Emerging trends and

opportunities in roads
and highways sector
June 2021
Analytical contacts

CRISIL FICCI
Mr Akshay Purkayastha Ms Neerja Singh
Director – Transport & Logistics Senior Director – Infrastructure (Transport and Urban)
CRISIL Infrastructure Advisory (Roads and Highways, Ports and Shipping, Railways,
Tel: (D) +91 124 672 2491 Urban Development, Real Estate and Smart Cities)
Tel: (D) +91 11 2348 7326

Mr Anshuman Chauhan Ms Komal Sharma

Associate Director – Transport & Logistics Deputy Director – Infrastructure
CRISIL Infrastructure Advisory Tel: (D) +91 11 2348 7519
Tel: (D) +91 124 672 2052 Email: [email protected]

Mr Sidhant Agrawal Ms Nikika Goyal

Consultant - Transport & Logistics Research Associate – Transport Infrastructure
CRISIL Infrastructure Advisory Tel: (D) +91 11 2348 7414
Tel: (D) +91 124 672 2509 Email: [email protected]
Contents
Message from the Minister .................................................................................................................................. 5

Foreword from FICCI ............................................................................................................................................. 6

Foreword from FICCI ............................................................................................................................................. 7

Foreword from CRISIL .......................................................................................................................................... 8

Executive summary .............................................................................................................................................. 9

India’s roads and highways sector ..................................................................................................................... 11

Background ................................................................................................................................................... 11
Expressways – creating highway networks of the future .............................................................................. 14
MMLPs and WSAs – key areas of road infrastructure improvement ............................................................. 15

Positive impact of the emerging infrastructure developments in the sector .................................................... 19

Improvements in logistical efficiency............................................................................................................ 20
New business opportunities across the national highways network ............................................................ 22

Business-friendly contractual structures – A step forward for attracting private investments ...................... 23

Emerging trends and technologies .................................................................................................................... 29

Design and implementation .......................................................................................................................... 29
Highway operations ....................................................................................................................................... 30

Way forward ....................................................................................................................................................... 34

3
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4
Message from the Minister

5
Foreword from FICCI

Mr BVN Rao
Chairman,
FICCI Committee on Transport Infrastructure and
Business Chairman (Transportation & Urban Infra), GMR Group

I am happy to share with you the FICCI-CRISIL white Also, despite the Covid-19 pandemic, MoRTH has
paper on “Emerging Trends and Opportunities in achieved record-breaking milestone by constructing
Roads and Highways Sector” to be released at 37 kms highways per day in year 2020-21. Further,
“Accelerating the Road Infrastructure: New India NHAI has set an ambitious target of building 4,600
@75, 2nd edition of Roads & Highways Summit” Km of new highways in the current fiscal year as
organized by Federation of Indian Chambers of opposed to 4192 Km constructed in FY 21
Commerce and Industry.
The FICCI-CRISIL comprehensive white paper
The government aims to create world-class road focuses on the present trends and technologies and
infrastructure and enhance user experience by various other initiatives undertaken by GoI to attract
building smart highways and wayside amenities. private investments/interest into the roads and
There is also a special focus on bringing down the highways sector.
cost of logistics by fast tracking the building of
I hope you will find this paper useful. We welcome
multimodal logistics parks (MMLP) projects. Such
your suggestions and feedback.
initiatives will forever change the face of road travel
in India.

It is noteworthy that government has shortlisted

Transportation as one of the four core sectors under
its National Monetization Pipeline plans, as part of
its commitment towards building an
Atmanirbhar Bharat.

6
Foreword from FICCI

Mr Shailesh Pathak
Co-Chairman,
FICCI Transport Infrastructure Committee and
Head- Special Initiatives, Development Projects, Larsen & Toubro

Highways in New India @75 are remarkably We look forward to more initiatives in road safety,
different from India @50. Much has improved in the better logistics, and much better user experience in
last few years in terms of rapid construction, better terms of road pavement quality and ‘rest areas’
maintenance and technology, and streamlined along not only new expressways, but also existing 4
dispute resolution. National Highway length is up lane and 6 lane highways. In many ways, the
50% since 2014. Land acquisition is now much less completion of the US Interstates from 1956-1965
problematic. Solutions have been found for stuck led to the road trip culture in America. It is today
PPP projects, so that construction is completed. possible to drive from anywhere to anywhere in
Affordable Arbitrations and claim settlements have India in less than 4 days. With the incipient
been institutionalised. Successful asset expressways, this experience would only get better.
monetisation is leading to long-term global capital
Such issues have been well analysed in FICCI-
funding platforms for Indian Highways.
CRISIL’s Knowledge Paper for “Accelerating the
Most FICCI members in the roads sector are not PPP Road Infrastructure: New India @75, 2nd edition of
investors, but road construction companies and Roads & Highways Summit”. The Paper describes
those who supply inputs, be it in terms of cement, the significant initiatives in Multi Modal Logistics
steel, aggregate etc. or equipment; or those who Parks, and plans for way-side amenities. FICCI
supply technology solutions, or those who supply would appreciate all your comments and
advice: consultants for business, financial, legal suggestions on how we could enable the ‘ideas’ in
and other advisors. For our FICCI members, both the National Infrastructure Plan (NIP) and the
construction and operations of highways and National Monetisation Plan (NMP) to get converted
associated infrastructure are important, as is the into ‘cash-flow’ and ‘infra assets’ benefiting the
road user experience. Electronic toll collections government, the private sector and above all, the
through FASTags have become near universal, road user.
which has de-fanged toll plazas of their earlier
tension of traffic jams.

7
Foreword from CRISIL

Mr Akshay Purkayastha
Director
Transport & Logistics
CRISIL Infrastructure Advisory

The Covid-19 pandemic has adversely affected ancillary and support infrastructure around the
economic and business activities in India and highways network. These include developing Multi-
around the world. During these trying times, Modal Logistics Parks (MMLPs) and Way-side
government spending on infrastructure, especially Amenities (WSAs). These initiatives are in line with
on roads and highways, has emerged as a ray of the MoRTH and NHAI’s focus on enhancing user
hope for the Indian economy. experience and building world-class infrastructure.

The highway construction sector saw a high growth The need for a robust and efficient logistics system
of over 30% last fiscal, vis-à-vis the year before. Toll has been felt deeply since the onset of the
collections also surpassed pre-pandemic levels by pandemic. The government has laid the foundation
the third quarter of the fiscal. This was the result of stone for the first MMLP to be built in India. In
multiple government initiatives and extensive addition, more than 30 MMLPs have been planned
budgetary support to the sector. across India. The infrastructural support thus
generated will help reduce the cost of
To enhance resource mobilisation and attract
transportation and warehousing, and create a more
private sector investment for all these initiatives,
efficient commercial transport ecosystem.
the Ministry of Road Transport and Highways
(MoRTH) and the National Highways Authority of Development of WSAs is expected to have a
India (NHAI) have made investor-friendly changes in positive, far-reaching impact on road users. Also,
the model concession agreement (MCA) under the incorporation of forward-looking designs and
hybrid annuity model (HAM), toll-operate-transfer technologies such as electric charging stations in
(TOT), and build-operate-transfer (BOT)-toll models. these WSAs will help strengthen electric vehicle
This has boosted investor sentiment as evident support infrastructure across India.
from successful TOT bundles 5A and 5B bids and
The roads and highways sector in India is indeed
significant interest shown by developers in HAM
undergoing a paradigm shift. As the Phase 1 of
and EPC bids. In addition, significant progress has
Bharatmala Pariyojana gets executed, more and
been made in reviving the BOT-toll model. These
more benefits will start flowing into the sector as a
steps will go a long way in achieving a better mix of
whole. The MoRTH and the NHAI have been the
EPC, HAM and BOT while awarding projects of
leading adopters of technology such as FASTag and
MoRTH and NHAI.
are focussing on building smart highways. As we
The Government of India, under the aegis of the move forward, there are a host of opportunities
MoRTH, is also rolling out new initiatives to develop lined up for all the stakeholders, which should help
the sector scale new heights of performance.

8
Executive summary

The roads and highways sector has recovered from

the pandemic blow much faster than anticipated,
and the fastest within the transport infrastructure
space.

To spell out the improvement, toll collections have

surpassed pre-pandemic levels with widespread
adoption of FASTag across the country. In addition,
the two key performance indicators of highway
sector performance – length of road projects
awarded and constructed – have shown robust
growth in the past year. All these positive
parameters are a result of strong government thrust
and private sector interest.

