Report on Infrastructure / Ports / Roads

Infrastructure segment in India

Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling India's overall development and enjoys intense focus from government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads and urban infrastructure development. In 2016, India jumped 19 places in World Bank's Logistics Performance Index (LPI) 2016, to rank 35th amongst 160 countries.

Market size
Foreign Direct Investment (FDI) received in construction development sector (townships, housing, built up infrastructure and construction development projects) from April 2000 to December 2017 stood at US$ 24.67 billion, according to the Department of Industrial Policy and Promotion (DIPP). The logistics sector in India is expected to increase at a Compound Annual Growth Rate (CAGR) of 10.5 per cent, from US$ 160 billion in 2017 to US$ 215 billion by 2020.

Investments
India has a requirement of investment worth Rs 50 trillion (US$ 777.73 billion) in infrastructure by 2022 to have sustainable development in the country. India is witnessing significant interest from international investors in the infrastructure space. Some key investments in the sector are listed below.

• In February 2018, the Indian government signed a loan agreement worth US$ 345 million with the New Development Bank (NDB) for the Rajasthan Water Sector Restructuring Project for desert areas.

• In January 2018, the National Investment and Infrastructure Fund (NIIF) partnered with UAE-based DP World to create a platform that will mobilise investments worth US$ 3 billion into ports, terminals, transportation, and logistics businesses in India.

Government initiatives
The Indian government is expected to invest highly in the infrastructure sector, mainly highways, renewable energy and urban transport, prior to the general elections in 2019. The Indian government is taking every possible initiative to boost the infrastructure sector. Some of the steps taken in the recent past are being discussed hereafter.

Announcements in Union Budget 2018-19:
• Massive push to the infrastructure sector by allocating Rs 5.97 lakh crore (US$ 92.22 billion) for the sector.

• Railways received the highest ever budgetary allocation of Rs 1.48 trillion (US$ 22.86 billion).

• Rs 16,000 crore (US$2.47 billion) towards Sahaj Bijli Har Ghar Yojana (Saubhagya) scheme. The scheme aims to achieve universal household electrification in the country.

• Rs 4,200 crore (US$ 648.75 billion) to increase capacity of Green Energy Corridor Project along with other wind and solar power projects.

• Allocation of Rs 10,000 crore (US$ 1.55 billion) to boost telecom infrastructure.

• The 90 smart cities shortlisted by the Indian government have proposed projects with investments of
Rs 191,155 crore (US$ 30.02 billion) which include projects focusing on revamping an Identified Area
(Area Based Projects) with investment of Rs 152,500 crore (US$ 23.95 billion).

• Contracts awarded under the smart cities mission would show results by June 2018 as the work is already in full swing, according to Hardeep Singh Puri, Minister of State (Independent Charge) for Housing and Urban Affairs, Government of India.

Road ahead
India and Japan have joined hands for infrastructure development in India's north-eastern states and are also setting up an India-Japan Coordination Forum for Development of North East to undertake
strategic infrastructure projects in the northeast.

Ports and Shipping Industry in India

• By FY17, cargo capacity at major ports grew to 1,065 MMT from 965 in FY16. As of December 2017, major ports had a capacity of 1,358 MMT.

• The average turnaround time of major ports improved to 3.44 days in FY17 from 4.01 days in FY15

• In FY18, major ports in India handled 679.36 MMT of cargo traffic, showing a CAGR of 2.73 per cent during FY08-18.

Cargo traffic at major ports in India:

• Stood at 679.36 MMT in FY18, growing at a CAGR of 2.73 per cent from FY08-18.

• In March 2017, 16 new cargo scanners were installed across major ports in India. In the 1st phase, 5 of the 13 major ports i.e. Kamarajar (Ennore), New Mangalore, JNPT, Kolkata and Vizag will receive the scanners.

Introduction
According to the Ministry of Shipping, around 95 per cent of India's trading by volume and 70 per cent by value is done through maritime transport.

