Mumbai: The Union government aims to reform policy and ease investment rules for infrastructure projects in an effort to attract capital to rebuild and expand its overburdened road network, the road transport minister Kamal Nath said on Friday.
The government hopes to reduce the likely gap between planned and actual investment by ensuring more financial participation and through measures to improve the risk-return equation for private players, Kamal Nath said in a meeting with investors and bankers.
“The lack of roads, and in the larger context, all of infrastructure, is a major challenge to our economic reform programme,” the minister said.
Policy reform: Road transport minister Kamal Nath says the country should focus on the toll-based model for new road projects. Harikrishna Katragadda / Mint
The National Highways Authority of India (NHAI) will seek bids for 6,563 kilometres of road projects in the next two quarters costing Rs604.8 billion ($12.4 billion), its chairman told Reuters on Friday.
India has a road network of about 3.4 million km (2.1 million miles), of which about 70,000 km are national highways.
Nath said the government expected to add 12,000 kilometres of roads this year at a cost of Rs1 trillion ($21 billion), and said preference would be given to the toll model for new roads.
Nearly 60% of the new roads are planned on the toll-based model, he said.
“We should look to toll roads as far as possible. We should look to build up specialised tolling companies, as in Europe,” he told reporters at a press conference after the meeting.
Earlier this week, Nath told Reuters the government had earmarked $20 billion a year for road building and expected foreign investors to fund half of this.
In its annual budget this week, the government raised funding for national highways by 23%, and provided for state-run India Infrastructure Finance Co Ltd to refinance bank loans for long-term infrastructure projects.
India’s road expansion program has been hampered mainly by lack of access to funds, but other structural problems have also stymied investment, including the process of offering and bidding projects.
Nath said the government was also looking at improving documentation to keep investment attractive, and has already taken steps related to streamlining land acquisition.
“We have decided to award bids only once possession has been taken for 80% of the land, and notifications have been issued for the balance 20%,” he said.