As part of Bharatmala Pariyojana, the government

has planned for development of greenfield
expressways to increase freight and passenger
speeds and logistics efficiency between major
economic centres. The NHAI has proposed
construction of 23 new access controlled highways/
expressways, which are expected to be
operationalised by March 2025.

The new expressways are being designed with the

goal of minimising the road lengths between major
cities, thus reducing travel time and costs. The
expressways will be completely access-controlled
to ensure unhindered flow of traffic. Superior
technical and safety standards for the new
expressways will allow speeds of up to 120
km/hour. In a much-needed forward-looking move,
a separate lane for electric trucks will be included
in some of these expressways.

Access-controlled expressways are expected to

offer road users some major benefits such as i)
efficient logistics movement due to high speed and
short distance, thus enabling time and cost savings,
ii) enhanced road safety due to reduced/ negligible
trespassing of cross-traffic, and (iii) closed tolling, a
more equitable form of tolling where users pay only

9
for the distance travelled and not for the entire thereby reducing fatigue-related road accidents.
length of the road. The WSAs will include facilities such as fuel
stations, restaurants, short-term accommodation,
Furthermore, as a part of its endeavour to provide
and washrooms for both passengers and truckers,
world-class road network and allied infrastructure
with EV charging stations likely to be added in
services, the NHAI intends to develop MMLPs at
future. A set of free facilities such as drinking
more than 30 strategic locations across the country
water, emergency telephone services, and parking
in the next five years.
will also be made available.
The hub-and-spoke model of freight movement
The NHAI has identified more than 600 sites for
facilitated by these MMLPs will be significantly
WSAs across 22 states in India spanning more than
more efficient than point-to-point freight movement
3,000 hectares.
as is currently prevalent. The development of
MMLPs at various locations across the country will The proposed WSAs will increase user satisfaction
be instrumental in improving efficiencies in the and also generate widespread employment
logistics value chain by providing specialised opportunities for potential investors, developers,
infrastructure and services. MMLPs will help cut restaurateurs, local farmers, and villagers along the
logistics costs, improve freight aggregation, corridors and expressways. The sites would also
distribution, storage and warehousing, and create include village haat/bazaar to sell local food, fruits,
various value-added services such as labelling, handicrafts and handlooms.
packaging, tagging, and crating. MMLPs will also
Additionally, under its vision to improve ease of
help reduce transportation and warehousing cost,
doing business in the sector, the government has
road congestion and pollution.
introduced various investor-friendly changes in the
The logistics sector is likely to be the primary MCA for the development of highways under the
beneficiary of the government’s initiative to develop PPP mode. These new, innovative contractual
MMLPs and greenfield expressway corridors. structures for PPP project developments, such as
According to the MoRTH, these initiatives are BOT-toll mode, TOT mode and HAM, will be
expected to bring down logistics costs instrumental in attracting private sector interest
substantially, thereby helping incentivise purchase and realising the full potential of the above-
of Indian goods in the global markets. The MMLPs, mentioned initiatives.
coupled with world-class expressways, will allow
Further, the growing use of advanced technologies
for freight transportation in larger-sized trucks at
such as drone survey recording, network survey
accelerated speeds, resulting in lesser carbon
vehicles (NSV) and LiDAR (light detection and
emission from movement of goods on a per-tonne-
ranging) for designing and surveys will only catalyse
per-kilometre basis and making freight
India’s vision of establishing first-world
transportation more environment-friendly.
infrastructure.
Other allied infrastructure services planned by the
Smart highways have been designed to support
government include WSAs across the country’s
electronic toll collection, e-mobility and solar
highway network.
charging. Moreover, the adoption of latest
The WSAs will augment road safety by providing technologies will be crucial for developing
much-needed resting facilities for travellers, sustainable infrastructure.

10
 India’s roads and
highways sector

programme have been classified as high priority

Background projects as they are expected to carry substantial
At 62.15 lakh km, India has the second-largest road volumes of traffic and act as the backbone of the
network in the world, with national highways (NH) NH network. The objective of the programme is to
constituting 1.36 lakh km.1 Project awards and optimise the efficiency of freight and passenger
construction in the roads and highways sector in movement across the country by bridging critical
India have increased significantly in recent years, infrastructure gaps through the development of
highlighting the current government’s thrust on the greenfield expressways, economic corridors, inter-
sector. This is also evident in the steadily increasing corridors and feeder routes.
road sector budget, which stood at Rs 1.18 lakh The effects of the pandemic are evident across all
crore for fiscal 2022.2 Further, the Task Force on
sectors of the Indian economy, but the roads and
National Infrastructure Pipeline (NIP) had projected
highways sector has recovered much faster than
a total investment of Rs 111 lakh crore in infra
anticipated. Before the onset of second wave of
projects for fiscals 2020-25, with ~18% of the
Covid-19, daily toll collections had surpassed pre-
targeted investment expected to be made in the
Covid-19 levels with collections reaching the
road sector in India.3
highest-ever mark of Rs 103.94 crore with over 64.5
The largest initiative in the road sector currently lakh daily transactions on February 25, 2021.4 The
underway is the Bharatmala Pariyojana, an two key performance indicators – length of road
umbrella programme for developing NHs in India. projects awarded and constructed – have been
Phase-1 has been envisioned to be executed over a encouraging, indicating strong government push
period of five years (fiscals 2018-22) at an approved and private sector interest.
outlay of Rs 5.35 lakh crore. The projects in the

1
Annual Report 2020-21, Ministry of Road Transport & Highways
2
An article on Investment in Road Infra: Business Line, March 11, 2021
3
Economic Times article dated April 30, 2020
4
Mint article dated February 26, 2021

11
Figure 1: Length of NH awarded (unit: km) and pace achieved (unit: km/day)5

18,000 46.7 50.0

43.7
16,000 45.0
14,000 40.0
12,000 9,659 28.7 35.0
27.7
24.5 30.0
10,000 21.8 11,613
25.0
8,000 5,679
5,754 15.0 20.0
6,000 4,905 5,737 15.0
4,000 7,396 3,271 10.0
2,000 4,344 4,335 4,788 5.0
3,067 2,222 3,211
- 0.0
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21

NHAI MoRTH Rate of Award

Figure 2: Length of NH constructed (unit: km) and pace achieved (unit: km/day)6

14,000 36.4 40.0

12,000 35.0
29.7
26.9 28.0
30.0
10,000
22.6 25.0
9,106
8,000
16.6 7,475 6,258 20.0
6,000 6,758
12.1 5,603 15.0
4,000 4,073 10.0
2,909
2,000 3,380 3,979 4,192 5.0
2,628 3,071
1,501 1,988
- -
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21

NHAI MoRTH Rate of Construction

Note: Length of NH awarded and constructed by MoRTH includes implementing agencies such as the state government
(state PWDs), the Border Roads Organisation (BRO) and the National Highway and Infrastructure Development Corporation
Limited (NHIDCL)

The NHAI awarded projects for highway stretches of up around 30% on-year. This takes the pace of
4,788 km last fiscal compared with 3,211 km in highway construction to a record of ~36.4 km per
fiscal 2020. Overall, MoRTH, including NHAI and day. The upward growth trend in awards and
other implementing agencies, awarded projects for construction is expected to continue in the current
7
highway stretch spanning ~10,500 in the last fiscal and future fiscals. The introduction of investor-
compared with 8,948 km in fiscal 20208. The length friendly changes in the MCA for highway building
9
of NH constructed last fiscal stood at ~13,300 km , under the HAM and BOT toll models, and the

5
Annual reports of NHAI, MoRTH and CRISIL analysis
6
Footnote 5
7
Financial express article date April 12, 2021
8
PIB dated 17th January 2021
9
Statement by Union Minister of RTH, April 02, 2021

