Moneycontrol
Mar 16, 2017 08:42 AM IST | Source: CNBC-TV18

Road transport ministry striving to reduce logistics costs to aid Make in India, says Gadkari

The Ministry of Road Transport and Highways is planning to ramp up its road construction speed to 30 KM per day from the current 22 KM per day by the end of March.

The success of Prime Minister Narendra Modi's Make in India initiative hinges on logistics costs in the country, according to Nitin Gadkari, Minister for Road Transport, Highways and Shipping. To achieve reduced costs, the ministry plans to speed up road construction and setting up logistics parks across the country, he said.

The ministry  wants to expedite daily road construction limit to 30 km from the current 22 km by the end of March. Gadkari said the government will also be giving out projects for the construction of over 15,000 KM by March-end.

The government, he said, is also going to transform India's logistics from a point-to-point model to a new hub-and-spoke model, which will be centred around a logistics park. "All ministries are keenly planning a multi-model logistic park. We have also appealed to the State governments to make the logistics park jointly with the Central government," he said.

He said the ministry expects investments of over Rs 50,000 crore in the logistics space.

He also said that many of the projects which have been sanctioned by the Road Ministry, are currently facing land acquisition problems. Financial closure is another issue that is being faced by the highway sector.

Although he is sure that the issue of financial closure will not be a problem in achieving targets.

The ministry is giving high priority to the EPC (Engineering, Procurement, and Construction) projects, as the sector continues to struggle. A bounceback of the EPC projects will be a positive sign for all investors, he said.

Gadkari is also actively looking at options to boost water transport. The ministry, he said, is working on around 111 rivers to enable water transport through them, starting with the holy river Ganges.

The ministry has also started making dry ports to give the shipping sector a big boost, he said.

He also said that the ministry is looking to promote bio-fuels and electric vehicles. It also plans to start using LNG as fuel for busses and ships.

Below is the transcript of Nitin Gadkari's interview to Surabhi Upadhyay on CNBC-TV18.

Q: We are coming after 2-3 months period of demonetisation when there was a bit of a question mark on traffic growth, on toll revenue as well. How do you sum up the health of the Indian highways as we are rounding up FY17?

A: Today, as far as traffic density is concerned, our highways are moving fast. Even for our hybrid model, we are already getting good response from the investor and the highway speed is also increased. I am confident that end of March, we will go up to 30 km per day. Presently, we have 22 km per day. Now, we are planning for a big mega-conference on convention, on logistic, on facilities which we want to develop in the country.

Actually, the dream of Prime Minister, Narendra Modi, Make in India, will be achieved only by reducing the logistic cost. So a lot of new technologies are there and particularly, the Railway Ministry, Commerce Minister, Agricultural Ministry, Aviation Ministry and Road Ministry and Shipping and inland waterways, where we are now keenly planning for making of integrated approach for logistic park.

And a multimodal transport hub, multimodal passenger hub, this is a new concept by which we want to develop the logistic park in the country and where we have the arrangement for truck terminal, having the truck transporters and truck maintenance, mechanics and at the same time, the banks and offices and area, there will be a big storage system using modern technology for food grains, fertilisers, cement, pre-cooling plant, cold storage.

And in 36 big cities, we are planning going for ring-road where we can make these types of arrangement as a logistic park. It is an integrated approach, so that is why the conference is for three days and we have already invited the Prime Minister for inauguration and I am confident that we are expecting the investment of more than Rs 50,000 crore in the logistics sector.

Q: Let me go over some of these points one by one and let us start with the number that you gave me first. 30 km, that is the rate that now the Highways Ministry has reached because I think it was around 17-18 km earlier by the end of December. So, this 30 km a day, this is as we are speaking in the month of March? And would you retain targets of 41 plus which was a target for this year, for the next fiscal as well?

A: Presently it is 22 km per day. But the end of March, still we are expecting there are some big projects. We are supposed to complete before March and we are trying for that, it is a target. But presently in the Ministry, it is come to 22 km per day because after December also, we added it. Now, it is difficult because there are 2-3 big projects are going on and I am expecting we are trying our level best to complete that project before March end.

Also, we are targeting for giving contracts for more than 15,000 km up to the end of March. That is also war footing we are doing. We are trying to do it, but it is the target but I am expecting that we will go up to complete that target.

Q: That is pretty important – you are looking at hopefully reaching 30 kilometres (Km) a day by the end of the month and the project award target of 15000 Km, that is also in tact you are saying?

