The government has announced highway projects worth $93 billion, including investments in NHDP worth $45 billion over the next three years in a bid to seek investors.
Being the world’s second largest road network, India’s road infrastructure can be best described as underdeveloped. To resurrect this, the government has rolled out projects worth $93 billion which includes $45 billion worth flagship road building programme under NHDP (National Highway Development Project). The government sees a unique opportunity for investors in a country with approximately 4.8 million kms of roads amongst which only 2 percent comprise of National Highways and account to 40 percent of the total traffic, 65 percent of freight and 80 percent of passenger traffic. The Road Transport and Highway Ministry has come up with a list of projects which include new models for both greenfield (hybrid annuity) and brownfield projects (monetisation).
The projects intend to allot 26,000 kms of National Highway projects of which 20,000 kms are NHDP projects. It includes opportunities like “Bharat Mala” project of $12 billion for 6000 kms which will provide connectivity to 123 district headquarters for $15 billion and construction of 350 bridges/ROBs in two years for $8 billion. It also includes the “Char Dham” connectivity along mountainous terrain for 2500 kms worth $8 billion and a strong road network in the North-East and border areas for $5 billion. It has also allotted project constructions along 10,000 kms this year itself to further provide more opportunities to investors based on the risk/return policy.
To attract potential investors, the government is giving incentives like 100 percent tax exemption for 5 years and 30 percent relief for the next 5 years which can be availed of in 20 years. The NHAI (National Highway Authority of India) is providing a capital grant of up to 40 percent of the project cost on a case to case basis. The Ministry is also providing investments through policy initiatives from sources like pension and insurance funds in the sector with consultation from Ministry of Finance and the RBI. The NHDP was implemented in the year 1998 under the leadership of Shri Atal Bihari Vajpayee and aims to upgrade, restore and widen major highways in India to higher standards.