12
government’s thrust on greenfield corridors and and participation. Figure 3 shows the mix of project
expressways are expected to further drive sector award by the NHAI during the last four fiscals.
growth. The positive impact of these initiatives on
Figure 3: Mode-wise length of NH awarded
investor interest is evident in the award price of TOT
(unit: km)10
bundles 5A1 and 5A2 which was ~Rs 630 crore more
than the base price for the NHAI’s fifth round of TOT 132
2020-21 128
auctions of Rs 1,621 crore. 1,919
2,609
That said, measuring the progress with these raw
numbers may not paint an accurate picture. For -
238
2019-20
instance, the quality of road construction varies 2,120
853
widely across the country. To address this issue, the
use of plastic in pavement construction is being -
2018-19 33
encouraged to improve efficiency and road quality. 1,412
777
The portfolio mix of the various models used for
209
project awards has been a focus area for the 799
2017-18 3,152
government in recent years. While the portfolio mix
3,236
initially envisioned under Phase-1 of Bharatmala
Pariyojana comprised HAM, EPC and BOT toll - 1,000 2,000 3,000 4,000
projects in a 50:40:10 ratio, the interest in BOT toll
BOT (Toll) Item Rate EPC HAM
projects from the private sector has been lower
than expected. With ~35,000 km of highways
Bharatmala Pariyojana, Setu Bharatam, and the
planned under the Phase-1, 3,500 km of highways
Char Dham Highway project have been focussing on
were planned to be awarded under the BOT toll
following an integrated approach towards building
mode. However, only four projects for ~341 km have
critical infrastructure. India’s road sector is getting
been awarded under BOT toll since fiscal 2017,
ready to embark in a new direction by enhancing
including two projects for 132 km being awarded in
user experience while building world-class
the last fiscal. A key reason for the lack of private
infrastructure. Allied infrastructure such as WSA
sector interest in BOT-toll projects is believed to be
have been planned by the government and will
the financial stress caused to the developers owing
provide much needed rest stops and emergency
to delays in construction and lower-than-estimated
facilities to road users. Greenfield expressway
revenue. Such challenges have diverted private
corridors have also been planned to increase the
sector interest towards investments in HAM and
speed and efficiency of freight and passenger
EPC projects where revenue risks are minimal.
movements between major economic centres.
The EPC and HAM models, albeit less risky for Furthermore, as a part of its endeavour to provide
private players compared with the BOT toll model, world class infrastructure and related services for
constrain government finances. To achieve the the highway network, the NHAI intends to develop
ambitious roads and highways development MMLPs at 35 strategic locations across the country.
programme, an optimum mix of HAM, EPC and BOT Put together, initiatives such as MMLPs and
toll models is necessary to ensure that the risks are greenfield expressway corridors are expected to
adequately distributed among government and reduce logistics costs significantly in the country. In
private players, so as to attract higher investment addition, allied infrastructure such as WSAs will

10
Footnote 5

13
likely generate employment opportunities and easily implemented in a closed toll system where no
increase user satisfaction. The following sections movements can be made toll-free.
look into each of the above initiatives in detail.
The table below lists the upcoming
expressways/corridors with expected completion
Expressways – creating highway
schedule:12
networks of the future
Expressways are highways that are completely Expected
Expressway (approx. length in km) completion
access controlled to ensure unhindered flow of
schedule
traffic, i.e. vehicles can enter/exit the roads from
Delhi – Mumbai (1,350) March 2023
only a limited number of points. They are meant to
be the highest class of roads in India, and are Ahmedabad – Dholera (110) March 2023
expected to transform user experience significantly.
Delhi – Amritsar – Katra (650) March 2024
They are designed with superior technical and
safety standards to allow speeds of up to 120 Bengaluru – Chennai (272) March 2024

km/hr. Expressways are currently being planned to Kanpur – Lucknow (63) March 2024
minimise road lengths between two given points via
Ambala – Kotputli (310) March 2023
greenfield diversions, access ramps, and
overpasses, thus reducing travel times and costs. Amritsar – Jamnagar (762) March 2023

UER II in Delhi (75) March 2024

Apart from the projects under Bharatmala, the NHAI
has proposed construction of 23 new highways with Raipur – Visakhapatnam (464) March 2024
a combined length of ~7,800 km, including a Delhi – Saharanpur – Dehradun (169) March 2024
network of expressways and economic corridors,
B’luru Satellite Town Ring Road (281) March 2024
which are expected to be operationalised by March
2025. Four expressways, including Delhi-Mumbai, Surat – Solapur (464) March 2025
Ahmedabad-Dholera and Amritsar-Jamnagar, are
Chennai – Salem (277) March 2025
scheduled for completion by March 2023. Nine more
are expected to be operationalised by March 2024. Durg – Raipur – Arang (92) March 2024

This network of expressways spans the country Chitoor – Thatchur (125) March 2024
connecting Surat, Solapur, Lucknow, Vizag,
Kharagpur – Siliguri (235) March 2025
Chennai, Bengaluru, Vijayawada, Raipur, Kota,
Kharagpur and Siliguri. The construction is Solapur – Kurnool (318) March 2025

expected to take place in a phased manner, with the Indore – Hyderabad (713) March 2025
last stretch of nine greenfield projects to be
Hyderabad – Visakhapatnam (221) March 2025
completed by March 2025. Total capital outlay of Rs
3.3 lakh crore is to be achieved through Special Kota – Indore (136) March 2024

Purpose Vehicles (SPVs) to ensure inexpensive Hyderabad – Raipur (330) March 2025
financing and reduced risk for investors.11
Nagpur – Vijayawada (457) March 2025
A new initiative for expressways is closed tolling,
which is a more equitable form of tolling where
users pay only for the distance travelled and not for
the entire road length. Distance-based tolling is

11
An article on 23 New Expressways: Times of India, August 13, 2020
12
NHAI & Times of India article dated August 13, 2020

14
Case study – Delhi-Mumbai Greenfield Expressway The expressway will include a separate lane for
(DME) electric trucks, which is a much needed forward-
looking move. Another focus area is to build green
The Delhi-Mumbai greenfield expressway infrastructure and upgrade existing backward
(DME)13 will be the longest expressway in India. areas. The government has committed to spend
With a design speed of 120 km/hr, it is expected Rs 7 lakh crore to building green infrastructure
to reduce travel time between the two cities to 12 using modern technology.14 The development of
hours from the current 24 hours. In addition, the the proposed Delhi–Mumbai expressway will
expressway will also improve connectivity with generate substantive employment opportunities
other economic hubs, including Jaipur, Bhopal, across the country. In addition, by improving
Indore, and Ahmedabad. connectivity to hitherto unconnected/poorly
connected and under developed areas in the
The expressway will have an eight-lane
country, the corridor will trigger economic
configuration with provisions to expand to 12
activities in such regions. It has been estimated
lanes in the future. A right of way of 100 m, with a
that a total number of 4,076 person-days are
22 m median, has been planned to enable inside
required for the construction of one kilometre of
future expansion. On expansion to 12 lanes, a 7 m
highways.15 Hence, the total number of person-
median will be maintained. Perpetual pavement
days expected to be generated from the
design has been adopted for the Delhi-Vadodara
construction of the Delhi-Mumbai greenfield
section of the corridor and rigid pavement design
expressway is around 54.86 lakh person-days.
has been adopted for Vadodara-Mumbai section
of the corridor. Further, the corridor will be
completely access controlled with closed tolling.

The Delhi-Vadodara section of the expressway

MMLPs and WSAs – key areas of
comprises 31 packages. Of the 31 packages, 28
road infrastructure improvement
packages of length ~760 km had been awarded at The government of India’s push for development of
a cost of ~Rs 37,430 crore, till March 31, 2021. In allied infrastructure facilities in highways sector –
addition, bids have been invited for the remaining such as MMLPs and WSAs – is expected to help
three packages with a length of 84 km. The achieve the following objectives:
Vadodara-Mumbai section of the expressway
i. enabling dramatic changes in user experience
comprises 18 packages. Of the 18 packages, 11
packages of length ~293 km had been awarded at ii. creating first-world logistics infrastructure
a cost of ~Rs 26,840 crore till March 31, 2021. across the highway network
With one package being implemented by
Such facilities will be instrumental in realising the
Maharashtra State Road Development
government’s vision of creating a world-class roads
Corporation (MSRDC), bids have been invited for
and highways network in India.
five packages with a total length of 129 km. A
detailed project report for the remaining one MMLPs
package of length 10 km is currently underway.
The logistics and supply chain market in India is
expected to touch $307 billion by the end of

13
NHAI and news articles
14
An article on Delhi-Mumbai Expressway: Mint, March 2021
15
NHAI and CRISIL Analysis

15
calendar year (CY) 2021.16 The industry has been transfer, providing world-class storage and
growing at a CAGR of 10.5% since CY2017, and is handling, as well as delivering value-added
further expected to expand with the Covid-19 freight services.
17
vaccine distribution. The logistics industry has
The development of MMLPs at 35 strategic
evolved significantly over time. Compared with the
locations across the country has been envisaged by
traditional logistics industry that comprised
the NHAI as a key policy measure to rationalise
scattered and single-operation activities, modern
logistics costs in India and improve its
logistics is systematic and integrated. Through
competitiveness. The pandemic has brought forth
extensive application of information technology and
the need for greater supply chain regionalisation.
industry expertise, modern logistics systems
The development of MMLPs at strategic locations
provide a full range of one-stop service that
across regions can help develop supply chain in a
supports the entire supply chain from transport and
more agile and cross-functional way.
freight, warehousing management, and order
processing to delivery and customer service.

