Transport Policy Watch


A number of policies are serving to foster the development of India's transport sector.

The Integrated Transport Policy of India, 2001 was drafted to “foster the development of the various transport modes in a manner that will lead to realization of an efficient, sustainable, safe and regionally balanced transportation system” and mentions that:

The National Urban Transport Policy was adopted in 2006 to incorporate urban transport as an important parameter at the urban planning stage and ensure safe, affordable and reliable transport in the rapidly urbanizing cities of India.

In addition to these, there are the:

  • National Road Transport Policy
  • National Maritime Agenda 2010-2020
  • National Auto Fuel Policy
  • National Policy on Biofuel

There is immense potential in applying sustainable transport solutions, to reduce toxic emissions, save energy, and reduce space requirement and its subsequent urban sprawl by using elements of sustainable transport and technologies.

At the central and State level several incentives have been laid out that give a boost to foreign companies wanting to enter the Indian market. Some of these are as follows:

  • 100% FDI is allowed in logistics and warehousing.
  • FDI up to 49% is permitted for scheduled air transport services and domestic scheduled passenger airlines under the automatic route. NRI investment is permitted up to 100% under the automatic route.
  • FDI up to 100% is allowed under the automatic route in mass rapid transport systems, including the associated commercial development of real estate, in all metropolitan cities.
  • Up to 100% FDI is allowed through the automatic route for the leasing of existing assets of ports, construction and maintenance of assets, leasing of equipment for port handling and leasing of floating crafts and captive facilities for port-based industries.
  • FDI up to 74% is allowed for the following activities which have applications in ITS (subjected to prescribed conditions): basic, cellular, unified access services, long-distance, V-sat, public mobile, radio trunk services, global mobile personal communication services, Internet service providers with gateways, ISPs not providing gateways, Radio paging and End-to-end bandwidth.

At the State level, some similar incentives are:

  • The Delhi government gives a 30% subsidy on electric vehicles (EVs) from Air Ambience Fund.
  • The Maharashtra government gives full tax exemption on electric vehicles.

At a legal level, several important acts govern the laws related to the transport sector including the Motor Vehicle Act (1988), Central Motor Vehicles Rules (1989), the Road Transport Corporations Act (1950), Multimodal Transportation of Goods Act (1993, amended in 2000), the Indian Carriage of Goods by Sea Act (1925, amended in 2000), the Major Port Trusts Act (1963), the Railway Act (1989), and the Aircraft Act (1934). In addition, several other acts exist for urban transport issues; for example the Delhi Metro Railway (Operation and Maintenance) Act, 2002.


Overall, several initiatives have been undertaken in recent years by Indian agencies to enhance sustainability and clean technologies in the Indian infrastructure. The Jawaharlal Nehru National Urban Renewal Mission (JNNURM) scheme aims to integrate development of infrastructure services in cities, ensure adequate funds to meet the deficiencies in urban infrastructure services, and establishment of linkages between asset-creation and asset-management through a slew of reforms for long-term project sustainability.

The core reforms aim at “process re-engineering through deployment of technology to enable more efficient, reliable, timely services in a transparent manner” and encompass several technology related strategies in transport including ITS and electric vehicles. Some of them are as follows:

  • The 12th Five Year Plan planned investments in the transport sector totals INR 3,883 Billion (€ 60 Billion) of which INR 2,026 Billion (€ 31 Billion) is estimated to be in public transport.
  • Increasing opportunities in alternative vehicle technologies (Electric Vehicles, Hybrids) and fuel technologies (Biofuels, Fuel Cells, Hydrogen) both in industrial and research sectors.
  • Civil aviation domestic capacity is projected to grow by 12-14% with demand expected to outstrip capacity, with domestic traffic growth of 17-18%, possibly as high as 20%. International passenger numbers are also expected to increase.
  • India needs an integrated infrastructure and logistics policy to keep up the growth of its gross domestic product. The contribution of third-party logistics (3PL) in the overall logistics market is likely to increase from ~1.5 – 2.0% in 2008-09 to ~3.5 – 4 % by 2013-14. 100% FDI is allowed in logistics.
  • The major ports are being augmented for capacity. Potential in development of container freight stations, creation of multimodal logistics parks, and LNG fuelling.


Additional information