India has the second largest road network in the world stretching to about 3.3 million Kms.The roads carry about 61 per cent of freight and 85 per cent of the passenger traffic. The highways / expressways constitite 66,000 Kms and carryaround 40 per cent of the total road traffic.
The government is planning to spend a totla of Rs.2,80,000 crore on developing the infrastructure for a better tomorrow. Out of the total a major chunk has been assigned for road development which would be Rs 1,60,000 crore. In addition, the national Highway development project (NHDP) is at an advanced stage of implementation - Golden quadrilateral (GQ - 5,846 kms) connecting Delhi, Mumbai, Chennai and Kolkata and the North-South Corridor (NSEW - 7,300 kms) - are expected to be completed by December 2009.
For a country of India's size, an efficient road network is necessary both for national integration as well as for socio-economic development. The national highways serve as the arterial network across the country. In its third meeting held on January 13, 2005, the Committee on Infrastructure adopted an action plan for development of the national highways network. An ambitious NHDP, involving a total investment of Rs 220,000 crore till 2012, has been established for the development of these highways.
Steps are also being taken for restructuring and strengthening of the National Highways Authority of India (NHAI) which is the implementing agency for the NHP. Institutional mechanisms have been established to address bottlenecks arising from delays in environmental clearance, land acquisition etc. A special focus is being provided for traffic management and safety related issues through the proposed directorate of Safety and Traffic Management.
In order to specify the policy and regulatory framework on a fair and transparent basis, a Model Concession Agreement (MCA) for Public Private Partnership (PPPs) in national highways has been mandated. This will significantly increase the pace of the project awarded as well as ensure an optimal balance of risk and reward among all project participants.
In spite of having the second largest road network globally coupled with the share of road freight traffic shooting up from 14 per cent in 1950 to 65 per cent in 2005, the Indian government is finding it difficult to handle the density of highway traffic network in India. Narrow highways and poor surface quality resulting in highest lead time is another key constraint However, the government has embedded certain plans pertaining to accessibility for smooth flow of transpiration through projects like GQ and the NS corridor.
Road development is recognized as an essential step to sustain India's economic growth. For this the government is planning to increase its spend on road development substantially with funding already in place. Several high traffic planning to increase its spend on road development substantially, with funding already in place. Several high traffic stretches have already been awarded to private companies on a Built Operate Transfer (BOT) basis. In addition, two successful BOT models have been prepared - the annuity model and the upfront/lump sum payment model - which is through PPP.
Further, investment opportunities exist in a range of projects being tendered by NHAI for implementing the NHDP - contracts are for construction on BOT basis depending on the section being tendered. A Rs 41,200 crore (US $ 5 billion) project plan to lay six-lane roads over 6,500 kms of national highways on the Design-Building-Finance-Operator (DBFO) basis has been envisaged. The government has also allowed 100 per cent FDI in this sector under the automatic route for road development. That apart, 100 per cent income tax exemption has been given to companies undertaking toad development for a period of 10 years.