Figure 4: Logistics as interplay of infrastructure,

services, and technology
Logistics Infrastructure & service

Transport &
Infrastructure Technology Services
Storage

Supply Chain

Raw Material
Manufacturing Distribution Wholesale Retail Customer
Supply

Source: Asian Development Bank

The Indian logistics sector encounters significant

challenges leading to high cost and low efficiency.
In order to support seamless intermodal transfers
and enhance last mile connectivity, the Logistics
Wing within the Department of Commerce, Ministry
of Commerce and Industry had released a draft of
the National Logistics Policy in public domain in
February 2019. Its main objective was to reduce
logistics cost as a percentage of GDP to about 10%,
optimise the modal mix, improve last mile
connectivity, and enhance the logistics value chain
through digitisation, standardisation, and
modernisation of warehousing among others. The
policy also emphasises on the development of
MMLPs for enabling seamless multimodal freight

16
Indian Retailer Bureau, January 14, 2021
17
Financial express article dated January 31, 2021

16
Currently, freight movement in India happens on Logistics parks are expected to provide four key
point-to-point routes on smaller-sized trucks, benefits as summarised below:
leading to higher logistics costs. MMLPs act as
freight aggregation and disaggregation centres and Reduction in transportation cost
will enable a hub-and-spoke model of freight Logistics parks will drive a ~10% reduction in
movement, in contrast to the point-to-point freight transportation cost for the top 15 nodes by enabling
movement currently prevalent in India. Further, freight movement for larger sized trucks and rail.
these MMLPs enable the use of larger trucks/rail Larger sized trucks have ~60%18 lower freight cost
movement between hubs which have lower per-ton- on a per ton per km basis compared with smaller
per-km cost compared to smaller trucks. sized trucks.
Furthermore, MMLPs could improve the utilisation
and performance of inland container depots (ICDs) Reduction in pollution
and container freight stations where they exist. Increased freight movement for higher sized trucks
A network of 35 MMLPs (Figure 5) has been and rail will enable a ~12% reduction in CO2
identified to cater to 50% of the road freight emissions for the top 15 nodes. Larger sized
movement in the country. The development of these vehicles, on account of lower fuel consumption per
35 multimodal logistics parks has been approved by ton per km, will result in lower CO2 emissions.
the cabinet as a part of the National Corridor
Reduction in congestion
Efficiency Enhancement Component (NCEEP) of
Bharatmala Pariyojana. 15 of these multimodal Increased freight movement for larger sized trucks
logistics parks were identified for development in and rail will result in a ~20% reduction in freight
Phase-1. vehicles catering to the demands of the top 15
nodes. In addition, shifting warehouses and
Figure 5: Locations of the proposed MMLPs
wholesale markets, currently being operated inside
the city, to logistics parks would free up urban
spaces, thereby reducing congestion.
Jammu
Sangrur Solan Reduction in warehousing cost
Bhatinda Ambala
Shifting warehouses currently being operated inside
Hisar Delhi NCR
city limits to logistics parks will reduce warehousing
Jaipur Jogighopa
cost, driven by lower rentals in logistics parks
Kota
Singrauli Sahibganj situated outside city limits. In addition, modern and
Kandla Ahmedabad Bhopal
Kolkata mechanized storage solutions provided by logistics
Indore
Rajkot Surat Raipur
Sundargarh parks will enable a reduction in storage and
Nashik Nagpur Jagatsinghpur handling losses.
Mumbai
Visakhapatnam
WSAs
Hyderabad
Panaji
Anantpur WSAs envisioned by the government will enable
Chennai improved road safety by providing adequate resting
Bengaluru
facilities for road users, thereby reducing fatigue-
Coimbatore
related road accidents. These WSAs will typically
Cochin
provide facilities such as fuel station, restaurants,

18
MoRTH

17
short-term accommodation, and washrooms for Mandatory facilities for all sites
both passengers and truckers. In addition, they are
expected to provide free facilities for highway users Washrooms & Ample bus & car
such as drinking water, emergency telephone drinking water parking
services, and parking.

Under its vision to provide world class traveller

facilities for the road users, the NHAI has identified Electric charging Children play area &
station landscaping
more than 600 sites across 22 states in India,
spanning more than 3000 hectares in total.19 130 of
these 600 sites are expected to be operational
Village Haat (Gram
during fiscal 2022.20 The envisaged area for each Medical facilities
Bazaar), Local craft
with doctors on call
WSA has been derived using pre-established shops
demand from highway and non-highway traffic in
prime locations across India. In order to provide All upcoming WSAs would include “Village Haat/
greater stimulus for participation of private Bazaar” which will offer specific area handicrafts
developers, the authority is providing i) and handlooms by local artisans besides local food
encumbrance free sites with clear land title and no and fruits. This is expected to provide an impetus to
Change of Land Use (CLU) requirement and ii) bring significant economic development to the
attractive lease tenure with flexible project villages along the highways.
development options for developers.
Figure 6: Regional design components and village
Some of the world-class facilities that are proposed haat
to be developed in the WSA shown below.

Permissible uses for all sites

Hotel &
Food court /
Fuel station Convention
Dhaba
center

Guest & Banquet & Warehouse /

Meeting Wedding Logistics
rooms halls facility

Retail arcade
Automobile Auto
& Speciality
showrooms workshops
restaurants

Truck user Truckers

Convenience
zone & Dormitory/
stores & ATM
parking Self Services

Image source: NHAI

19
NHAI
20
An article on wayside amenities: Mint, March 24, 2021

18
 Positive impact of the
emerging infrastructure
developments in the
sector

In the past few years, the roads sector in India has Expressways – enabling dramatic changes in user
seen multiple progressive and timely interventions experience
by the Union Government. Budgetary outlay for the Some of the prime benefits that the access-
sector has increased and the rate of road project controlled expressways would offer to road users
awards by the MoRTH and associated entities has are:
gained significant momentum in the past decade.
India has made significant progress in highway i. Efficient logistics movement due to high speed
development with keen focus on allied and short distance, thus enabling time and cost
infrastructure development, such as MMLPs, WSAs savings
and freight terminals. Development of such allied ii. Seamless connectivity between major economic
infrastructure facilities will enable multi-fold centres in the hinterland with coastal roads and
benefits, including, but not limited to, efficient
ports
intermodal freight movement, improving the
logistical efficiency, world-class WSAs to crores of iii. Enhanced road safety due to reduced/
travellers every day and impetus to electric-vehicle negligible trespassing of cross-traffic
(EV) charging infrastructure across the highway
iv. Ideal for long-distance traffic, as spacing
network.
between entry and exit is always between 20 km
Although the disruptions caused by the Covid-19 and 25 km
pandemic dominated in 2020, it shaped the year in
A new initiative for expressways is ‘closed tolling’,
roads and highways sector, specifically in terms of
which is a more equitable form of tolling, where
changes in the provisions of MCA for PPPs. The
users pay only for the distance travelled and not for
government introduced various investor-friendly
the entire road length. Distance-based tolling is
changes in the MCA for the development of
easily implemented in a closed-toll system, where
highways under the PPP mode, such as BOT, TOT
no movements can be made toll-free.
and HAM. Furthermore, in case of development of
WSAs, the proposed lease tenure would provide
flexible project-development options for
developers.

