The road and highways sector of India is very well-developed. If we go by the numbers, then with roughly 5.5 million kilometres (kms) of a road-web spread out throughout the country, India has the second largest road network in the world. These roads comprising of national highways, expressways, state highways, major district roads, other district roads and village roads bear more than 60 per cent of total goods traffic and 90 per cent passenger traffic in the country. Realising this very well, strengthening the road and highways infrastructure of the country has always been the main priority of the government. It is for the same reason that the sector has received strong monetary and other support over the years. And since the present government came in, the road and highways sector has grown considerably. In fact, it seems that India is right on the ‘Road’ to success. Quite literally!

Current market size of the road and highway sector in India

The construction of highways reached 9,829 kms during financial year 2017-2018 and they were constructed at an average of 26.93 km per day. On the other hand, total length of roads constructed under Pradhan Mantri Gram Sadak Yojana (PMGSY) was 47,447 km in the financial year 2017-18.

Tracking the pace of growth of Indian road sector

India’s road sector has seen consistent improvement in the last three-four years as recognising the role it plays in influencing the economic development, government has been increasingly building quality roads and highways across the country.

Until 2014, the road and highways sector in the country was moving at a very slow pace. The sector began recovering only recently from the years of stagnation. If we look at the recent past, then the year 2015-16 saw the welcoming changes with more than 6,061 kms of highway construction. In the year 2016-2017, a record 16,271 km of national highways were awarded and 8,231 km were constructed. Also, the highest ever average daily construction rate of 133 km was achieved for rural roads in 2016-2017. Moving ahead, Budget 2017-18 further spelt optimism for the road and highways sector with a total of outlay of Rs. 55,000. In October 2017, the Indian Government approved the biggest ever Highway Development Plan for 83,677 kms of roads at an investment of Rs 6.92 lakh crore by 2022. It included the Bharatmala Pariyojana for providing connectivity to interior and backward areas and borders of the country. It is to be noted here that on an average, 27.5 km of highways were constructed every day in the Financial Year 2018.

Importance given to highway and rural road development in the Budget 2018-2019

In the Budget 2018-2019, it was stated that under the Bharatmala Project which includes development of highways running through economic corridors, border and coastal areas and expressways, 35,000 km of roads in phase-I would be constructed at an estimated cost of Rs 5,35,000 crore. Bharatmala is expected to grant India 50 national corridors as opposed to the six right now. Further, the project would be connecting 550 districts in the country through the national highway linkages against the existing number of 300.

Moving further, the budgetary allocation for National Highway Authority of India (NHAI) was increased by 10 per cent to Rs 916.63 billion for 2018-19. Further, in the budget 2018-2019, rural roads saw an allocation of Rs 19,000 crore under PMGSY and this allocation was up by 12.42 per cent relative to last year’s grant of Rs 16,900 crore. Overall, between 2014-15 and 2018-19, the overall budgetary allocation to the highways sector was increased from Rs 32,000 crore to Rs 71,000 crore.

Progress made in the road and highways sector in the current year 2018 and government’s initiatives for the coming years

1. A total of 892 km and 2,345 km national highway projects were awarded and constructed, respectively between April–August 2018.

2. Nearly 416 ongoing projects worth Rs 3.26 lakh crore are being implemented by the NHAI and are in various stages of completion.

3. According to the Ministry of Road Transport and Highways, the targeted deadline for the completion of the 127 NHAI projects and 153 Ministry projects has been changed from June 2019 to March 2019. Also, around 100 ongoing projects are scheduled to be completed by December 2018.

4. For the year 2018-19, the construction target of NHAI projects has been revised from 5058 km to 6000 km.

5. Earlier this year, the first phase of PMGSY was preponed from 2022 to 2019.

6. Recently, India signed a USD 500 million (Rs 3,371 crore) loan pact with World Bank to provide additional financing for PMGSY rural road projects to build 7,000 km of climate-resilient roads.

7. Nearly 200 road projects worth about Rs 1.5 lakh crore are likely to be completed by mid-2019.

8. A total of 200,000 km national highways are expected to be completed by 2022.

9. Government is aiming to develop the Golden Quadrilateral connecting four major metropolitan cities viz. Delhi-Mumbai- Chennai-Kolkata. North South and East West Corridors (NS-EW) connecting Srinagar to Kanyakumari and Silchar to Porbandar with a spur from Salem to Cochin.

10. Government is also aiming at six laning of existing 4 lane highways.

Impact of growth of the road sector on other industry segments including construction equipment market

All these plans clearly prove that the development of roads and highways is one of the priority areas for the government. These ambitious plans are promising for the bright future of Indian road sectors as well as the country’s overall economic growth. Particularly, they are expected to hugely affect the growth of the construction equipment sector in the country. This is clear even from the fact that the Ministry of Road Transport and Highways has decided to implement a Value Engineering Program to promote the use of new technologies, materials and equipment in highways projects executed either under PPP mode or public funding mode.

In nutshell

With a host of proactive actions already underway and many being planned, the future is bright for the road and highways sector in India and this is definitely spelling good for the construction equipment industry including the motor grader segment. In fact, for the next two-three years, it is expected that road and highways would be the main growth drivers of construction equipment and it is estimated that the demand of motor graders which are extensively used for road construction will definitely increase by 15-20 per cent in the next four-five years. Thus, indeed, the future of motor graders looks bright keeping in mind the present scenario.