PORTS

The experience of operating berths through PPPs at some of the major ports in India has been quite
successful. It has, therefore, been decided to expand the programme and allocate new berths to be
constructed through PPPs. A model concession agreement is being formulated for this purpose.

The Government has also decided to empower and enable the 12 major ports to attain world-class
standards. To this end, each port is preparing a perspective plan for 20 years and an action plan for
seven years. International experts have been engaged for assisting the Ports in this exercise, which is
likely to be completed by November, 2006. Recognising that the shipping industry is moving towards
large vessels, a plan for capital dredging of channels in major ports has also been formulated

A high level committee has finalised the plan for improving rail-road connectivity of major ports. The
plan is to be implemented within a period of three years. Further, changes in customs procedures are
being carried out with a view to reducing the dwell time and transaction costs. The government has
also delegated powers to the respective Port Trusts for facilitating speedier decision-making and
implementation. At the same time, several measures to simplify and streamline procedure related to
security and customs are been initiated.

The National Maritime Development Programme is expected to bring a total investment of over
Rs.50,000 crore in the port infrastructure. Such improvement in the scale and quality of Indian port
infrastructure will significantly improve Indias competitive advantage in an increasingly globalized
world.

Size

Indian ports handled cargo of 519 million tonnes in 2004-05, a 11.8% increase over 2003-04

70% of the traffic at major ports by volume is dry and liquid bulk, remaining 30% is general cargo,
including containers
- Containerised cargo has grown at a rate of about 14% p.a. over the last 5 years

India has 12 major ports and 187 minor ports along 7,517 km long Indian coastline
- Cargo handled by Major Ports has increased by 9.5% p.a. over last 3 years
- Major ports handle nearly 75% of the total traffic

Of the 12 major ports, 11 are run by Port Trusts while the port at Ennore is a corporation under the
Central Government. These ports handled 383.75 million tonnes of cargo in 2004-05

2 major Government projects underway:

- Project Sethusamundram: Dredging of the Palk Strait, in Southern India to facilitate maritime trade
through it
- National Maritime Development Programme for modernisation and expansion of port capacities

Top

Structure
 Government of India dominated maritime activity in the past. Policy direction is now oriented to
encouraging the private sector to take the lead in port development activities and operations

Many Major ports now operate largely as landlord ports - International port operators have been invited
to submit competitive bid for BOT terminals on a revenue share basis

Significant investment on BOT basis by foreign players including Maersk (JNPT, Mumbai) and P & O
Ports (JNPT, Mumbai and Chennai), Dubai Ports International (Cochin and Vishakhapatnam) and PSA
Singapore (Tuticorin)

Minor ports are already being developed by domestic and international private investors: Pipavav Port
by Maersk and Mundra Port by Adani Group (with a terminal operated by P & O)

Top

Policy

100% FDI under the automatic route is permitted for port development projects

100% income tax exemption is available for a period of 10 years

Tariff Authority for Major Ports (TAMP) regulates the ceiling for tariffs charged by Major ports/port
operators (not applicable to minor ports)

A comprehensive National Maritime Policy is being formulated to lay down the vision and strategy for
development of the sector till 2025.

Top

Cargo handled by Major Ports in India

Major Port Trade Container Traffic

(04-05, MMT) (04-05)(million TEU*)
Chennai 44 0.62
Cochin 14 0.19
Ennore 9.5
Haldia 36 0.13
JNPT 33 2.37
Kandla 42 0.18
Kolkata Dock System 10 0.16
Mormagao 31 0.01
Mumbai 35 0.22
New Mangalore 34 0.01
Paradip 30
Tuticorin 16 0.31
Vizag 50 0.05
Source: Indian Ports Association

* Twenty foot equivalent unit

Opportunity

The JNPT port where the capacity will be

over 3 million TEU by 2006

The port sector has seen significant investment

by major global port operators

Top

Outlook

Cargo handling at the major ports is projected to grow at 7.7% p.a. (CAGR) till 2011-12
- Traffic estimated to reach 877 million tonnes by 2011-12
- Containerised cargo is expected to grow at 15.5% (CAGR) over the next 7 years