19
Improvements in logistical Impact of Greenfield Expressways on logistical
efficiency efficiency

Existing impediments in the logistics sector in India Development of high-class expressways will
improve the country’s logistical efficiency in the
India has consistently ranked low in the Logistics
following ways:
Performance Index (LPI), published by the World
Bank. The LPI objectively measures the comparative Consistent road infrastructure
performance of all countries across the world in the
A nationwide network of four- to eight-lane
logistics sector. India had improved its LPI rank
expressways would allow for smooth flow of goods
from 54 to 36 between 2014 and 2016, due to
and cargo, thereby reducing freight costs. In
improvements in infrastructure, Make In India
addition, consistent infrastructure along the key
programme, as well as technological and digital
routes would help reduce congestion on Indian
improvements in the logistics supply chain.
roads.
However, its rank dropped down to 44 again in
201821, highlighting need for further improvements. Capacity for a more efficient fleet mix
The primary reasons for India’s low LPI score are
India’s fleet mix is characterised by smaller,
infrastructural inefficiencies in the logistics sector,
inefficient trucks. Historically, 16T and 25T GVW
resulting in high logistics costs. Much of the higher
trucks have been the highest-selling categories in
cost could be attributed to absence of efficient
India, compared with China, where 26-39.9T truck
intermodal and multimodal transport systems.
categories lead the market. Trucks with higher
22
Figure 7: Evolution of India’s LPI score payload are more efficient than the trucks with
4 lower payloads (freight cost on a per-tonne per-km
basis for a 9 MT truck is Rs 3.5, 2.5x that for a 40 MT
truck). The proposed 4-8 lane expressway network
3.5 would allow for freight movement in larger-sized
trucks with high payload capacity.

2.5
2010 2012 2014 2016 2018

Timeliness Customs
Infrastructure International shipments
Logistics competence Tracking and tracing
Overall

21
World Bank
22
World Bank

20
Impact of MMLPs on logistical efficiency Multi-modal freight transportation
Developing multimodal logistics parks is a part of MMLPs with road and rail connectivity enable
the government’s Logistics Efficiency Enhancement multimodal freight transportation. This aids freight
Program. The figure below illustrates the key transportation on line haul (between hubs) to shift
functionalities that the proposed MMLPs are from road to rail and waterways (wherever
expected to serve: possible), thereby reducing the freight cost.

Figure 8: Key functionalities of logistics parks Storage and warehousing

Current situation Ideal situation
Point-to point freight movement Hub and spoke model freight
The MMLPs would provide mechanised warehouses
Rail Water
and specialised storage solutions, such as cold
Location 1
storage, mechanised material handling and
MMLP 1 MMLP 2
10 ton truck 10 ton truck intermodal transfer container terminals, and bulk
Location 2
and break-bulk cargo terminals.
30 ton truck
Location 3
Under-developed material handling infrastructure
Logistics park Freight aggregation Multimodal freight Cluster
enable and distribution movement efficiencies
Services Logistics Storage and Value added
The warehousing landscape in India is
Handling services
park Provides warehousing services
characterised by the presence of large number of
private/ unorganised warehouses, resulting in
Freight aggregation and distribution
smaller sized warehouses with very low investment
MMLPs will provide hubs for freight aggregation and in this sector. Smaller sized unorganised
efficient distribution. Logistics parks would enable warehouses with limited mechanisation results in
line haul freight movement (between hubs) on larger higher storage and handling losses, thereby
sized trucks and thereby aiding in reduction of increasing the supply chain costs.
freight transportation cost.

21
The MORTH estimates that logistics parks would Passenger Car Units (PCUs) per day (FY18). This
drive about 10% reduction in transportation cost for traffic has been steadily increasing and it is
the top 15 nodes by enabling freight movement on expected that NH-8 will reach its design capacity
higher-sized trucks and rail, which will also result in by the middle of 2020s. Based on this, an
lower carbon dioxide emissions and less congestion alternative greenfield alignment has been
23
in cities . Shifting warehouses and wholesale proposed to connect Delhi to Vadodara via Sohna
markets, currently inside the city, to logistics parks – Ferozpur Jhirkha – Dausa – Kota – Ratlam –
(driven by lower rentals) would reduce urban Godhra and further linking up with Vadodara
congestion. In addition, modern and mechanised Mumbai corridor to create seamless connectivity
storage solutions provided by logistics parks would between Delhi and Mumbai.
cut down storage and handling losses.
As a part of its endeavour to provide world-class
traveller facilities, i.e., WSAs for DME, NHAI has
New business opportunities across
selected 94 suitable sites in vicinity of major
the national highways network cities and towns with area more than 650 Ha. All
Development of greenfield expressway corridors, upcoming WSAs along the expressway would
MMLPs and WSAs would open up new kinds of include “Village Haat/ Bazaar”, which will offer
business opportunities for potential investors and area-specific handicrafts and handlooms by
developers, restaurateurs, villagers along the local artisans besides local food and fruits. All in
corridors and expressways and local famers. all, the development of these sites will bring
economic development to the villages along the
Drawing huge opportunities for investors,
highways. This initiative would also go a long way
developers, operators and retailers, the NHAI will
in providing employment to local youth,
develop more than 600 WSAs along the national
especially farmers in all corners of the country.
highways across 22 states in India. The proposed
WSAs will help promote local economy by
An approved master plan for WSA along the
generating employment opportunities and help
expressway is illustrated in the figure below.
local people to market their unique produce/
handicrafts at village haats developed. Facilities Figure 9: Approved master plan for WSA along DME
such as EV charging stations will help in promoting
the use of electric vehicles, thus reducing pollution.

Case study – Development of WSAs along Delhi-

Mumbai Expressway (DME)

The NH-8 section of the Golden Quadrilateral,

connecting Delhi and Mumbai, is one the busiest
and most critical routes of the national highways
network. It connects Delhi (the political capital in
the north of the country) with Mumbai (the
economic capital and the busiest port of the
country). Currently, this route witnesses an
average traffic of approximately 85,000

23
MoRTH

22
 Business-friendly contractual
structures – A step forward for
attracting private investments

The government has introduced various investor- technology for traffic and road-condition monitoring

friendly changes in the MCA for the development of and additional performance security.
highways under the PPP mode. Some of the Incrementally, the revised MCA is a positive
important policy decisions related to the BOT (toll) development towards reviving the BOT (toll) project,
model, TOT model and HAM taken during 2020 are a dominant mode of execution until fiscal 2013,
detailed below. which lost interest, due to lower traffic than the
projections, alternative roads and a decline in
BOT (toll) projects
economic activity. Under the revised MCA, the
BOT (toll) has taken a back seat in the way NHAI has revenue potential of a project would be reassessed
gone about the bidding of roads in past few years. every five years during the concession period, as
The struggle with sharing of risk between against every 10 years done previously. Earlier, the
stakeholders and the participants undergoes traffic potential of the project was tested in the 9th,
various tweaking to make the model concession 10th and 11th year from the date of signing the
agreements palatable to all stakeholders. To concession agreement. This is a positive
address the incremental concerns, the ministry development, as the concession period can now be
approved the revised MCA of BOT-toll projects in extended with more certainty than before, in case of
2020. Considering the key challenges faced by a shortfall in the revenue target, thus reducing the
stakeholders, a few changes in the BOT (toll) risk of lower traffic. As a result, the debt obligations
framework have been introduced. The changes had can be managed more prudently and reduce the
been proposed keeping in mind the reforms related liquidity risk of the project. Further, the appointed
to project preparation and conditions precedents, date for the project would be given only after 90% of
dispute resolution, limitation of liability, ease-of- the required land is available, compared with the
doing business, incorporation of new policies – earlier requirement of 80%. The revised norm is a
such as a policy for harmonious substitution, policy positive development, given the additional certainty
for resolution of stuck projects – and other it adds to land availability and reduce the risk of
miscellaneous reforms, such as the use of latest project de-scope and eases the process of tying up

23
project debt. Some of the other changes, such as
limiting the liability to 100% of total project cost,
inclusion of a dispute resolution board and timely
redressal within 90 days are welcome steps.

