed a memorandum of understanding (MoU) with the Federal Ministry of Climate Action, Environment, Energy, Mobility, Innovation and Technology of the Republic of Austria on technology cooperation in the road infrastructure sector.
  • In November 2020, Ministry of Road Transport and Highways issued the ‘Motor Vehicle Aggregator Guidelines 2020’ to regulate shared mobility and reduce traffic congestion and pollution.
  • In November 2020, Union Minister of Road Transport and Highways, Mr. Nitin Gadkari announced a large financial relief package and released Rs. 8,000 crore (US$ 1.08 billion) to meet the working capital requirements of contractors.

Road Ahead

The Government, through a series of initiatives, is working on policies to attract significant investor interest. A total of 200,000 km of national highways is expected to be completed by 2022.

In the next five years, National Highway Authority of India (NHAI) will be able to generate Rs. 1 lakh crore (US$ 14.30 billion) annually from toll and other sources.

Note: Conversion rate used for February 2021 is Rs. 1 = US$ 0.01357

References: Media Reports, Press Releases, Ministry of Road Transport and Highways, NHAI website, Press Information Bureau (PIB)

Notes: ^FDI in construction development Includes: Townships, housing, built-up infrastructure and construction-development projects

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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