IBEF Presentataion
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ROADS For updated information, please visit www.ibef.org November 2017 Table of Content Executive Summary……………….….…….3 Advantage India…………………..….……..4 Market Overview …………………….……..6 Strategies Adopted………….….…..……..19 Growth Drivers…………………….............21 Opportunities…….……….......……………31 Success Stories……………....……………34 Industry Associations……………....……...38 Useful Information……….......…………….40 EXECUTIVE SUMMARY . In FY17, India had the 2nd largest road network in the world, spanning over a total of 5.21 million kms. Over 64.5 per Second largest road network cent of all goods in the country are transported through roads, while, 90 per cent of the total passenger traffic uses road network to commute Rising budget allocation of . During FY17-18, Government of India allocated US$ 10.13 billion for development of national highways across the road sector country . As on October 2016, 304 projects were recommended for development by the Public Private Partnership Appraisal Growing private sector Committee (PPPAC) involvement . Investment of US$ 31 billion is expected in PPP by 2020 for national highways . The Government of India plans to increase the length of National Highways from 103,933 kms to 200,000 kms. Rapid growth in national . As of February 2017, national highways of 6604 kms in length were constructed, against a target of 15,000 kms, under highways various road transport and highway projects . CPPIB (Canada Pension Plan Investment Board) plans to invest US$ 322 million for infrastructural development in India. The Government has received public sector undertakings from countries like Malaysia and Japan for funding the upcoming highway projects in India – annuity model 60 per cent of the investment is borne by the private investors 40 Overseas Investment for per cent by NHAI in 5 equal instalments. infrastructure development . As of November 2016, Union Government and Asian Development Bank signed US$ 500 million loan agreement to build the longest bridge across river Ganga, in Bihar. In April 2017, the Government of India agreed to build world-class road infrastructure in the Jaffna region in Sri Lanka. The 3 major stretches being built are Mannar-to-Vavuniya, Dambulla-to-Tricomalee and Jaffna-to-Mannar. Source: MoRTH Annual Report 2015–16, NHAI, Make in India, Aranca Research 3 Roads For updated information, please visit www.ibef.org Roads ADVANTAGE INDIA ADVANTAGE INDIA . Greater connectivity between different cities, . The Central Government has fast tracked towns and villages has led to increased road at least 24 roads and highways projects traffic over the years . Government is planning to offer a bonus . Growth in automobiles and freight movement of 10 per cent of the total project cost to commands a better road network in India firms that construct and deliver highway projects before deadline . Rise in the number of 2 and 4 wheelers, increasing traffic supports the growth ADVANTAGE INDIA . The government has given a massive . Road infrastructure has been key push to infrastructure by allocating US$ government priority; sector received 61.8 billion for infrastructure in the strong budgetary support over the Union Budget 2017-18 years . Growing participation of the private . Financial institutions received sector through Public-Private government approval to raise money Partnership (PPP) through tax-free bonds . 100 per cent FDI is allowed under automatic route subject to applicable laws and regulations Notes: NHAI - National Highways Authority of India, MoRTH - Ministry of Road Transport and Highways, E- Estimated Source: NHAI, Make in India, MoRTH, Business Monitor International, Aranca Research 5 Roads For updated information, please visit www.ibef.org Roads MARKET OVERVIEW ROAD NETWORK IN INDIA IS SUB-DIVIDED INTO THREE CATEGORIES Roads1 (Total length: 5.47million Kms) State highways National Highways District and Rural roads . Total length: 1,61,487 kms . Total length: 1,03,933 kms . Total length: 52,07,044 kms . Share: 3 per cent of the total . Share: 2 per cent of the total . Share: 95 per cent of the total roads in India roads in India roads in India Source: Ministry of Road Transport and Highways (MoRTH) Annual Report 2016-17, Aranca Research, Note: 1- Data as of FY17 7 Roads For updated information, please visit www.ibef.org STRONG MOMENTUM IN EXPANSION OF ROADWAYS . Value of total roads and bridges infrastructure in India is expected to Roads/Visakhapatnam bridges infrastructure port traffic value (million in India tonnes) (US$ billion ) expand at a CAGR of 13.6 per cent over FY09–17 to US$ 19.2 billion . In April 2017, the National Highways and Infrastructure Development Corp. bagged a project to build 5 tunnels worth US$3.42 billion. 