What is the growth outlook for road infrastructure companies in India?
India has the second-largest road network in the world, spanning a total of 5.89 million kilometres. This road network is used to transport 64.5 per cent of all goods in the country and 90 per cent of India’s total passenger traffic uses this road network to commute. Road transportation has gradually increased over the years with improvement in connectivity between cities, towns and villages. In India, sale of automobiles and movement of freight by roads is growing at a rapid rate. To meet this rapidly growing demand, highway construction in India is observed to be growing at 17 per cent CAGR between FY16 – FY21 and despite the pandemic and lockdowns, India has constructed 13,298 km of highways in FY21.
The private sector has emerged as a key player in the development of road infrastructure in India. Increased industrial activities, along with increasing number of two and four-wheelers have supported growth in road transport infrastructure projects. The government’s policy to increase private sector participation has proved to be a boon for the infrastructure industry with many private players entering the business through the public-private partnership (PPP) model. Allocation of ₹111 trillion by the government for the National Infrastructure Pipeline project for FY 2019-25, inclusive of likely capital expenditure allocation of around 18 per cent for the road sector, is a boon for private sector players.
Shri Virendra D. Mhaiskar
Chairman & Managing Director, IRB Infrastructure Developers Ltd.
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