A: Yes. After end of March we will get the total data and after that it can be appropriate for me to say. Already we are working very fast on war footing level to complete the target of giving contracts to 15000 kilometre and at the same time complete the target of 30 kilometres per day.

Q: Let me quote one of the industry reports – these are just some of the concerns that different rating agencies are highlighting. I am quoting from India Ratings report, they are giving their outlook for the infrastructure sector, road sector for the year and one of the concerns is that expectations of sluggish traffic growth which is why India Ratings at least is maintaining a negative outlook. What do you think have the lessons been because the target was originally 40 Km a day. It was around 17-18 Km and now it has improved to 22 Km, you are hoping to go to 30 Km. So, what were the reason, why the original target couldn’t be met? How are you hoping to better this in the New Year?

A: Everywhere we must have a big target. Target is for the ministry, for the people who are doing work, to give them a target that you have to meet this target. Day by day we are trying for that but it is a very difficult task because the land acquisition is a big problem. The system for taking decision also, there is a long term system for that. At the same time we are making DPR, got a lot of clearances somewhere, there are some judicial problems, somewhere land acquisition problem is there. Somewhere there is problem for the bankers. 48 projects were waiting for financial closure. So, the problems are everywhere but my spirit behind all this thing is to give a good target, everyone tries his level best to complete that target. So, target is very big and it is very high. 30 Km is not a small thing, even 22 Km is also a big thing. However still for maintaining the tempo always there is a big target which motivates and inspires the people to work more, that is the basic philosophy behind it.

Q: Can you throw some more light on project closures and finances wherever that might be a concern. We have some odd numbers – you mentioned a couple of projects, how many projects would be there which are awaiting financial closure because that is one of the concerns that has also been highlighted. Are you talking to the Finance Ministry, what is the bankers approach to this to try and expedite a lot of the stuck highway projects in the New Year?

A: In the project which is already sanctioned by the ministry, there is some problem related with land acquisition. Previously it was decided by the ministry that without 80 percent of land acquisition we cannot offer appointment date. However after that we have changed it and now we have decided after 50 percent of the land is acquired and the process for other land acquisition is in the process, then we are ready to give the appointment date. So, there is a relaxation which we are giving in land acquisition.

Second thing is financial closure – I had meeting with the bankers in Mumbai a month ago. I discussed this issue in very detail with the bankers and I assured them the investment in the highway sector is a secured investment because we are getting the toll from it.

In the past when there was a problem with land acquisition, environment, forest clearance, not taking decisions, these are not the problems. Presently the sector is moving fast and I requested them that you should give priority to invest into highway sector. So, today the impression of the bankers, impression of the investors has changed. Once upon a time it was not a good impression. Today after our good performance now all stakeholders are giving good response. I am confident that we will achieve our goal.

Q: Any sort of guidance or any sort of estimates you can give us in terms of, if you have set a target for yourself and for the Ministry? How many stuck road projects, highway projects are you hoping to unlock in FY18? Is there some internal thinking?

A: Presently, the thinking in the ministry is we should give priority to engineering, procurement construction (EPC) project because still I feel that the health of the sector is not in a good position. It is improving. Compared with the past the sector is doing good. Good performance is there, but still. Now we have decided to give the priority for making EPC project by which it gives a positive signal to the investor. At the same time, health of the industry also will be changed and it will be more easy for us to get the investment in public-private partnership (PPP) or build operate transfer (BOT).

Q: Now let us talk about this mega infrastructure summit, actually inter-ministerial summit that you are looking out in May and there are some pretty ambitious fund raising targets that are being laid out there as well. So, what is the thought process and when you are talking about multimodal logistics, what is it that the ministry is really aiming at?

A: Already in our shipping ministry, in particular the ports, we have now started making dry ports, just like in railway Concor is doing. Then we are also planning, we have already started work in Jalna and Wardha in Maharashtra. We are making a satellite port also.

The second thing is, we have already decided to convert 111 rivers into waterways. In ganga, already work has been started and we are making 40 water ports there and three multimodal. One is Varanasi, Haldia and Sahibganj and from Sahibganj, you can export anything to Bangladesh, Myanmar and South-east Asia. At the same time, we can take material from Sahibganj to Chittagong. We have already signed an agreement with Bangladesh and from Chittagong, by road, we can go to the Northeast. That is going to reduce the logistics cost.

