Infrastructure: Ports, inland waterways, roadways, logistics, railways, airports

Ports

Indian ports handled about 1,135 million tonnes of traffic in 2016–17. Of this, around 57% was handled by ports that come under the purview of the Government of India (called major ports), and the rest was handled by ports under state government purview (non-major ports). A majority of the non-major port traffic is handled across 15 ports, most of which are privately owned on long-term concessions from state governments.

The Government of India has launched several initiatives to harness the natural advantages of India and tap the vast growth potential of the maritime sector. One of the government’s flagship initiatives is Sagarmala, a programme under the Ministry of Shipping.

India has an extensive network of inland waterways and of the total navigable length of 14,500 km, 5,200 km of the rivers and 4,000 km of canals can be used by mechanised crafts. As compared to the US, China and the European Union, freight transportation by waterways is highly underutilised in India. India has now declared a plan to develop 111 national waterways. Of this, 32 new national waterways and 5 existing national waterways are to be developed in the next three years.

Roadways

We expect close to 15,000 km of highways to be awarded in FY 2017–18. The Ministry of Road Transport and Highways (MoRTH) constructed around 8,200 km of national highways during FY 2016–17 and has set an ambitious target to construct about 15,000 km of roads during FY 2017–18. In addition, there is an expectation that close to 9,000–10,000 km of roads would be awarded by MoRTH/the National Highways Authority of India (NHAI) and other Central Government agencies during FY 2017–18.

The government has also decided to award some road projects that are under operation to suitable private

investors under the TOT model of PPP, where projects would be awarded for a concession period of 30 years, with operation and maintenance risk vested with the private party. This model has been conceptualised to monetise already operational road projects and attract long-term institutional investors who eye projects with steady returns during a long-time horizon.

The days of cut-throat competition are slowly disappearing, clearing the way for a market with limited players. This is a great opportunity for foreign players to showcase their capabilities and enter the market.

Logistics

Driven by improvements in regulatory reform and the development of supporting infrastructure, it is expected to exhibit strong growth in the near future.

The implementation of GST is one of the key enablers that is expected to result in increased efficiency for the logistics sector. Prior to the implementation of GST, industry players and logistics service providers based their warehousing decisions on tax considerations at the expense of operational efficiency. However, with GST in place, the logistics sector is expected to witness supply chain redesign and network optimisation, leading to operational efficiency.

The logistics sector has witnessed significant investment over the last few years, driven by the favourable regulatory landscape and growth of the e-commerce sector. US companies have entered the Indian logistics market either directly or through the investment route. The Indian logistics sector is expected to open multiple investment avenues over the next few years in warehousing and 3PL

Railways

Thus far, the Indian market has been majorly dominated by the IR (Ministry of Railways) and other public sector entities, with private players present in specialised areas of operations only. Unlike India, the US market is dominated by private players.

There is a focus on decongesting existing railway lines through the implementation of Dedicated Freight Corridors (DFCs) and doubling of tracks. Upgrade/construction of a modernised terminal network is also being undertaken to make the best use of increased speeds and capacities.

The current railway infrastructure is acutely inadequate and needs enhancements in all aspects. The dependence of various segments of operations on the underlying infrastructure makes it imperative to have the requisite infrastructure in place in the form of tracks, signalling systems, electrification, terminals, etc.

Airports

India is expected to become the third largest passenger market by 2035 in terms of million origin-destinations (O-Ds) to, from and within the country, growing at a CAGR of 7%.[1]

The biggest challenge for Indian air carriers is volatile aviation turbine fuel (ATF) prices, which are considerably high compared to international standards. The Government of India has not reduced jet fuel prices in proportion to the fall in international crude oil prices.

Owing to increased air connectivity between the US and India, several new routes are expected to become active between the two nations. These routes will entail new opportunities for Indian as well as foreign air carriers. US carriers can either participate directly or in partnership with Indian air carriers to operate on these new routes. These developments have piqued the interest of major US airlines

Contact us

Sanjay Tolia

Sanjay Tolia

Markets Leader, PwC India

Tel: +91 22 6689 1321

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