Size of the Initiatives
With an extensive road network of 3.3 million kilometers, India is the second largest in the world. Indian roads carry about 61% of the freight and 85% of the passenger traffic. All the highways and expressways together constitute about 66,000 kilometers (only 2% of all roads), whereas they carry 40% of the road traffic. To further the existing infrastructure, Indian Government annually spends about Rs.18000 crores (USD 3.704 billion).
Target
- Developing 1000 km of expressways
- Developing 8,737 km of roads, including 3,846 km of national highways, in the North East
- Four-laning 20, 000 km of national highways
- Four-laning 6,736 km on North-South and East-West corridors
- Six-laning 6,500 km of the Golden Quadrilateral and selected national highways
- Widening 20,000 km of national highways to two lanes
Approach
- 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 and Build-Operate-Transfer (BOT) for some stretches � based on either the lowest annuity or the lowest lump sum payment from the Government
- BOT contracts permit tolling on those stretches of the NHDP
- A large component of highways is to be developed through public-private partnerships and several high traffic stretches already awarded to private companies on a BOT basis.
Policy
- 100% FDI under the automatic route is permitted for all road development projects
- 100% income tax exemption for a period of 10 years
- Grants / Viability gap Funding for marginal projects by NHAI.
- Formulation of Model Concession Agreement
Opportunity
Road development is recognized as essential to sustain India�s economic growth. Road development is a priority sector and the ongoing focus on the highway infrastructure development is targeted to projected annual growth of 12-15% for passenger traffic and 15-18% for cargo traffic. The project has been attracting huge Direct Foreign Investment (FDI).
Road
development is a priority sector
Outlook
- Annual growth
projected at 12-15% for
passenger traffic, and 15-18%
for cargo traffic
- Over $50�60
billion investment is required
over the next 5 years to improve
road infrastructure
Potential
- Road
development is recognised as
essential to sustain India�s
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
Government Initiative
For a country of India's size, an efficient road network is necessary both for national integration as well as for overall socio-economic development. The National Highways (NH), with a total length of 65,569 km, serve as the arterial network across the country. The four-laning the 5,900 km long Golden Quadrilateral (GQ) connecting Delhi, Mumbai, Chennai and Kolkata is on the verge of completion. The ongoing four-laning of the 7,300 km North-South East-West (NSEW) corridor is scheduled to be completed by December 2009. 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 (USD 45.276 billion) up to 2012, has been established. The main elements of the programme are as follows:
Steps Taken
- 100 per cent FDI under the automatic route in all road development projects.
- 100 per cent income tax exemption for a period of 10 years
- Cabinet Committee on Economic Affairs (CCEA) has agreed upon the National Highways Fee (Determination of Rates and Collection) Rules, 2008 to establish uniformity in fee rate for public funded and private investments projects.
- An increment in the overseas borrowing amount of infrastructure sectors, to US$ 500 million from US$ 100 million.
- Offering cheaper loans for highway projects that will speed up the projects worth more than US$ 12. 70 billion under separate phases of the NHDP.
- The Ministry of Shipping and Road Transport is considering a �green corridor' highway project solely for farmers with �no toll' charges that would link rural roads with National Highways. This is likely to be developed along with the six-lane project under the NHDP.
NHDP Plan: At a Glance
- NHDP Phase-II - December, 2009
- NHDP Phase-III - December, 2013
- NHDP Phase-V - December, 2012
- NHDP Phase-VI - December, 2015
- NHDP Phase-VII - December, 2014
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 kilometers (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 kilometers (NHDP-IV)
With a view to providing balanced and equitable distribution of the improved/widened highways network throughout the country, NHDP-IV envisages up gradation of 20,000 kilo 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 kilometers (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 kilometers proposed under NHDP-V, about 5,700 kilometers shall be taken up in the GQ and the balance 800 kilometers would be selected on the basis of approved eligibility criteria.
Development of 1000 kilometers of expressways (NHDP-VI)
With the growing importance of certain urban centers 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 kilometers 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, bypasses, 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.
Private Sector Participation
A KPMG report titled 'Opportunities in Infrastructure and Resources in India' reveals that investments of the order of US$ 500 billion are expected to take place in the coming years. This development would call for increased resource requirement, consumer responsiveness, and concern for managerial efficiency. The private sector will be largely involved both at construction contracts and(BOT levels. Some major private participation in this initiative includes.
- Reliance Energy
Three contracts to four-lane 400 kilometers of highway and four-laning of five national highway projects in Tamil Nadu that covers 400 kilometers and at an estimated cost of more than US$ 762.42 million.
- L&T inter-state Road Corridor Limited
Four-laning of the 76 kilometers highway between Palanpur and Swaroopgunj on the East-West Corridor.
- Jaiprakash Associates Ltd (JAL)
Implementing the 165 kilometers long Taj Expressway project, which connects Greater Noida to Agra at a cost of US$ 554.93 million.
- Lanco Infratech
four-laning of two highways in Karnataka at an estimated cost of US$ 247.41 million.
- DS Construction
Development of the Gwalior-Jhansi section on NH-75 that includes four-laning at a cost of US$ 159.9 million.
- Maytas Infra Private Limited and Nagarjuna Construction Company Ltd (Joint Venture)
Four-lane the highway from Tindivanam and Pondicherry, at an estimated cost of US$ 70.09 million.
- Era Constructions India Limited and Karam Chand Thapar & Bros Limited
Construction of a section of the Delhi-Haryana Border to Rohtak and four-laning of Gwalior by-pass at a cost of US$ 73.8 million.
- Madhucon Projects
Executing ongoing BOT projects with four toll-based road projects.
Public Private Partnership
Since January 2006, the Public-Private Partnership Appraisal Committee (PPPAC) has granted approval to a total of 87 projects including 77 highway projects. The PPPAC approves the infrastructure projects worth US$ 5.98 billion on November 2008 . This includes 21 highway projects to be taken up under NHDP Phase III and V.
International Participation
Many international player have joined the league in the growth and reform of the highway infrastructure in India. Indian road construction projects have become a lucrative and emerging investment opportunity for numerous international giants. The various international companies to join the league are Berhad (Malaysia), Deutsche Bank, Emirates Trading Agency (Dubai), the Isolux Corsan Group (Spain), Italthai (Thailand), Baelim (Korea), Dyckerhoff (Russia), Widmann AG (Germany), IJM Corporation, SDN and Road Builders (Malaysia), Kajima and Taisei (Japan). These companies acquire equity stakes between 10 to 51 per cent in various highway projects floated by the National Highway Authority of India (NHAI) and other state governments.
The Golden Quadrilateral and NSEW
projects
For additional information:
Department of Road Transport and
Highways, Ministry of Shipping, Road
Transport and Highways (http://morth.nic.in),
National Highways Authority of India (http://www.nhai.org)
( Convention Rate at USD 1 = 48.5904 INR )
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