The New Foreign Trade Policy envisages doubling of Indias share in global exports in next five years
to $150 billion (Rs.675000 crores)
- A large portion of the foreign trade to be through the maritime route: 95% by volume and 70% by
value

Top

Potential
 Growth in merchandise exports projected at over 13% p.a. underlines the need for large investments in
port infrastructure

Investment need of $13.5 billion (Rs.60,750 crores) in the major ports under National Maritime
Development Program (NMDP) to boost infrastructure at these ports in the next 7 years
- Under NMDP, 276 projects have been identified for the development of Major ports
- PublicPrivate partnership is seen by the Government as the key to improve Major and Minor ports
* 64% of the proposed investment in major ports envisaged from private players

The plan proposes an additional port handling capacity of 530 MMTA in Major Ports through:
- Projects related to port development (construction of jetties, berths etc.)
- Procurement, replacement and/or up-gradation of port equipment
- Deepening of channels to improve draft
- Projects related to port connectivity

Investment need of $4.5 billion (Rs.20,250 crores) for improving minor ports

For a country of India's size, an efficient road network is necessary both for national integration as well as
for socio-economic development. The National Highways (NH), with a total length of 65,569 km, serve as
the arterial network across the country. The ongoing programme of four-laning the 5,900 km long Golden
Quadrilateral (GQ) connecting Delhi, Mumbai, Chennai and Kolkata is nearing completion. The ongoing
four-laning of the 7,300 km North-South East-West (NSEW) corridor is to be completed by December
2009. In its third meeting held on 13 January, 2005, the Committee on Infrastructure adopted an Action
Plan for development of the National Highways network. An ambitious National Highway Development
Programme (NHDP), involving a total investment of Rs.2,20,000 crore upto 2012, has been established.
The main elements of the programme are as follows:

Four-laning of the Golden Quadrilateral and NS-EW Corridors

(NHDP I & II)
The NHDP Phase I and Phase II comprise of the Golden Quadrilateral (GQ) linking the four metropolitan
cities in India i.e. Delhi-Mumbai-Chennai-Kolkata, the North-South corridor connecting Srinagar to
Kanyakumari including the Kochi-Salem spur and the East-West Corridor connecting Silchar to
Porbandar besides port connectivity and some other projects on National Highways. Four-laning of the
Golden Quadrilateral is nearing completion. The contracts for projects forming part of NS-EW corridors
are being awarded rapidly for completion by December 2009.

Four-laning of 10,000 kms (NHDP-III)

The Union Cabinet has approved the four-laning of 10,000 km of high density national highways, through
the Build, Operation & Transfer (BOT) mode. The programme consists of stretches of National Highways
carrying high volume of traffic, connecting state capitals with the NHDP Phases I and II network and
providing connectivity to places of economic, commercial and tourist importance.

Two laning of 20,000 km (NHDP-IV)

With a view to providing balanced and equitable distribution of the improved/widened highways network
throughout the country, NHDP-IV envisages upgradation of 20,000 kms of such highways into two-lane
highways, at an indicative cost of Rs.25,000 crore. This will ensure that their capacity, speed and safety
match minimum benchmarks for national highways.

Six-laning of 6,500 kms (NHDP-V)

Under NHDP-V, the Committee on Infrastructure has approved the six-laning of the four-lane highways
comprising the Golden Quadrilateral and certain other high density stretches, through PPPs on BOT
basis. These corridors have been four-laned under the first phase of NHDP, and the programme for their
six-laning will commence in 2006, to be completed by 2012. Of the 6,500 kms proposed under NHDP-V,
about 5,700 kms shall be taken up in the GQ and the balance 800 kms would be selected on the basis of
approved eligibility criteria.

Development of 1000 km of expressways (NHDP-VI)

With the growing importance of certain urban centres of India, particularly those located within a few
hundred kilometers of each other, expressways would be both viable and beneficial. The Committee on
Infrastructure has approved 1000 k.m. of expressways to be developed on a BOT basis, at an indicative
cost of Rs.15,000 crore. These expressways would be constructed on new alignments.

