India’s road network is the second-largest in the world, with about 6 million km of roads. Indian Railways is the fourth-largest railway network worldwide, having 75,439 miles of total track spanning a 67,368 km route. Also, India stood 10th worldwide concerning the overall quality of infrastructure environment in the country.
Australia is one of the most urbanised countries in the world, with over 85% of its population living in cities and towns. The government of Australia has launched several initiatives to promote urban development, such as the City Deals program, which is a partnership between the federal, state, and local governments to develop urban area.
SOLID DEMAND:
- India will require investment worth Rs. 50 trillion (US$ 777.73 billion) across infrastructure by 2022 for a sustainable development in the country.
- In FY22 (until December 2021) 5,835 kms of highway was constructed across India.
- India is projected to account for 40% of the total global share of rail activity by 2050.
DRIVING ADVANTAGE:
- Indian Railways is developing and creating technology in areas such as signalling and telecommunication with 15,000 kms being converted into automatic signalling and 37,000 kms to be fitted with ‘KAVACH’, the domestically developed Train Collision Avoidance System.
- The initiative ‘Infrastructure for Resilient Island States’ (launched in November 2021) will give India a huge opportunity to contribute to the betterment of other vulnerable countries in the world.
- The Government aims to construct 65,000 kms of national highways at a cost of Rs. 5.35 lakh crore (US$ 741.51 billion) by 2022.
GOVERNMENT POLICIES:
- In Union Budget 2021, to support initiatives such as ‘Housing for All’ and ‘Smart Cities Mission’, the government allocated Rs. 13,750 crore (US$ 1.89 billion) to AMRUT and Smart Cities Mission.
- Government has allowed 100% FDI in the railway sector.
- In the Union Budget 2022-23, government has planned for an increase in allocation for the central road fund by 19%, the total fund was Rs. 2,95,150 crores (US$ 38.86 million).
RISE IN INVESTMENTS:
- Revenue growth has been strong over the years. Indian Indian Railways’ revenue reached US$ 16.56 billion in FY 2023 (until October 2022)
- In Union Budget 2022-23, The government has given a massive push to the infrastructure sector by allocating Rs. 10 lakh crore (US$ 130.57 billion) to enhance the infrastructure sector.
INTRODUCTION
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. India has the second-largest road network in the world, spanning a total of 5.89 million kilometres (kms). This road network transports 64.5% of all goods in the country and 90% of India’s total passenger traffic uses road network to commute. Road transportation has gradually increased over the years with improvement in connectivity between cities, towns and villages in the country. India’s railway network is recognised as one of the largest railway systems in the world under single management. The railway network is also ideal for long-distance travel and movement of bulk commodities, apart from being an energy efficient and economic mode of conveyance and transport. Indian Railways is the preferred carrier of automobiles in the country.
MARKET DIMENSIONS
India has the fourth largest railway network with over 22,593 operating trains (9141 freight and 13,452 passengers) with a daily passenger count of 24 million passengers and 203.88 million tonnes of freight. In FY22 passenger traffic stood at 3.54 billion as compared to 1.28 billion in FY21.
India plans to spend US$ 1.4 trillion on infrastructure through ‘National Infrastructure Pipeline’ in the next five years. Hundreds of new cities need to be developed over the next decade. Over the next 10 years, demand for urban freight is predicted to increase by 140%. Final-mile freight transit in Indian cities accounts for 50% of the total logistics expenditures in the country’s increasing e- commerce supply chains. Indian logistics market is estimated to touch US$ 320 billion by 2025.
Highway construction in India increased at 17.00% CAGR between FY16-FY21. Despite pandemic and lockdown, India has constructed 13,298 km of highways in FY21. Under the Union Budget 2022-23, the Government of India has allocated Rs. 199,107.71 crore (US$ 26.04 billion) to the Ministry of Road Transport and Highways. In FY22 (until December), the Ministry of Road Transport and Highways constructed national highways extending 5,835 kms.
INVESTMENTS AND GROWTH
Some of the major investments on these sectors are as follows:
Mega Investment Textiles Parks (MITRA) scheme was launched to establish world-class infrastructure in the textile sector and establish seven textile parks over three years.
The government announced Rs. 305,984 crore (US$ 42 billion) over the next five years for a revamped, reforms-based and result-linked new power distribution sector scheme.
In FY23 (until September 2022), the combined index of eight core industries stood at 142.8 driven by the production of coal, refinery products, fertilizers, steel, electricity and cement industries.
FDI in construction development (townships, housing, built-up infrastructure and construction development projects) and construction (infrastructure) activity sectors stood at US$ 26.22 billion and US$ 28.64 billion, respectively, between April 2000-June 2022.
GOVERNMENT POLICIES
Some of the major initiatives taken by Government of India are as follows:
In Union Budget 2022-23, The government has given a massive push to the infrastructure sector by allocating Rs. 10 lakh crore (US$ 130.57 billion) to enhance the infrastructure sector. The government allocated Rs. 134,015 crore (US$ 17.24 billion) to National Highways Authority of India (NHAI).
The government announced an outlay of Rs. 60,000 crore (US$ 7.72 billion) for the Ministry of Road Transport and Highways.
The government announced Rs. 76,549 crore (US$ 9.85 billion) to the Ministry of Housing and Urban Affairs.
The government allocated Rs. 84,587 crore crore (US$ 10.87 billion) to the Department of Telecommunications to create and augment telecom infrastructure in the country.
The total revenue expenditure by Railways is projected to be Rs. 234,640 crore (US$ 30.48 billion)
100 PM-GatiShakti Cargo Terminals for multimodal logistics facilities will be developed over next three years.
Focus was on the PM GatiShakti – National Master Plan for multimodal connectivity to economic zones. Everything, from roads to trains, from aviation to agriculture, as well as many ministries and departments, will be integrated under the PM GatiShakti National Master Plan.
In FY 2022-23 (until October 20, 2022), passenger earnings stood at Rs. 33,838.16 crore (US$ 4.15 billion).
THE FUTURE AHEAD
India’s Infrastructure forms an integral part of the country’s economic ecosystem. There has been a significant shift in the industry that is leading to the development of world-class facilities across the country in the areas of roads, waterways, railways, airports, and ports, among others.
Indian Railway network is growing at a healthy rate. In the next five years, Indian railway market is expected to be the third largest, accounting for 10% of the global market. The government has announced two key initiatives for seeking private investments-running passenger trains by private operators across the railways network and redevelopment of railway stations across the country. According to Indian Railways, these projects have the potential of bringing an investment of over US$ 7.5 billion in the next five years.
The Government, through a series of initiatives, is working on policies to attract significant investor interest. In the next five years, National Highway Authority of India (NHAI) will be able to generate Rs. 1 lakh crore (US$ 14.30 billion) annually from toll and other sources.
Australia has improved its standing in India as a reliable partner and effective water manager through government-to-government engagement that has been centered on technical capacity building initiatives in river basin management, water accounting, and hydrologic forecasting. Australia has financial opportunities associated with large-scale transportation infrastructure projects in India, as well as expertise in services and technology related to the growth of India’s transportation infrastructure. Australia can contribute expertise to the development of smart cities in a variety of fields, including urban planning, transportation management, traffic safety, water and sanitation, and waste management. Australia’s transport infrastructure is also likely to see significant growth in the coming years. The government is investing in major transport infrastructure projects, such as the Inland Rail project and the Western Sydney Airport. Australia has a well-developed transport infrastructure that includes roads, railways, airports, and ports. The government has launched several initiatives to improve the country’s transport infrastructure, such as the Inland Rail project, which is a 1,700 km freight rail line that will connect Melbourne and Brisbane.