India has 12 major and 200 notified minor and intermediate ports. Under the National Perspective Plan for Sagarmala, six new mega ports will be developed in the country. The Indian ports and shipping industry plays a vital role in sustaining growth in the country's trade and commerce. India is the sixteenth largest maritime country in the world, with a coastline of about 7,517 km. The Indian government plays an important role in supporting the ports sector. It has allowed FDI of up to 100 per cent under the automatic route for port and harbour construction and maintenance projects. It has also facilitated a 10-year tax holiday to enterprises that develop, maintain and operate ports, inland waterways and inland ports.

Market size
Cargo traffic handled by India's major ports increased 4.97 per cent year-on-year to 616.62 million tonne (MT) during April 2017-February 2018. The highest growth was witnessed by Cochin Port at 17.63 per cent, followed by Paradip at 15.56 per cent, Kolkata (including Haldia) at 14.29 per cent and Jawaharlal Nehru Port Trust at 6.37 per cent. Container traffic saw the highest growth during this period at 8.37 per cent year-on-year and reached 8,302 TEUs.

During 2016-17, major and non-major ports in India have accomplished a total cargo throughput of 1,133.09 million tonne, an increase of 5.7 per cent previous year 2015-16. The growth in cargo handled at major and non-major ports in 2016-17, were 6.8 per cent and 4.2 per cent, respectively. The share of major ports in the total traffic handled by Indian ports increased from 56.5 per cent in 2015-16 to 57.2 per cent in 2016-17.

The country's major ports handled a combined traffic volume of 647.76 million tonne during 2016-17, registering an annual growth rate of 6.80 per cent. The major ports recorded the highest ever capacity addition of 100.37 MT in 2016-17, thereby raising the total capacity to 1065 MT per annum, as against a capacity of 965.36 MT per annum in 2015-16. The government has taken several measures to improve operational efficiency through mechanisation, deepening the draft and speedy evacuations.

The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, reported that the Indian ports sector received FDI worth US$ 1.64 billion between April 2000 and September 2017.

Investments and developments
The Indian Minister for Shipping, Road Transport and Highways, Nitin Gadkari, announced a massive investment in India's ports and roads sector, which is likely to help boost the country's economy. The Indian government plans to develop 10 coastal economic regions as part of plans to revive the country's Sagarmala (string of ports) project. The zones would be converted into manufacturing hubs, supported by port modernisation projects, and could span 300–500 km of the coastline. The government is also looking to develop the inland waterway sector as an alternative to road and rail routes to transport goods to the nation's ports and hopes to attract private investment in the sector.

Government initiatives
Some of the major initiatives taken by the government to promote the ports sector in India are as follows:
• In March 2018, a revised Model Concession Agreement (MCA) was approved to make port projects more investor-friendly and make investment climate in the sector more attractive.

• Project UNNATI has been started by Government of India to identify the opportunity areas for improvement in the operations of major ports. Under the project, 116 initiatives were identified out of which 86 initiatives have been implemented*.

• The Ministry of Shipping, Government of India, released Rs 25 crore (US$ 3.86 million) as grants-in-aid to Jawaharlal Nehru Port Trust (JNPT) and Rs 50 crore (US$ 7.72 million) to the Government of Karnataka for Karwar port, for infrastructure development under the Coastal Berth Scheme of the Sagarmala programme.

• Mr Rajnath Singh, Home Minister, Government of India, and Mr Nitin Gadkari, Minister for Shipping, Road Transport and Highways, inaugurated a new sea route to Baratang Island and initiated various shipping projects in the Andaman and Nicobar (A&N) Islands; along with announcement of addition of 14 new ships in the A&N Islands over the next three years.

Road Ahead
Increasing investments and cargo traffic point towards a healthy outlook for the Indian ports sector. Providers of services such as operation and maintenance (O&M), pilotage and harbouring and marine assets such as barges and dredgers are benefiting from these investments.
The capacity addition at ports is expected to grow at a CAGR of 5-6 per cent till 2022, thereby adding 275-325 MT of capacity.