At the same time, we are making the railways and the highways to be in a one logistic park, then it can be easy for transport. Somewhere we are going to connect it to the airports. Our government is planning for making of 400 regional airports. So, the integration between the road sector, ports sector, inland waterways, railways and aviation, this integrated approach of development is very important. It is depending upon the geographical situation. So we will make the research and study of every projects.

All stakeholders and all the departments, they have a policy for that and we are open. In this conference, there is a exhibition which is of new technology and we are open. Even in National Highways Authority of India (NHAI). We are open, if anyone gave 1,000 acre of land, we can make joint venture, we can give him access, we can bear the cost of construction, road construction, we will see that we will get all type of clearances and by joint venture, we can make the logistic park.

At the same time, I am appealing to the state government. They can also participate in it, they can make the logistic park with the joint venture with the central government and our offer is with the central government corporation, just like Food Corporation of India, many corporations are there, even we can make it with the state government corporation and private investors. So, now whatever suggestions we receive from the investors and the stakeholders, we are very open on it and we will go ahead and we are welcoming the maximum public private investment in the sector.

I am expecting an investment of Rs 50,000 crore in the logistics park and this conference will be a very important conference for the investors, those who are particularly interested in logistics.

Q: So, Rs 50,000 crore worth of investment, are you expecting most of this to be primarily domestic investment? Are you expecting to hear from some big-ticket foreign investors as well in this summit?

A: Now, the summit is open for everybody. It is for foreign investors, it is for Indian investor, it is for government entrepreneur. Any corporation belongs to state or central government, even if it is going for Agricultural Ministry, a lot of agencies are there in the Commerce Ministry and anyone can take initiative in it. It is open for everybody. And suppose they have some good suggestions, we will also think on it.

Q: I now want to talk to you about the integrated transports and logistics policy because you have said that you really want to increase the speed of freight which is flying on India\'s highways and in fact, you want to double it. When does this policy see light of day and what can we expect in terms of some of the salient features which will help you achieve this target?

A: Already in this conference, the different departments and stakeholders and from my Ministry, we are giving proposal of our policies to the stakeholders. We are going to discuss all these things in the conference, about technology, about the policies.

And I feel that by Federation of Indian Chambers of Commerce and Industry (FICCI) and Confederation of Indian Industry (CII) as our partner and by which we are expecting the investors from all over India, also foreign investors and with their suggestions, with their experience in the other countries, whatever good suggestions we will receive, on that basis, we will think about it.

Q: Talking about FY18, if you could shed some light on the targets and the thought process that you have? For instance the project award target, are you looking at upping it and also the road construction numbers that you think are feasible for FY18?

A: When I declare targets you never give me any appreciation for completing the good record. Target is a target. Suppose a student passes with 75 percent father and guardians they say why you are not getting 80 percent. If he gets 80 percent then why not 85 percent.

Q: You already must have a blueprint of sorts in place in your head. So, what are you looking out for in FY18? What are you going to tell your top officials to look at?

A: The target is very high. NHAI and National Highways and Infrastructure Development Corporation Limited (NHIDCL) these are our two very powerful hands. At the same time we want to take the help from the stakeholders in the state governments – state PWDs. Now we have started the work of Express Highways. This year we are going to start Baroda-Mumbai Express Highway of Rs 44000 crore. We are now fixing the alignment for Delhi-Jaipur, Delhi-Katra. At the same time Delhi-Meerut is moving fast now, the work is going on. Delhi Easterly Bypass we are trying to complete it before May 26 when our government is going to complete 3 years. So, things in this sector are moving fast.

We are already converting the state highway into national highway. We are now upto 1.7 lakh kilometre. In next 3-4 months it will be going upto 2 lakh kilometre.

Now you understand, 52 lakh kilometre road length we have, out of which only 2 percent was national highway – 96000 kilometre and 40 percent of traffic was on 2 percent road. However after converting it into 2 lakh kilometre, 80 percent of national traffic will be on national highway.

Road accidents is a big problem for us. We want to reduce the accidents. Now we have started FASTag. 18 percent of the toll plaza is now converted into FASTag. Now we have decided every lane will be on FASTag. We are trying to complete more than 50 percent within two months and that will reduce the time, reduce the fuel and it will be also good for pollution which we are facing.

Q: In terms of construction per day and total awards that the ministry might hope to achieve for FY18, some rough numbers or maybe a range that we can work with?

