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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 Jan, 21 2021

Indian Road Industry Report  (Size: 466.38 KB ) (November, 2020)

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 21.44% CAGR between FY16-FY19. In FY19, 10,855 km of highways were constructed, and the Government has set a target for constructing 12,000 km of national highways in FY20. In October 2020, the foundation stone was established for nine National Highway projects—with a total length of ~262 km—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$ 25.66 billion in the between April 2000 and March 2020.

Government Initiatives

Some of the recent Government initiatives are as follows:

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

In October 2020, the Minister of Defence, Mr. Rajnath Singh, dedicated the 19.85 km alternate alignment of the National Highway 310 in East Sikkim for defence preparedness and socioeconomic development in the state.

In October 2020, National Highway projects worth Rs. 19,800 crore (US$ 2.67 billion) in Kerala have been initiated by the Ministry of Road Transport and Highways and are expected to be completed by 2024. 30 projects—with a length of ~549 km—worth Rs. 5327 crore (US$ 718.40 million) are under implementation.

In October 2020, the Department of Central National Highways has issued a permit to construct a 122 km National Highway from Kalvakurthi in Telangana to Karivena in Andhra Pradesh. The new national highway would reduce the distance to Tirupati from Hyderabad by 80 km.

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 November 2020 is Rs. 1 = US$ 0.013

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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