HAM projects
The changes introduced in the provisions of HAM
MCA will usher in new easier rules for road
developers. Among the measures taken to revive
interest in HAM, which came into existence in
CY2016, is the government’s decision to double the
frequency of payment of upfront construction
support (40% of the project cost) to 10 from five
earlier. The measure will help concessionaires
better manage their working capital requirements
and should also provide more comfort to lenders in
the event of termination. For the remaining 60% of
the project cost paid to the developer as annuities
over the operations period, along with interest
thereon, the new rules say interest will be due and
payable on the reducing balance of completion cost
at an interest rate equal to the average of one-year
marginal cost of funds-based lending rate (MCLR) of
the top five scheduled commercial banks plus
1.25%. Earlier, the interest rate was linked to the
Reserve Bank of India (RBI) bank rate plus 300 basis
points. The interest on annuities for HAM projects is
sizeable, amounting to around 45% of overall
In another move to attract more participation in the
inflows during the concession period. Linking the
construction of highways, the government had
interest rate to MCLR will increase the overall
relaxed technical and financial qualifications for
inflows for a HAM project.
bidders of national highway projects under HAM.
The move to change the way interest is calculated Under the modified rules, a bidder will be qualified
on annuities paid to developers and reduce the to bid for a HAM project if it has a minimum net
equity lock-in period post the construction period to worth of 15% of the estimated project cost (EPC) at
six months from two years and the inclusion of a the close of the preceding financial year, as against
dispute resolution board are other positives 25% earlier. The capital cost of the project should
expected to boost investor interest. Overall, the new be more than 5% of the amount specified as the
HAM agreement has incorporated all the issues estimated project cost, as against more than 10%
which cropped up during the past few years since earlier. Further, no prior experience of the bidder is
2016. All the new clauses are likely to result in a required for constructing tunnels up to 200 meters
better environment for road developers – less and bridges up to 60 meters length. The widening of
working capital, faster dispute resolution, and more the scope for technical bids and relaxation in
inflows. financial capacity will certainly enhance
competition in the highways sector.

24
 established. This enables private investors to
perform a more robust due diligence and establish
willingness to pay while bidding for the project.

The NHAI has successfully monetised brownfield

asset bundles 1 and 3 under the TOT model over the
last few years and has more bundles in the pipeline.
The concession of the first bundle (~681 km) of TOT
commenced from. August 29, 2018, with the Rs
9,681.50 crore received from the concessionaire
having been deposited in the Consolidated Fund of
India (CFI)24. Later, ~566 km of NHs were monetised
under TOT Bundle-3, amounting to Rs 5,011 crore.
The appointed date for the same was declared on
October 20, 2020. The concession fee of Rs 5,011
crore was realised on October 19, 202025. Recently
TOT bundles 5A1 and 5A2 were auctioned for ~Rs
630 crore more than the base price of Rs 1,621 crore

Earlier, the TOT model considered existing projects

that have been generating revenue for a minimum
period of two years. The proposed amendments
have reduced this period to 1 year of revenue
generation, so as to expand the ambit of the TOT
model. Another significant change in the existing
model is that the NHAI now would have the power to
vary the concession period of the projects to 15-30
years, as opposed to the current concession period
of 30 years.
TOT projects
The floor price or the initial estimated concession
The MoRTH devised the TOT model to recycle and
value (IECV) will now be disclosed by NHAI only after
raise funds from the monetisation of its operational
receipt of technical bids and after declaring the
road assets. The model securitises toll revenue
selected bidder. The highest bidder will take the
being generated by the existing government-owned
bundle on a long-term lease. The decision to let the
road assets and utilises the proceeds to finance the
bidders discover the price should smooth NHAI’s
development of new road assets. One of the key
asset monetisation programme, crucial for its
benefits to private investors is the minimisation of
highway development and addressing overburdened
revenue risk with the establishment of revenue
debt repayment obligations.
streams. There are no construction risks such as
land acquisition delays, contingencies and cost With these changes incorporated, NHAI, in
escalations. Moreover, estimation of traffic September last year, invited bids for the fifth TOT
becomes easier than with a greenfield project since bundle package, its smallest-ever tender for asset
the operational history of the asset is well monetisation in two packages with a total length of

24
MoRTH Annual Report 2020-21
25
MoRTH Annual Report 2020-21

25
~160 km. Both packages got awarded with around  For privately-placed, unlisted InvITs, leverage
Rs 630 crore more than the base price for its fifth was to be determined by the issuer after
round of TOT auctions. Moreover, in the 2021-22 consultations with investor(s). The underlying
budget, the government has set a target of Rs assets could be completed, under-construction,
10,000 crore for the NHAI to raise by monetising its or both.
operational stretches in the current fiscal year. As
Later, under the measures announced in Union
per recent media releases in May 2021, the NHAI
Budget 2021-22, investments in InVITs were made
plans to offer 1,500 km — 32 projects — under the
more attractive, while deepening their capital
TOT model this financial year as it chalks out a fresh
raising avenues. As per the announcement, the
monetisation plan.
trusts can raise debt capital at competitive rates,
Infrastructure Investment Trusts while dividend payment to InVITs is exempt from tax
deducted at source (TDS). Abolishment of TDS on
Over the last few years, India has introduced newer
dividend payments to InvITs should ease
and easier investment opportunities for a wider
compliance and enhance the efficiency of these
range of retail investors via Infrastructure
channels.
investment trusts (InvITs). InvITs are institutions
similar to mutual funds that pool investments from In order to enhance the NHAI's resource
various categories of investors and invest them in mobilisation, the Cabinet had accorded approval
completed, revenue-generating infrastructure authorising the NHAI to set up an InvIT to monetise
projects, thereby generating investor returns. completed NHs with a toll collection track record of
Structured like mutual funds, InvITs have a trustee, at least one year. This will be India’s first
sponsor(s), investment manager and project government-sponsored InvIT. Building on this
manager. While the trustee (certified by the momentum, the NHAI is ready to come out with its
Securities and Exchange Board of India or SEBI) is own InvIT, the current status of which is as under:27
responsible for inspecting the performance of an
i. SBI Caps has been appointed as transaction
InvIT, sponsor(s) are the promoters of the company
advisor
that set up the InvIT. As of May 2021, India has 15
InvITs that are either public or private.26 ii. IDBI Trustee Services Limited has been
appointed as trustee
Starting with the IRB public InvIT in 2017, the InvIT
model has gained traction over the last few years, iii. Company secretary has been appointed to
with around five deals materialising in the roads form SPVs and Trust
and highways sector. SEBI had come up with
iv. Registration application for NHAI InvIT has
amendments for both publicly and privately-issued
been submitted to SEBI
InvITs in March 2019 to encourage investments.
Some of the major amendments were: v. SPVs have been incorporated

 Publicly-issued InvITs would be in multiples of a vi. The NHAI Board has approved investments in
lot, each consisting of 100 units. Value of the two newly-incorporated SPVs
allotment lot would be Rs 1 lakh
vii. The investment manager of the NHAI InvIT has
 Leverage limit of publicly issued InvITs was been appointed and accorded the name of
increased from 49% to 70% of InvIT assets “National Highways Infra Investment

26
Invest India
27
MoRTH Annual Report 2020-21

26
 Managers Private Limited” (NHIIMPL). developing facilities, such as commercial spaces
NHIIMPL has also been incorporated under the and logistic parks, in addition to the road user
Companies Act, 2013. The management WSAs, wherever possible.
structure of the Board of Investment Manager
Of the various contracting options, such as (i) fixed
and the appointees thereon have been
rental agreement, (ii) minimum guarantee and
approved.
revenue share; and (iii) pure revenue share, the
Contractual structures for WSAs second option, i.e., the hybrid option with minimum
guarantee and revenue share, is the most optimal
The NHAI is developing 23 new highways, including
choice for both the lessor and the lessee. The
a network of expressways and economic corridors,
minimum guarantee component provides the
spanning ~7,800 km at an estimated cost of ~Rs 3.3
authority a steady stream of revenue from lessees.
lakh crore28. Land parcels have already been
The revenue-share component enables the
acquired along a few greenfield access-controlled
authority to get a share of upside in revenue from
corridors, such as Delhi–Mumbai expressway,
WSAs. From the viewpoint of a lessee, the hybrid
Amritsar–Jamnagar Economic Corridor and
model with a fixed minimum guarantee and revenue
Ambala–Kotputli corridor, primarily for the purpose
share de-risks lessees, as the lessee is protected
of development of road-user WSAs. The NHAI has
from the potential uncertainty in revenue with
already called for bids for the appointment of lessee
limited minimum guarantee compared with a higher
for development and operation of these WSAs. The
minimum guarantee expected in the current model.
lease agreement for the development and operation
The de-risking makes the project more attractive,
of WSAs has already been approved by the
potentially attracting higher number of interested
competent authority.
bidders, which, in turn, will lead to better price
For land parcels along greenfield access-controlled discovery for the authority.
corridors, the warm shell is being constructed by
In case of land parcels along the brownfield
NHAI through the highway contractors. The lessee
corridor, where access enforcement is not possible
will be responsible to develop a fully functional
by the authority, the level of future competition is
facility from the warm shell, as provided by the
unrestricted and the risks for lessees’ future
lessor (NHAI), capable of immediate effective
cashflow is higher. In such a scenario, the lessees
commencement of day-to-day operations of user
will be constrained in bidding aggressively for a
facilities for usage and convenience of expressway
minimum guarantee, which translates to a fixed
users. The lessee is required to make the facility
expenditure for the lessee, irrespective of the
operational by installing the necessary fixtures,
business potential of the site. Therefore, the
furniture, furnishing and equipment in the warm
bidding parameter for land parcels along brownfield
shell constructed by the lessor (NHAI) by following
corridor will be in the proportion of revenue share
the site-specific layout and façade drawings
for both fuel and non-fuel facilities, whereas the
provided by the lessor (NHAI). However, land
minimum guarantee will be a pre-defined fixed
parcels along existing brownfield national highways
value as determined by the authority in the lease
projects will be handed over to the lessee on an ‘as
agreement. Since revenue share is the bidding
is where is’ basis for construction, development and
parameter, which is linked to the actual
operationalisation of WSAs by the lessee. Further,
performance of the site, the bidders will be more
the NHAI is also exploring the possibility of
aggressive in this case than the current model with
commercialisation of these land parcels by

