MUMBAI: Reducing the cost of construction by using innovative technologies and locally available resources along with policy reforms will drive the road sector in the future, says a report.

According to a report titled 'SBI-Industry Wrap- Road Sector- On a high-way' prepared by the Economic Research Department of SBI, the government needs to conduct in-depth study of the gaps between international and national standards to ensure reducing cost and ensure speedy completion of projects.

"As the priority of the government lies in the development of infrastructure, an in-depth study of the gaps between international and national standards is required immediately," the report said.

It noted that use of locally available resources and materials to bring down the cost and need to reduce the time for completion of project through use of prefabricated and innovative technologies is the need of the hour.

Road ministry is likely to award project length totaling 20,000 km in next two years whereas the total target is to award road construction project of 9,000 km in FY 2016.

Of total 9,000 km road contract awards the target for NHAI is fixed at 5,600 km and balance is be implemented through state public works departments.

"Going forward focus will be on aligning national standards for design, construction, maintenance and operation of roads, bridges and flyovers with the global standards to bring down the cost of construction while maintaining high standards of quality through adoption of innovative technologies and materials for road construction," it said.

Further, expected softening of the interest rate and sharing of the 40 per cent of the project cost under hybrid annuity model is likely to provide some comfort to the industry players operating with high level of debt and interest expense ratio.

"Consequently, we expect margins of the industry to recover marginally in FY 2016 backed by growth in revenue and reduction in financing expenses," it said.

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