A rapid growth in population, urbanization and commercial and industrial activities has caused an increase in consumption of and demand for transportation in India. A multi-modal transportation system (MMTS) has the potential to lighten the burden affecting the system in India by yielding the lowest cost of transportation and the lowest environmental impact. An MMTS is a system wherein different modes of transport are connected to allow seamless and economical movement of freight and passengers.
An MMTS requires a well-developed transportation system in place. Developing such infrastructure in a country requires continuous and significant investments in the transportation infrastructure of the country. The World Bank report, Financing India’s Urban Infrastructure Needs: Constraints to Commercial Financing and Prospects for Policy Action, estimated that to meet the growing transportation needs of the country, India requires an investment of USD 840 billion over the next 15 years. Not only is the investment in the transportation system in India low, but there is also a lack of sufficient investments from the private sector.
As per World Bank’s Logistics Performance Index, India’s global LPI ranking has plummeted from 35th in 2016 to 44th in 2018. Inadequate investments give rise to several other issues that adversely impact the transportation infrastructure in India.
Roadways in India are the most prominent transportation mode for freight and passengers- causing congestion and slower road speeds. Despite all the heavy lifting, this mode of transportation needs more infrastructure and investments. An efficient roadways transportation infrastructure is crucial for MMTS. There is a need for a different strategy to handle freight!
Railways, a prominent mode of passenger transportation, have been losing investors’ interest in the market. This mode of transportation operates on the principle of social welfare. Thus, freight operations subsidize passenger operations, compromising business and failing to lure investments.
The increasing urbanization and growing commercial and industrial activities offer many potential business opportunities. An effective MMTS requires a well-developed infrastructure of all modes of transportation. Additionally, the transportation system infrastructure in India needs more significant investments, thereby giving way to public-private partnerships. The National Infrastructure Pipeline allocates an investment of roughly USD 575 billion into transportation infrastructure until 2025.
Roadways, the backbone of the economy in the transportation system, presents a significant investment opportunity for investors with the Bharatmala Pariyojana programme by the government of India. National Highway Authority of India intends to fast track highway infrastructure development by way of this programme, with USD 100 billion allocated for the first phase.
In order to attract private investments in railways, the government has partnered for the redevelopment, operation and management of railway stations in public-private partnerships. Setting up railway corridors dedicated to freight transportation and high and semi-high-speed rail tracks will also attract investment by improving railways transportation logistics in India. The rapid growth of urbanization in India creates a growing need for metro expansion and construction. Metros improve transport congestion and enable last-mile connectivity. It is a crucial mode of passenger transportation in MMTS.
The lack of legal and regulatory framework for infrastructure development challenges and disputes holds investors back from bringing in much-needed finances. While the government has set ambitious targets and conceptualized plans and programmes to achieve the same, lack of investments and funding prevent the execution of infrastructure development. The government, it would appear, is keen to offer lucrative incentives and concessions to lure private investments.
Sources: Author’s experience
Citation: This Insight may be cited as InfEneTy ‘Intermodal Transportation System – Indian Perspective’ 15.05.2023
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