SECTOR : Roads & Highways

Sector Snapshot : Road Transport

 India accounts for the world‘s second largest road network with over 3.34 million
kilometers out of which 195,000 kilometers are highways.

 Road transportation accounts for over 4.6 % of the GDP in 2007 with annual
average growth of 9.5 % during the period 2000-01 and 2005-06.

 The freight movement by road transport has been growing at an average rate of
9% over the last four years.

 It is estimated that the total freight traffic carried by the road transport would
reach to 1,231 billion tonne km (BTKM) by 2012.

 The inadequacy of the road transport infrastructure is the biggest roadblocks in

the economic growth of India.
o Estimated loss due to road congestion - Rs601 billion by 2017.

 Planning Commission estimates an investment of about US$320 billion in

infrastructure.

Investment planned for Road Transport

 The total investment in the road transport infrastructure

development involves the following:
 Investment of around US$8 billion up to 2012 for the development of road
transport network
 About 12 National Highway Development Programme (NHDP) projects to
connect ten major ports by 357km
 About 9 PPP projects covering further 269km.
Policy initiatives : Road Transport Sector

 Duty free import of high capacity and modern road construction equipments
 Tax concessions –complete tax holiday for any 10 consecutive years out of 20
years
 Longer concession periods of up to 30 years

Challenges : Road Transport Sector

 Key challenges for private developers are :

 Delay in Land acquisition,
 Slow dispute resolution,
 Lack of coordination between different government agencies, etc.

 These issues significantly delay the implementation of projects and hence the
requirement of a dedicated facilitating agency to resolve and expedite projects
once awarded.

Opportunities : Road Transport Sector

 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 / lump sum 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.
  Relaxation of norms to encourage small players : Different norms like small
companies tying up with bigger experienced players or small companies
appointing a specialized agency as supervisor to help in the project can all be
considered and incorporated in contracts.

PROGNOSIS : Opportunities for investors, contractors, O&M contractors, equipment

suppliers, toll operators in State Roads, Rural Roads and Roads in North East India