Road and Infrastructure Industry Analysis

India has second largest road networks in the world, spanning a total of 5.5 million kilometres (kms). Production of commercial vehicles increased to 894,551 in 2017-18 from 567,000 in 2009-10 at a CAGR of 5.87 per cent.

The private sector has emerged as a key player in the development of road infrastructure in India. Increased industrial activities, along with increasing number of two and four wheelers have supported the growth in the road transport infrastructure projects. The government’s policy to increase private sector participation has proved to be a boon for the infrastructure industry with a large number of private players entering the business through the public-private partnership (PPP) model.

With the Government permitting 100 per cent foreign direct investment (FDI) in the road sector, several foreign companies have formed partnerships with Indian players to capitalise on the sector's growth. MAIF 2 became the first largest foreign investment in Indian roads sector under TOT mode worth Rs 9,681.5 crore (US$ 1.50 billion). In May 2018, the Government of India signed US$ 500 million loan agreement with World Bank to provide additional funding for construction of 7,000 km climate resilient roads out of which 3,500 km will be built using green technologies under Pradhan Mantri Gram Sadak Yojna (PMGDY). As of October 2018, total length of projects awarded was 6,400 kms under Bharatmala Pariyojana (including residual NHDP works).  The total amount of investments* are estimated to reach Rs 1.58 trillion (US$ 2.25 billion) in FY19.

The Ministry of Road Transport and Highways has fixed a target for construction of 10,000 km national highways in FY19. The Government of India aims to complete 200,000 km national highways by 2022. In the coming years, NHAI’s increased delegation autonomy along with Bharatmala Pariyojana initiative is expected to enable growth in awarding momentum.^

Note: TOT - toll operate transfer, * - investments include Budgetary support, IEBR refers to Internal and Extra Budgetary Resources and constitutes the resources raised by the public sector units through profits, loans and equity and Private sector investments; according to Ministry of Road Transport and Highways, ^ - Crisil Research