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Roads & Highways

India's roads and highways is a keystone of its infrastructure strategy, essential for connectivity and economic growth. India has world's second-largest road network, of more than 6.67 Million kilometres, with 1,46,145 km of national highways and 1,79,535 km of state highways. The road network transports 64.5% of all goods in the country and 90% of India’s total passenger traffic uses road network to travel. Road transportation has progressively increased over the years with improvement in connectivity between towns, cities, and villages in the country. India has made several innovative financing models, such as Hybrid Annuity Model (HAM) and Toll-Operate-Transfer (TOT) have been implemented in the country, to encourage private investments and drive growth.

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INDUSTRY OVERVIEW

The roads and highways industry in India provides a high-growth investment opportunity, supported by robust infrastructure development, strong government initiatives, and growing connectivity. Prime Minister Narendra Modi inaugurated 112 national highway projects in March 2024, across several states, with a total value of approximately $12.04 billion (Rs. 1 lakh crore).

There has been 60% rise in the National Highway network during the last decade and an increase of 2.5 times in the length of the four-lane national highway, from 18,387 km in 2014 to 46,179 km in 2023. Also, a tremendous growth of 143% seen in the average pace of national highway construction over the last decade. The National Highways Infra Trust (NHIT) raised around Rs. 16,000 crore ($1.92 billion) in InvIT round-3, which stretches aggregate length of 889 kilometres of national highways, and marking the biggest transaction by the National Highways Authority of India (NHAI).

Recently, the Ministry of Road Transport and Highways (MoRTH) has launched several initiatives to drive the growth of the nation's roads and highway industry, such as the Bharatmala Pariyojana, which focuses to target the development of 34,800 kilometres of highways with an investment of INR 5.35 lakh crore to improve connectivity across border areas, economic corridors, and remote regions. Additionally, the Pradhan Mantri Gram Sadak Yojana (PMGSY) put emphases on improving rural connectivity as well as enhancing access to education, markets, and healthcare.

Robust Demand

In India, industrialization, urbanization, and a rising middle class are contributing to the bigger demand for high-speed connectivity and improved road infrastructure. According to India Brand Equity Foundation (IBEF), the total length of National Highways was 146,145 km in the country as of January 2024. The increase in private vehicle ownership, e-commerce, and commercial transport also fuels the demand for a better roads and highways system. Around 4.2 million units of passenger vehicles were sold in FY24 compared to more than 3.8 million units sold in the same period of previous year.​​ The Passenger Vehicle (PV) sales increases by 10.5% year-on-year in FY24 with rise in total passenger vehicle dispatches to 38.90 lakh units.​

Rising Investments

The rise in investments for roads and highways in India can be seen by increasing participation of Public Private Partnership (PPP).​​ Also, the government of India has allocated Rs. 2.70 lakh crore ($32.68 billion) to the Ministry of Road Transport and Highways, under the Union Budget 2024-25.

Policy Support

Government policies such as the National Highways Development Project (NHDP), Bharatmala Pariyojana, and Pradhan Mantri Gram Sadak Yojana (PMGSY) are constantly supporting the growth of the roads and highways industry. Also, now 100% Foreign Direct Investment (FDI) is permitted under the automatic route in the road and highways industry.​​ The Bhoomi Rashi Portal had incorporated 1467 projects of the NHAI by December 2023.

Opportunities

Some attractive opportunities such as government goal to construct 65,000 kms of national highways at a value of Rs. 5.35 lakh crore ($64.17 billion).​​ Also, a network of 35 Multimodal Logistics Parks are planned to be develop as part of Bharatmala Pariyojana, with a sum total of Rs. 46,000 crore ($5.55 billion) investment, that can handle around 700 MMT of cargo. ​