20 CAGR 13.6% These tunnels, namely, Zojila tunnel at Zojila Pass (14 kms), Vailoo 19.20 Tunnel at Sinthan Pass (8-10 kms), Z-Morah tunnel (6.5 kms), Pir-Ki- 18 Gali Tunnel on National Highway-244 (8.5 kms) and Daranga Tunnel 16 at Shudh Mahadev (4.5 kms), will help in avoiding road accidents 16.10 because of avalanches 14 . Increasing industrial activity, increasing number of 2 and 4 wheelers 13.4 would support the growth in the road transport infrastructure projects 12 . In January 2017, the government proposed to lay down cycle tracks 10 11 on all highways and major roads pan India, to promote the use of electric cars and public transport. 8 8.3 8.6 8.6 . In April 2017, Chenani-Nashri tunnels that links Kashmir valley with 6 6.9 6.8 Jammu was inaugurated. It is the longest road tunnel in the country and US$371.86 million were invested in this project 4 . Targeted pace of road construction has been increased to 23 km a day. 2 0 2009 2010 2011 2012 2013 2014 2015E 2016F 2017F Note: CAGR - Compounded Annual Growth Rate, FY - Indian Financial Year (April - March), F - Forecast, NHDP - National Highway Development Project, SARDP-NE: Special Accelerated Road Development Programme for the North Eastern Region and LWE - Left Wing Extremism Programme; Figures are as per latest data available Source: Business Monitor International (BMI), Ministry of External Affairs, Aranca Research 8 Roads For updated information, please visit www.ibef.org INDIAN CONSTRUCTION EQUIPMENT REVENUES ON AN UPTREND . By FY20, construction equipment industry’s revenue is estimated to Growth inVisakhapatnam revenues from constructionport traffic (million equipment tonnes) (US$ billion) reach to USD5 billion. In FY16, India construction equipment industry grew at a Y-o-Y of around 3.45 per cent over the previous year 7.5 CAGR 2.34% 6.5 6.5 5.5 5.1 5.0 4.5 4.6 4.3 4.2 3.9 3.9 3.5 3.7 3.0 2.5 2.9 1.5 0.5 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY20 -0.5 F Note: CAGR - Compounded Annual Growth Rate, FY - Indian Financial Year (April-March), E – Estimate, YoY – Year on Year Source: The Boston Consulting Group, Mahindra Website 9 Roads For updated information, please visit www.ibef.org CONSTRUCTION EQUIPMENT SALE ON AN UPTREND . With infrastructure investment set to go up, demand for construction TotalVisakhapatnam number of construction port traffic equipment (million tonnes) units sold equipment will rise further. The number of construction equipment units sold increased 41.5 per cent year-on-year in 2016 backed an increase in road projects and a 60,000 low base. Concrete Show India 2017 was held at Mumbai, Maharashtra, with 50,000 52,500 52,100 more than 100 Indian and global manufacturers & suppliers from 49,700 industries such as concrete, construction, construction equipment, etc., participating in the event. 40,000 42,600 42,710 . Between January-September 2017, about 42,710 units of construction equipment were sold in India, as against 37,346 units 35,900 36,800 between the same period in the previous year. 30,000 20,000 10,000 - 2011 2012 2013 2014 2015 2016 2017* Note: CAGR - Compounded Annual Growth Rate, FY - Indian Financial Year (April-March), E – Estimate, YoY – Year on Year Source: NBM & CW, Mahindra Website, Indian Construction Manufacturers’ Association 10 Roads For updated information, please visit www.ibef.org RISING DEVELOPMENT OF NATIONAL HIGHWAYS . Double-lane highways constitute the largest share of highways in India (40658 kms). Double-lane highways are followed by single/intermediate- lane (19330 kms) and 4/6/8-lane (19128 kms) highways . The Government has proposed to upgrade 2 lane national highways into 4 lane national highways for which US$ 65 billion has been allocated. This step is expected to reduce the passenger car units (PCU) to 10000 per day . In the state of Telangana, the total accumulated length of National Highways including those sanctioned after formation of the state and before bifurcation stands at 5,512-km as on April 2017. In January 2017, Government of Assam announced investment of US$2.23 billion for developing 1253 kms of roads in the state, into national highways . In response form institutional investors from Canada, Middle East and the US, in February 2017 NHAI floated bids to monetise 10 national highway projects in the country. The National Democratic Alliance (NDA) decided to bring all future road projects such as economic corridors and coastal roads under its aegis, with an aim to give a boost to its Bharatmala Plan. This flagship programme is estimated to cost around US$148.74 billion. The government is planning to monetise 105 highway projects, worth US$21.57 billion as a part of new innovative models of financing. Mr Narendra Modi, Prime Minister of India, inaugurated road and highway projects worth Rs 15,000 crore (US$ 2.34 billion) in Udaipur, Rajasthan on August 29, 2017. Road projects worth Rs 34,000 crore (US$ 5.32 billion) are being undertaken by the central government to decongest the road network connecting the National Capital Territory of Delhi, according to Mr Harsh Vardhan, Minister of Environment, Forests and Climate Change, Government of India.