28
Times of India, 13th August 2020

27
minimum guarantee as the bidding parameter. In line with the above, the following bidding
parameters govern the appointment of WSA
In case of land parcels along greenfield access-
developer:
controlled corridors, the level of competition is
restricted and the unknown risks to revenue (as of Contracting model: Minimum
future competition) for the lessee is minimised, as Guarantee and Revenue
Sr. Type of land Share
the access will be controlled by the authority. This
No. parcel
reduces the uncertainty in future revenue for the Bidding Predefined
lessees and even with minimum guarantee as the Parameter fixed value
bidding parameter, the lessee is expected to bid Along brownfield Revenue
1 Lease rental
aggressively. Therefore, in case of land parcels corridor share
along the greenfield corridor, the bidding parameter
Along greenfield Revenue
will be the minimum guaranteed payment, whereas 2 Lease rental
corridor share
a proportion of the revenue share for both fuel and
non-fuel facilities will be a pre-defined fixed value The period of lease will not be more than 30 years
as determined by the authority and defined in the for sites with no constructed asset, i.e. in cases
lease agreement. where the WSA will have to be completely
developed by the private party/ developer. On the
other hand, for sites where the authority has
already undertaken construction of WSA, the lease
period will not be more than 15 years.

28
 Emerging trends and
technologies

Despite constraints posed by the Covid-19 reduce their engagement of labour and achieve
better workmanship. Moreover, the growing
pandemic, the pace of highways construction in the
country has touched a record 37 km per day in fiscal demand for better quality of roads will necessitate

202129. The NHAI awarded 141 projects (4,788 km) more digitalisation for benefits, such as higher

worth Rs 1.71 lakh crore in fiscal 2021 and is productivity, cost control, perfect predictability,
efficiency, quality, safety, keeping projects on track
planning to award projects worth around Rs 2.25
and timely completion. Some of the advancements
lakh crore in the current fiscal30. In planning the
made in the road sector are discussed below.
development and construction of a road, it is
important to recognise the close relationship
between adoption and implementation of new and Design and implementation
emerging technologies in road construction. The Government of India has been very proactive in
Technological advancements made in this area have integrating new and emerging technologies over the
quickened the speed of construction and lowered lifecycle of the road asset. During the planning and
the project lifecycle cost. design stage of the project, surveys are being
conducted with the help of satellite imagery, using
The importance of technological advancements is
drones and LiDAR (Light Detection and Ranging).
growing leaps and bounds, with Covid-19 having
LiDAR is a remote sensing technology that uses
accelerated the motions. The pandemic has led to
laser pulse for scanning and measuring three
reverse mass migration of construction workers,
dimensions of an object with a 3D data capture. It
making technology more appealing to construction
performs point-cloud scanning by bombarding
companies. This has prompted greater reliance on
millions of laser points and measures the reflected
tech-savvy equipment with agencies trying to
scan. LiDAR can be mounted on various platforms
achieve speed with more automated machines to
such as terrestrial, mobile and airborne, depending

29
Hindu article dated April 02, 2021
30
Financial Express article date April 10, 2021

29
upon the object to be scanned. The planning and material shortage, reduced the need for
estimation of the projects are being undertaken supervision, helped improve the utilisation of
along with LiDAR, AutoCAD and other software. resources, and helped manage projects more
effectively in real time from remote locations.
LiDAR also plays an important role in Detailed
Project Reports (DPRs) for road expansion or new In another tryst with technology to cut lengthy
road development, along with a 360-degree view administrative processes, while bringing better
panoramic camera. LiDAR captures all road assets transparency and project progress tracking on a
such as sign boards, signals, toll plazas, buildings, real-time basis, the NHAI became the country’s first
utility poles, cables and dividers with 3D geo- government-backed construction sector
references along with true pictures. The entire 3D organisation to go ‘fully digital’ with its cloud-based
model is developed on the basis of these inputs Data Lake software. The integration of IOT and
with high accuracy. It further helps decision makers project management software with Data Lake was
to take effective and robust decisions. done primarily to improve the efficiency in the
implementation phase and identify
Figure 10: Road asset mapping using LiDAR data
bottlenecks/delays in various project approvals and
other administrative processes within the
organisation. In terms of next steps, artificial
intelligence (AI) is being incorporated in Data Lake,
which will use the data and create an efficient
advance-alert mechanism in various aspects of
construction progress, material handling and road
safety.

Image Source: Ceinsys Tech. Ltd.

During implementation and road construction

stage, IOT sensors are being incorporated to get a
better on-ground view of the project without being
on the site. Digital tools and technologies fitted into
construction equipment, such as telematics, GPS,
data collection, condition monitoring, secure
remote maintenance and connectivity options are
being extensively used in the road construction
sector to measure the real-time progress of
projects. Road construction got more tech savvy
with the use of precast and prefab construction,
composite construction, the use of geo textiles, geo
composites and geo grids in various road
construction elements and the use of raw material,
such as plastic, pond and fly ash. These
technologies have reduced the dependency on
labour at site or compensated for labour and raw

30
Highway operations Given below are the some of the other key
technology-based initiatives to improve the
Technology-based initiatives are increasingly being
operation and management of highways in India
adopted to improve the operation and maintenance
of highways in India. A substantial increase in Smart highways
budgetary allocation and the provision to raise more
Smart highways have the opportunity to turn from
funds from the market to build and expand
serving a singular purpose of being the backbone of
highways may accelerate road construction, but
a country’s transportation system to providing
maintenance of larger sections of the NHs remains
additional value through solar powered vehicle
a challenge for the implementing agencies. To
charging, electric vehicle charging lanes, safety
enhance transparency, uniformity and to leverage
feature implementation and gathering of key data
the latest technology, the NHAI has recently made
points for both road users and transportation
mandatory the use of drones for monthly video
administrators. Such data related to goods and
recordings of NH projects during the development,
people movement will have tremendous
construction, operation and maintenance stages.
applicability. Case study – The Ray – Ecosystem of
Apart from this, mandatory deployment of NSVs to
smart road technologies
carry out road condition surveys on the national
highways will enhance the overall quality of the The Ray is an ecosystem of smart road technologies
highways as NSVs use the latest survey techniques being built in a collaboration between the Ray C.
such as high-resolution digital cameras for 360- Anderson Foundation, Interface, a multinational
degree imagery, laser road profilometers and other carpeting manufacturer, the Georgia Conservancy,
technology to measure distress in road surfaces. and Georgia Tech’s School of Architecture. The Ray
Such initiatives will help tackle existing challenges has been implementing new ideas and technologies
and ensure proper maintenance of NHs. to create a regenerative highway ecosystem on the
18-mile stretch of I-85, and several pilot projects
are already underway. Some of the technologies
involved are described here:

Tire Safety Check Station (WheelRight): It

measures the pressure and tread depth of the
tires on vehicles traveling up to 10 miles per hour.
The system has a monitor connected to an
automatic number-plate recognition system.
Solar-powered vehicle charging: Located along
The Ray are several solar-powered Photovoltaic
for Electric Vehicle charging stations, which is a
significant advancement in creating the
infrastructure needed to support EVs.
Solar-paved highways: The Ray is the testing
ground for Wattway’s pilot project in the US – A
pavement that uses traditional solar cells,
protected in a patented frame, allowing the road
surface to generate clean energy.

