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SECTOR : Roads & Highways

Sector Snapshot : Road Transport

India accounts for the worlds second largest road network with over 3.34 millionkilometers out of which 195,000 kilometers are highways.

Road transportation accounts for over 4.6 % of the GDP in 2007 with annualaverage 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 of9% over the last four years.

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

The inadequacy of the road transport infrastructure is the biggest roadblocks inthe 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 ininfrastructure.

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 toconnect ten major ports by 357km

About 9 PPP projects covering further 269km.

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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 20years

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 therequirement of a dedicated facilitating agency to resolve and expedite projectsonce awarded.

Opportunities : Road Transport Sector

A large component of highways is to be developed through public - privatepartnerships. Several high traffic stretches already awarded to private companieson a BOT basis. Two successful BOT models are already in place the annuitymodel and the upfront / lump sum payment model.

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

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Relaxation of norms to encourage small players : Different norms like smallcompanies tying up with bigger experienced players or small companiesappointing a specialized agency as supervisor to help in the project can all beconsidered and incorporated in contracts.

PROGNOSIS : Opportunities for investors, contractors, O&M contractors, equipmentsuppliers, toll operators in State Roads, Rural Roads and Roads in North East India