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Govt reviews exit policy for road developers

10 Oct 2013 Evaluate

With an aim to attract road developers and to revive country’s highway sector, the government is reconsidering its exit policy for road developers in order to resolve taxation issues in policy. Earlier, in June, the government had approved a policy that allows infrastructure developers to exit highway projects by divesting their entire stake. The government was of the view that new policy will help to expedite implementation of road infrastructure in the country and insulate the highways authority from heavy financial claims and unnecessary disputes. Meanwhile, the government's exit policy has not attracted road developers because of its complicated structure. After the policy was formalized, highway developers had also raised concerns over the taxation structure in special purpose vehicles (SPV) executing the projects.

Meanwhile, the ministry of road transport and highways is taking measures to revive the growth in highway road projects in the country and has recently asked the government to provide flexibility in the model concession agreement (MCA) to allow the National Highways Authority of India (NHAI) board to make changes in proposed road projects, if required. Further the ministry would like provisions in the public-private partnerships (PPPs) contracts that allow re-negotiations as PPPs are long-term partnerships spread over 20-25 years. The government has entered into the 'Public Private Partnership (PPP)' programme in order to bring adequate resources for setting up of a sound and efficient infrastructural base.

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