A: I don’t want to give rough number because you take that number and whatever I work with you will ask me why you are not completing your target. So, declaring target is also a big problem. However my 40 Km target is a target. In my regime I am assuring you that a day will come that we will achieve this 40 Km per day target and I will show you that the department, the NHAI, NHIDCL, we have got all potential that we can make 40 Km road construction per day.

Q: It is going to be a good day for India, for everybody who uses highways and that would be almost every single citizen here. But let me now talk about money and you mentioned the amount that you are looking to raise in the summit itself. You have earlier of course, laid out a very ambitious target of Rs 25 lakh crore. That is of course, across highways, shipping, across the infrastructure sector. You have spoken about masala bonds and some innovative ideas that the NHAI can work with. Are we going to see any of this play through in this year?

A: Already for masala bonds, we are in process. We need some approvals from the government agencies. Probably within 8-10 days we will get the approvals and we will go for masala bonds. As far as the financial position of the department is concerned, we are on a very solid track. Now, we want to monetise the project number more than 100 and where we receive Rs 1,25,000 crore.

Then the limit for infrastructure bonds is more than Rs 70,000 crore is with us. Then we can monetise other all projects which we completed in this one and two years also. Then, hybrid projects are there. And at the same time, I am confident that the investors are ready to invest in the sector and my Rs 25 lakh crore target, just I want to clear it, out of which Rs 15 lakh crore in road sector and Rs 15 lakh crore, my target is in shipping, ports and inland waterways.

Sagar Mala is a project where we are expecting a big investment. Out of Rs 4 lakh crore in Sagar Mala, Rs 1 lakh crore already we have completed the work in the port sector, mechanisation, modernisation of the port and our profit has increased from Rs 6,000 crore to Rs 7,000 crore for this year. All ports are in good profits and we are planning on making of 14 industrial clusters where the petroleum cluster, there is a chemical cluster, leather cluster, furniture cluster, automobile cluster, where we are expecting the investment of Rs 8 lakh crore in the industrial clusters.

And this is the most important. By adding all these things in my department, my approximately, target coming to Rs 25 lakh crore. And today, both department concerned, we are up to Rs 5,50,000 crore and up to end of March, again that is the target we are trying to complete Rs 6 lakh crore and then next we will try moving fast and to get it to be more done in Sagar Mala because this is a very ambitious project for the government.

Q: Now I am going to talk about certain issues which are extremely consumer centric so everybody wants to know. One is what is happening with the scrappage policy and in the same light because we are talking about more environment friendly ways, there are reports that indicate that you have been in conversation with the Finance Ministry to look at maybe some sort of sops or subsidies to really give a boost to e-vehicles. So, if you could shed some light on that?

A: Actually regarding the scrapping policy and now, the Cabinet notice prepared and we are waiting for the approval of the cabinet and after that, we will implement that policy. Regarding the electric vehicles, already there was one meeting with the Finance Minister and now, the policy is under the thought of the concessions, tax, it is up to the Finance Ministry and the Cabinet.

We are pursuing the thing, but I am confident that in due course of time, we will be in a position to pass this policy into the Cabinet and we are going to encourage bio-fuel, ethanol, bio-diesel, bio-CNG and electric. I already signed the file where we are going to use LNG as automobile fuel in the port sector, in the shipping, in trucks, buses. It is a clean fuel and cost effective. So, we are also making e-auto rickshaw, e-car and e-bus. We are thinking.

Now giving some more concessions for that. We are also working in these directions and we are going to encourage the electric vehicles, bio-fuel vehicles, as a fuel. We want to use it because we are very much concerned about the pollution. Pollution is a big concern. And import substitute, cost effective and pollution free and indigenous technology is our highest priority. We are also going to move for some mass rapid electric transport.

Now we have decided to make some pilot projects because after that the security concerns are important and after that, we will implement this policy into whole of India particularly in the metro cities and that can be very useful for our traffic congestion.

Q: Goa is on everyone\'s mind and everyone is really wondering what happens tomorrow. There are allegations that are coming in from all sorts of parties. The Congress says that Mr Parrikar is a two-day Chief Minister. If you could just set the record straight on this about the numbers game in Goa and how you expect things to play out because tomorrow is probably going to be a critical day.

A: Today, there is already an assembly, the test is there, I do not want to make any comments on it. But it is a support from the regional parties and independents with BJP and I am confident that under the leadership of Manohar Parrikar, we will get majority in the assembly tomorrow also. And I am very much confident about it. I do not feel any problem there.

Regarding the congress party, they missed the bus and because their frustration, they are making a lot of allegation, the allegations are baseless.

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