Under the Sagarmala Programme, the government has envisioned a total of 189 projects for modernisation of ports involving an investment of Rs 1.42 trillion (US$ 22 billion) by the year 2035.

Ministry of Shipping has set a target capacity of over 3,130 MMT by 2020, which would be driven by participation from the private sector. Non-major ports are expected to generate over 50 per cent of this capacity.

India's cargo traffic handled by ports is expected to reach 1,695 million metric tonnes by 2021-22, as against 643 million in 2014-15, according to a report of the National Transport Development Policy Committee.

Within the ports sector, projects worth an investment of US$ 10 billion have been identified and will be awarded over the coming five years.

Road Infrastructure in India

India has the second largest road network across the world at 5.4 million km. This road network transports more than 60 per cent of all goods in the country and 85 per cent of India's total passenger traffic. Road transportation has gradually increased over the years with the improvement in connectivity between cities, towns and villages in the country. The Indian roads carry almost 90 per cent of the country's passenger traffic and around 65 per cent of its freight. In India sales of automobiles and movement of freight by roads is growing at a rapid rate.

Market size
The transport infrastructure sector in India is expected to grow at 6.1 per cent in real terms in 2017 and at a Compounded Annual Growth Rate (CAGR) of 5.9 per cent through the year 2021, thereby becoming the fastest-expanding component of the country's infrastructure sector.The construction of highways reached 8,142 km during FY 2016-17, with an all-time high average pace of 22.3 km per day. In the first two months of FY2017-18, 1,627 km of highway was constructed at an average of 26.3 km per day.
Total length of roads constructed under Prime Minister's Gram Sadak Yojana (PMGSY) was 47,447 km in 2017-18.

Key investments and developments
The Union Minister of State for Road, Transport and Shipping has stated that the government aims to boost corporate investment in roads and shipping sector, along with introducing business-friendly strategies that will balance profitability with effective project execution.
Some of the key investments and developments in the Indian roads sector are as follows:
• The National Highways and Infrastructure Development Corporation (NHIDCL) has been awarded a contract to build five all-weather access tunnels worth Rs 23,000 crore (US$ 3.57 billion) in Jammu and Kashmir by 2024.
• The first phase of construction work of Mumbai's 29.2 km long coastal road is expected to begin in April 2018, after bids are finalised in March.

Government initiatives
Some of the recent government initiatives are as follows
• The Cabinet Committee on Economic Affairs (CCEA), has approved the construction of Zoji La tunnel which is a strategic transport project for all-weather connectivity in Srinagar, Kargil and Leh.

• The Ministry of Road Transport and Highways, has sanctioned projects worth Rs 13,411 crore (US$ 2.1 billion) for development of national highways in Assam between 2014-15 and 2017-18.

• The Central Road Fund (Amendment) Bill, 2017 has been passed by Lok Sabha, which would result in revenues of Rs 2,300 crore (US$ 358.7 million) for national waterways in the country.

• The Indian government has succeeded in providing road connectivity to 85 per cent of the 178,184 eligible rural habitations in the country under its Pradhan Mantri Gram Sadak Yojana (PMGSY) since its launch in 2014.

• The land acquisition process and detailed project reports (DPR's) for the Bharatmala Pariyojana are underway and the first project is expected to be awarded before the end of 2018, according to Nitin Gadkari, Minister for Road Transport and Highways.

• The state government of Kerala plans to raise Rs 10,000 crore (US$ 1.54 billion) from non-resident Keralites (NRKs) to finance the development of two highways in the state and support NRKs in the long-term.

• The Ministry of Road Transport and Highways, plans to implement ‘Value Engineering Programme' in order to promote use of new technologies and material in highway projects being executed in India.

Road ahead
The government, through a series of initiatives, is working on policies to attract significant investor interest.

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