Roads and Highways

OUTLINE

  • USD 8.21 billion outlay planned for highways during 2016-17.
  • USD 22.6 billion budgetary support for central road sector development during 2012-17.
  • 23 million km of roads and highways in the country.
  • 01 million km of National Highways.
  • Ministry of Road Transport & Highways (MORTH) aims to expand the National Highway network to 0.2 million km over the next 4-5 years.MORTH has so far approved in-principle about 38,750 km of State roads as new NHS subject to the outcome of their detailed project reports (DPRs). Further, about 14,000 km of additional State road stretches are proposed to be upgraded under the “Bharatmala Pariyojana”.
  • The type of PPP project implementation models used in the highways sector is Build Operate Transfer (BOT) Toll, BOT (Annuity) and the Hybrid Annuity Model (HAM).
  • Fiscal incentives for the sector
    • 100% FDI through automatic route allowed subject to applicable laws and regulation.
    • The right of way (ROW) for project land made available to concessionaires free from all encumbrances.
    • NHAI/GOI to provide a capital grant (Viability Gap Funding/Cash Support) up to 40% of project cost to enhance viability on a case to case basis.
    • 100% tax exemption for 5 years and 30% relief for next 5 years, which may be availed of in 20 years.
    • Duty-free import of modern high capacity construction equipment.
  • 113 completed Public Private Partnership (PPP) Projects and 136 PPP projects are ongoing as of 31.03.2016.
  • Accelerated project award -10,098 km awarded in 2015-16 as against 7,980 km in the previous year- an annual hike of 26.5%.
  • Accelerated project construction- 6,029 km constructed in 2015-16 as against 4,340 km in the previous year- an annual hike of 39%.
  • 85% Indians are solely dependent on public transport. 70 million passengers use State Road Transport Undertaking buses on a daily basis.

FDI POLICY

  • 100% Foreign Direct Investment (FDI) is allowed under the automatic route in the road and highways sector, subject to applicable laws and regulation.

SECTOR POLICY

  1. Development and maintenance of road infrastructure is a key Government priority­ the sector has received strong budgetary support over the years.
  2. Standardised processes for PPP and public funded projects and a clear policy framework relating to bidding and tolling have been developed over the years.
  3. Major policy initiatives undertaken by MoRTH during last two years include:
    • Mode of delivery – MoRTH is now empowered to decide on mode of delivery of projects-EPC/PPP.
    • Enhanced Inter-Ministerial coordination – An Infrastructure Group has been created under Chairmanship of Hon’ble Minister (Road, Transport & Highways) to resolve approval/clearance issues related to Environment & Forests, Railways and Defence, and most of the issues have been resolved.
    • Exit Policy -Private developers can now exit all operational BOT projects two years from start of operations irrespective of the date of award of the project.
    • Revival of Languishing projects – Now revival of BOT projects which are languishing in the construction stage is possible through one-time fund infusion by NHAI, subject to adequate due diligence of such projects on case to case basis through an institutional mechanism.
    • Promoting innovative project implementation models– The Hybrid Annuity Model (HAM) has been developed and adopted for implementation of highway projects. The model takes into consideration appropriate risk allocation. Fifteen projects have already been awarded under this model.
    • Amendments to the Model Concession Agreement (MCA) for BOT projects – Certain changes in the MCA have been approved by an empowered Committee headed by the Cabinet Secretary based on stakeholders feedback. This would facilitate streamlined development and operation of highway projects

FINANCIAL SUPPORT

  • The Union Budget of 2016-17 mentions that the total investment in the central road sector would be USD 8.21 billion [including USD 30 million for Road Transport]during 2016-17.
  • NHAI has been authorised to generate Internal & Extra Budgetary Resource (IEBR) of USD 8.85 billion during 2016-17
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