31
 Smart studs (future plan): Solar-powered smart Corporation of India (NPCI) and is based on the
studs illuminate in different colours and patterns National Electronic Toll Collection (NETC)
to communicate a variety of crucial alerts to programme. It offers an interoperable nationwide
drivers and passengers. EV charging lanes toll payment solution, including clearing house
(future plan): By wiring roads to create an services for settlement and dispute management.
electromagnetic field that transmits energy to a
FASTag is a device that employs radio frequency
receiver that supplies the car’s battery, drivers
identification (RFID) technology for making toll
could get the power they need while still in
payments directly, while the vehicle is in motion. A
motion — no stopping is required.
FASTag (RFID tag) is affixed on the windscreen of
the vehicle and enables a customer to make the toll
In India, the concept of smart highways have gained
payments directly from the account linked to
significant momentum with Eastern Peripheral
FASTag.
Expressway (EPE), India’s first smart and green
highway of 135 km length, inaugurated by Prime
Minister Narendra Modi in 2018. Some of the
various components of smart highways included
solar powered plants, closed tolling system,
rainwater harvesting, weigh-in-motion (WIMs)
equipment, intelligent traffic management and
video incident detection system (VIDS).

As per a recent statement by Gurugram

Metropolitan Development Authority (GMDA), it is
planning to set up smart traffic signals at new
traffic locations across the city and convert the
existing signals into smart ones wherever
necessary. The move is likely to ease traffic
movement and keep constant vigil over the
functioning of traffic signals. A smart traffic signal
is automated and, unlike manual or conventional
signals, it takes into account the volume of traffic
on a real-time basis. The GMDA’s long-term aim is
to link all of the city’s traffic signals to their
Integrated Command and Control Centre (ICCC),
from where they can also monitor their functioning.

FASTag-ing Highways and GPS-based toll

collection

As a part of the government’s Digital India initiative,

Electronic Toll Collection (ETC) through the
implementation of FASTag has become mandatory
from February 16, 2021, on all national highways.
Following this, toll collection through FASTag has
seen consistent growth. The digital system has
been developed by the National Payments

32
Figure 11: NETC FASTtag issuances and amount collected31

40.00 3,500.00
35.00 3,000.00
Million numbers

30.00 2,500.00

Crore
25.00
2,000.00
20.00
1,500.00
15.00
10.00 1,000.00

5.00 500.00
0.00 -
Apr-17

Aug-18

Dec-19
Aug-17

Aug-20
Dec-16
Feb-17

Oct-17
Dec-17

Apr-18
Feb-18

Oct-18
Dec-18

Apr-19

Aug-19
Feb-19

Oct-19

Apr-20
Feb-20

Oct-20
Dec-20

Apr-21
Feb-21
Jun-17

Jun-18

Jun-19

Jun-20
Tag Issuance Amount

There has been a significant increase in FASTag encourage more investors to invest in the highway
issuance in the country – from 2,08,761 in infrastructure of the country.
December 2016 to 3,34,48,613 in May 2021.
In another tryst with technology to ensure seamless
Electronic toll collection via FASTags has plugged vehicle movement through toll plazas, GPS-based
revenue leakages substantially, leading to toll collection is likely to be implemented within a
significant increase in daily toll collections. During year in India, as per a statement by Union Minister
the first three quarters of fiscal 2019-20, the of Road Transport and Highways, Nitin Gadkari in
average daily toll income for the NHAI rose sharply March’2021. Both the Ministry of Road Transport
to Rs 80-85 crore in December 2019, from Rs 60-65 and Highways and the Indian Highways
crore during the April-June quarter of fiscal 2019-20 Management Company Ltd (IHMCL) have swung into
32
— an over 40% jump . Most recently, given the action ever since the Union Minister made the
mandatory toll collection through electronic announcement in the Lok Sabha in March. While the
FASTags from February 16, 2021, daily toll ministry is conducting a pilot project on global
collections have breached the Rs 100 crore mark, positioning-based electronic tolling on the Delhi-
recording the highest-ever collection of Rs 103.94 Mumbai National Highway, the IHMCL has invited
crore with over 64.5 lakh daily transactions on bids for consultant for GNSS-based tolling.
February 25, 202133. The smooth implementation of
With the GPS-based toll collection, the physical toll
FASTag has witnessed growth of 20% in terms of
booths will be removed and tolls at highways will be
electronic toll collection transactions and 27% in
collected based on GPS imaging (on vehicles). This
terms of collection of user fee through FASTag 34.
move aims to ensure a fully seamless, toll barrier-
FASTag implementation has also reduced the
free movement for vehicles, enhanced audit control
waiting time at national highways fee plazas
and centralised user accounts for the toll operator,
significantly, resulting in enhanced user experience
along with adherence to green norms by curtailing
through automation. This will also enable correct
the idling fuel wastage.
valuation of road assets in the future and will

31
National Payments Corporation of India
32
CNBC article dated December 18, 2019
33
Mint article dated February 26, 2021
34
Footnote 33

33
Way forward

We expect to see a paradigm shift in highway would go a long way in creating a financially

construction in India from the conventional practice sustainable road development ecosystem. However,

of merely widening the existing highways to for monetisation to be attractive, the underlying

construction of new, modern highways that are assets will have to be intrinsically good, with good

sustainable and developed using advanced growth prospects backed by attractive data and
pricing. In addition, robust management and strong
technologies.
governance is essential to attract investors,
The highways of the future will include greenfield particularly in InvITs.
access-controlled expressways and economic
The development of MMLPs at various locations
corridors, and offer quality services to highway
across the country will be instrumental in improving
users – both for passenger and freight transport.
efficiencies in the logistics value chain. The
Increasing use of technological advancements and
logistics sector will be the primary beneficiary of
a greater emphasis on sustainability, e-mobility and
MMLPs and greenfield expressway corridors. That
eco-friendly construction will be some of the key
said, for this to work, the proposed MMLPs will
future trends.
need to be well-integrated with both the state and
The business prospects for the roads and highways national highway network. Last-mile connectivity
sector in India seem highly promising in the near challenges have bedevilled a number of logistics
future, with strong government push and private projects in the country, such as ports, which has
sector interest being reflected in the current pace created unnecessary bottlenecks.
of project awards and construction. However, the
The government’s keen focus on development of
rising debt levels of NHAI indicate a need for
exploring alternate financing options for future world-class allied infrastructure facilities, such as
WSAs, is commendable. This will not only enhance
projects.
user experience, but also generate widespread
Asset monetisation will gather pace in the roads employment for the local population. It is important
sector as engineering, procurement and that these WSAs be developed in a holistic manner,
construction (EPC) companies are expected to incorporating best practices from around the world.
deliver significant number of completed projects for Efforts should be made to attract large real estate
the NHAI and MoRTH to operate. Accelerating the and infrastructure developers who have the
programmes for InvITs and asset monetisation financial heft and vision to provide such facilities.

34
In addition to MMLPs and WSAs, new infrastructure identified and measurable KPIs to grade the
avenues such as development of utility/ optic fibre operational performance of contractors in a
ducts along highway corridors should be explored. transparent manner will help in inculcating an
This will not only provide an additional source of objective, performance-based culture in the sector.
revenue to MoRTH and NHAI, but also ensure that Similar evaluations could be conducted for overall
our highways are ready for a data-driven future. projects as well.

Expediting the execution of Bharatmala-Phase 1 The new, innovative contractual structures for PPP
will be crucial in providing expressway connectivity projects will be instrumental in attracting private
along with MMLPs and WSAs. Some of the effective sector interest and realising the full potential of the
ways for this would be (i) close monitoring and proposed initiatives. The various investor-friendly
tracking, (ii) rule-based prioritisation of projects changes introduced in the MCA for the development
with high viability and award readiness, and (iii) of highways under the PPP mode are a step forward
structured review of projects to ensure timely towards increasing private sector participation in
execution. the Indian roads sector. Sector regulators such as
MoRTH and NHAI should ensure that this positive
Evaluating the operational performance and
momentum is maintained going forward.
efficiency of contractors and developers will also be
vital going forward. A holistic framework with

35
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