Challenges ahead for transport sector
Development and modernisation of the transportation sector— roads, ports and airports—remains a top priority for the government and saw some major initiatives last year.
A number of projects were cleared under the National Highway Development Programme. The 11th Plan that kicked in last year estimates an investment of $76 billion (Rs 3,04,000 crore) for beefing up the road network during the five-year period.
A $12.4-billion (Rs 49,600 crore) investment plan has been drawn up to upgrade infrastructure and capacities at ports in view of the rising cargo traffic.
To meet the projected demand by 2012, capacity of major ports needs to be doubled and those of non-major ports needs to be increased by 80 per cent. A model concession agreement is also close to finalisation for construction of new berths through public-private partnerships (PPPs).
The government is planning to develop over 300 airports and airstrips through PPP to overcome the growth constraints on the booming aviation sector due to limited infrastructure. It also proposes to develop 35 greenfield airports by 2010 as well as explore the possibility of opening defence airports to civilian aircraft. Besides, there are plans to allow private players to build and run airports with government funding.
Corporate impact | | “By increasing the allocation, the government has reiterated the importance of this sector. However, there are inordinate project execution delays and things need to be speeded up”
— R. Shankararaman
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Bharat Earth Movers: Thanks to the continuing thrust on the road sector, the company expects an even better offtake of some of its smaller equipment used for this sector. In anticipation of the surge, it has appointed 21 dealers across the country exclusively to cater to product sales from its contracted equipment division
- GMR: While L&T probably does the most in this segment by value, others like Gammon India and GMR also stand to benefit. According to Spark Capital Advisors, the BOT toll model was gaining better acceptance, but there are still 7,300 km that need to be completed in the north-southeast-west corridor alone. Investment of Rs 2-lakh crore would be needed to develop 50,000 km of roadways and there is enough work for all
- Kingfisher Deccan: Airline carriers, including the lowcost ones, could benefit from a surge in air traffic on account of an incease in household income in the wake of increased income tax rebates for both men and women
Sectoral impact - Enhanced allocation of Rs 12,966 crore from Rs 10,867 crore for the National Highway Development Programme coupled with a separate window of Rs 4,000 crore under the Rural Infrastructure Development Fund for rural roads provides opportunity for larger contracts to private construction companies
- In the medium-to-long term, a cut in excise duty from 16 per cent to 12 per cent for small cars may lead to increase in traffic on roads, thus positively impacting toll roads
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