Of the requisite US$60 billion investment for the road sector, US$40 billion will come from private investors, including US$10 billion from foreign players, expects Kamal Nath  The Indian road sector demands considerable private investment over the coming years.In a bid to improve on the profound road deficit, the Ministry of Road Transport and Highways (MORTH) had set a target of constructing 20 km roads daily in 2009. Currently, around 12 km roads are being built in India per day.
“The Ministry intends to construct 35,000 km roads over the coming 5 years and for this the sector needs an investment of US$60 billion,” said minister for road transport and highways Kamal Nath recently. Mr Nath further expects that out of the total requisite investment, US$40 bn investment will be from the private sector, including US$10 bn come from foreign investors.
Earlier this month, the minister said that MORTH intends to award around 18,000-20,000 km of road projects in 2010-11, amounting to US$50 billion and expects 70% investment to come from private players.
“The optimism of Mr Nath is driven by certain current reforms in government policies facilitating increased participation of foreign funds and private equity in toll projects and SPVs[i],” says Niyati Sanyal, a New-Delhi-based realty analyst. Despite 100% FDI allowance in the sector, foreign players used to shy away earlier due to land acquisition problems and sluggish implementation of the toll projects in India, notes Miss Sanyal.
2,500 km highways in FY11
With more than 3.30 million km roads, India has the second largest road network globally.[ii] However, national highways account for only about 2% of this, aggregating to 70,548 km. In a bid to overcome the huge deficit, the Centre set a target to construct 3,165.55 km highways last year, of which it managed to build 2,008.93 km. In 2010-11, it intends to add another 2,500 km of highways.
Recently, Mr Nath had remarked that there will hardly be any difficulty to raise resources for highways, of which close to two-third will be toll roads.
To woo foreign investors, the minister met investors from Japan, Hong Kong, Singapore, the US, the UK and Malaysiarecently. The good news is the sector is now receiving investment commitments from some foreign players.
Jeeta Bandopadhyay
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