Roads and Highways

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OVERVIEW

Roads and highways are the backbone of connectivity in an economy. India has the second largest road network in the world, spanning over 5.89 million km with 1.56 lakh km of State Highways, 1.32 lakh km of National highways and 56.08 lakh km of District and Rural Roads. More than 64 percent of the freight and 90 percent of passenger traffic is carried through roads.

Highway construction has been at the forefront of performance and innovation in India and has recorded CAGR of 20.57 percent from 4,260 km of highways in 2013-14 to 10,855 km of highways in 2018-19. National Highway Authority of India (NHAI) constructed 3,979 km of national highways in 2019-20 as compared to 3,380 km in 2018-19, which is the highest length of national highways constructed by NHAI in a year.

The Ministry of Road Transport and Highways (MoRTH) has envisaged highway development programme- “Bharatmala Pariyojana” which includes development of about 66,000 km national highways. Development of major Highways will be done under this scheme including the development of economic corridors, inter-corridors and feeder roads, national corridors efficiency improvements, border and international connectivity roads, coastal and port connectivity roads and expressways. A total of 246 projects with total of length of 10,100 Km have been awarded till February 2020. Further, 1255 Km has been constructed under Bharatmala Project in FY 2019-20.

Under Phase-I of Bharatmala Pariyojana, the MoRTH has approved implementation of 34,800 km of national highways in 5 years with an outlay of ₹ 5,35,000 crores. NHAI has been mandated development of about 27,500 km of national highways under Phase-I of the programme. Under Special Accelerated Road Development Programme for North-Eastern region (SARDP-NE) Scheme (Phase A and Arunachal Pradesh), 6418 km is identified for development at an estimated investment of about ₹ 33750 crore, out of which 3225 km has been completed and 2155 km is under construction.

Contracts Secured

Indian companies secured a total of 314 contracts for ADB financed projectsin India and overseas during April 2019-July 2020. Out of the total, 168 projects worth US$ 1.2 billion were secured for construction and supply of goods in the road transport sector, of which 166 projects will beimplemented for construction and development of road transport in India, while the rest 2 contracts worth US$ 30.23 million, will be implemented in Sri Lanka. Similarly, Indian companies secured a total of 11 contractsworth US$ 9.04 million in the transport sector in AfDB financed projects, during January 2015- August 2020.

FDI

FDI of upto 100 percent is permitted under automatic route, subject to applicable laws and regulations. During April 2000- March 2020, the construction activities received FDI inflow of 16.8 billion, accounting for 4 percent of total FDI inflows into the country.

OUTLOOK

The Government, through a series of initiatives, is working on policies to attract investor interest in the sector. A total of 200,000 km national highways are expected to be completed by 2022. The Government of India has decided to invest ₹ 7 trillion (US$ 107.82 billion) for construction of new roads and highways from 2019-20till 2025-26. However, with the outbreak of Covid 19 pandemic in the country, road constructions will see decline due to shortage of labour, availability of raw materialand transport of raw material. Due to ongoing lockdown in the country, difficulty in obtaining clearances will be a major setback for developers to fully resume the construction activities during the pandemic.

 

SELECT GOVERNMENT INITIATIVES

  • The Government launched the Bharatmala Pariyojana, which aims to build 66,100 km of economic corridors, border and coastal roads, and expressways to boost the highway network. It is envisaged that the programme will provide 4-lane connectivity to 550 districts. The first phase of the programme will bring in US$ 82 billion investments by 2022, for the development of 34,800 km of highways.
  • The Special Accelerated Road Development Programme for the North Eastern region (SARDP-NE) is aimed at developing road connectivity between remote areas in the North East with the State capitals and district headquarters.