Other Highway Projects (NHDP-VII)

The development of ring roads, byepasses, grade separators and service roads is considered necessary
for full utilization of highway capacity as well as for enhanced safety and efficiency. For this, a programme
for development of such features at an indicative cost of Rs.15,000 crore, has been mandated.

Accelerated Road Development Programme for the North East Region

The Accelerated North-East Road Development Project is under consideration, which will mainly provide
connectivity to all the State capitals and district headquarters in the north-east. The proposal would
include upgrading other stretches on NH and state highways considered critical for economic
development of the north-east region.

Institutional Initiatives
Steps are being taken for restructuring and strengthening of National Highways Authority of India (NHAI),
which is the implementing agency for the National Highways programme. Institutional mechanisms have
been established to address bottlenecks arising from delays in environmental clearance, land acquisition
etc. A special focus is being provided for traffic management and safety related issues through the
proposed Directorate of Safety and Traffic Management. It is expected that the sum total of these
initiatives should be able to deliver an efficient and safe highway network across the country.
In order to specify the policy and regulatory framework on a fair and transparent basis, a Model
Concession Agreement(MCA) for PPPs in national highways has been mandated. It is expected that this
common framework, based on international best practices, will significantly increase the pace of project
award as well as ensure an optimal balance of risk and reward among all project participants.

Size

India has an extensive road network of 3.3 million kms the second largest in the world

Roads carry about 61% of the freight and 85% of the passenger traffic

Highways/Expressways constitute about 66,000 kms (2% of all roads) and carry 40% of the road traffic

The Government of India spends about Rs.18000 crores (US $ 4 billion) annually on road development

The ambitious National Highway Development Project (NHDP) of the Government is at an advanced
stage of implementation. Key sub-projects under the NHDP include:
- The Golden Quadrilateral (GQ-5846 kms of 4 lane highways)
- North-South & East-West Corridors (NSEW-7300 kms of 4 lane highways)

Program for 4-laning of about 14,000 km of National Highways is underway

Top

Structure

National Highways Authority of India (NHAI) is the apex Government body for implementing the NHDP.
All contracts whether for construction or BOT are awarded through competitive bidding
 Private sector participation is increasing, and is through:
- Construction contracts
- BOT for some stretches based on either the lowest annuity or the lowest lumpsum payment from
the Government
* BOT contracts permit tolling on those stretches of the NHDP

Top

Policy

100% FDI under the automatic route is permitted for all road development projects

Incentives:
- 100% income tax exemption for a period of 10 years
- NHAI agreeable to provide grants/viability gap funding for marginal projects
- Model Concession Agreement formulated

Top

The Golden Quadrilateral and NSEW projects

Opportunity
Road development is a priority sector

Top

Outlook

Annual growth projected at 12-15% for passenger traffic, and 15-18% for cargo traffic

Over $5060 billion investment is required over the next 5 years to improve road infrastructure

Top

Potential

Road development is recognised as essential to sustain Indias economic growth

- The Government is planning to increase spends on road development substantially with funding
already in place based on a cess on fuel

A large component of highways is to be developed through public-private partnerships

- Several high traffic stretches already awarded to private companies on a BOT basis
- Two successful BOT models are already in place the annuity model and the upfront/lumpsum
payment model

Investment opportunities exist in a range of projects being tendered by NHAI for implementing the
NHDP contracts are for construction or BOT basis depending on the section being tendered.

A Rs.41,200 crores (US $ 5 billion) project plans to lay 6 lane roads over 6,500 kms of National
Highways on the Design Build Finance and Operate (DBFO) basis in Golden Quadrilateral and other
high traffic stretches.

India has the second largest road network in the world

 An annual growth of 12-15% for passenger traffic has been projected

RAILWAYS

The rapid rise in international trade and domestic cargo has placed a great strain on the Delhi-Mumbai and Delhi-Kolkata
expected to be about Rs. 22,000 crore (US $ 5 bn). Requisite surveys and project reports are in progress and work is exp

With incre
rapidly. S
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CIVIL AVIATION

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such
as
Chen
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and
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take
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nd
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coun
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35
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also
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expe
cted
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bring
a
total
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tmen
t of
Rs.
40,0
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crore
for
mod
ernis
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ture.

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the
anal
ogy
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ways
secto
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Mod
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Conc
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Agre
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also
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the
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prop
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Airpo
rts
Auth
ority
of
India
are
to be
finali
 sed
soon
.
This
woul
d
inclu
de
upgr
adin
g of
the
ATC
servi
ces
at
the
airpo
rts.
Issue
s
relati
ng to
custo
ms,
immi
grati
on
and
secu
rity
are
also
bein
g
resol
ved
in a
man
ner
that
enha
nces
the
effici
ency
of
airpo
rt
usag
e.

Size

India has 125 airports; of these 11 are designated as international airports

In 2004-05, Indian airports handled 60 million passengers and 1.3 million tonnes of cargo
- Passenger traffic grew at over 22% in 2004-05 over 2003-04; Cargo grew at 21.6% over the previous
year
 Top

Structure

Currently, all 125 airports are owned and operated by the Airports Authority of India (AAI)

The Government aims to attract private investment in aviation infrastructure

- Privatisation of the Delhi and Mumbai airports is in progress concessions have already been
awarded. Expected investment of about Rs.15,700 crores (US $ 3.5 billion)
- New international airports at Bangalore and Hyderabad are being built by private consortia with a total
investment of about Rs.4000 crores (US $ 600 million)
- 25 other city airports are being considered for private investment

Air India and Indian Airlines are Government owned international and domestic flag carriers
respectively.

Indian private airlines Jet, Sahara, Kingfisher, Deccan, Spicejet - account for around 60% of the
domestic passenger traffic. Some have now started international flights.

Top

Policy

100% FDI is permissible for existing airports; FIPB approval required for FDI beyond 74%

100% FDI under automatic route is permissible for greenfield airports.

49% FDI is permissible in domestic airlines under the automatic route, but not by foreign airline
companies
- 100% equity ownership by Non Resident Indians (NRIs) is permitted

AAI Act amended to provide legal framework for airport privatisation

100% tax exemption for airport projects for a period of 10 years

Open Sky Policy of the Government and rapid air traffic growth have resulted in the entry of several
new privately owned airlines and increased frequency/flights for international airlines.

Top

Airport Statistics 2003-04

Airport Passenger traffic

(million, 2003-04)
Bangalore 3.2
Chennai 4.6
Delhi 10.3
Hyderabad 2.2
Kolkata 3.0
Mumbai 13.3

Source: Director General of Civil Aviation, AAI

Opportunity

Development of airport infrastructure is a

focus area for the Government

There has been a significant uptrend in domestic

and international air travel

Top

Outlook

Passenger traffic is projected to grow at a CAGR of over 15% in the next 5 years
- To cross 100 million passengers p.a. by 2010

Cargo traffic to grow at over 20% p.a. over the next five years
- To cross 3.3 million tonnes by 2010

Major investments planned in new airports and upgradation of existing airports

Top

Potential

Favourable demographics and rapid economic growth point to a continued boom in domestic
passenger traffic and international outbound traffic

International inbound traffic will also grow rapidly with increasing investment and trade activity and as
Indias rich heritage and natural beauty are marketed to international leisure travellers.
- Consequent high demand for investments in aviation infrastructure

SME lending, a largely untapped market, presents a significant opportunity - SMEs account for 40% of
the industrial output and 35% of direct exports

The Government is taking steps to increase participation by private industry

Major opportunities lie in:

- Modernisation / upgradation of metro airports induction of partners for Chennai, Kolkata expected
subsequently
- Greenfield airport projects planned in resort destinations and emerging metros such as Goa, Pune,
Navi Mumbai, Greater Noida and Kannur.

Estimated investment of about Rs.40,000 crores (US $ 9 billion) for airport development over the next 5
years