The Kerala government’s recent decision to eliminate state GST and royalty fees on earth and aggregates for national highway projects, approved by the cabinet last week, is anticipated to greatly benefit the National Highways Authority of India’s (NHAI) 20 forthcoming highway initiatives outlined in Vision 2047. These initiatives, covering a total distance of 1,795 kilometers, are associated with an estimated land acquisition cost of ₹92,833.96 crore. According to the agreement with NHAI, Kerala is obligated to cover 25 percent of this expense, which amounts to ₹23,208.49 crore.
Additionally, the state’s SGST and royalty on earth and aggregates for these projects were projected at ₹7,684.82 crore, comprising ₹6,001.21 crore for SGST and ₹1,683.61 crore for royalty. By waiving these charges, the state aims to significantly alleviate the financial strain on project implementation and align itself with the central government’s preference for allocating projects to states that provide such concessions.
The projects benefiting from this waiver include high-speed corridors such as the Palakkad-Malappuram-Kozhikode (121 km), Palakkad-Madurai-Rameswaram (315 km), the segment from the Tamil Nadu-Kerala border near Aryankavu (59 km), and the Salem-Erode-Tiruppur-Coimbatore-Thrissur route (284 km). Also included under the waiver are the Kochi-Kollam-Kanyakumari corridor (355 km) and the Mangaluru-Kannur-Kozhikode-Kochi route (338 km).
In order to support highway construction and minimize expenses, the state government previously sanctioned a policy that permits the National Highways Authority of India (NHAI) and its contractors to extract earth from designated water bodies for highway projects without incurring royalty or seigniorage fees. This policy is, however, contingent upon certain safeguards. Dredging will only be authorized following soil testing that verifies the extracted material is devoid of construction value or mineral content.
The irrigation department is responsible for conducting these tests promptly to prevent delays in the project. Executive engineers from the irrigation department will document the initial and final levels of the dredging sites to measure the volume of material removed.
District geologists, in collaboration with NHAI’s authorized engineers, will keep comprehensive records of the quantities exempted under this policy, ensuring that the materials are utilized solely for national highway construction. Collectively, these measures, ranging from financial exemptions to regulatory assistance for material acquisition, are anticipated to significantly enhance the state’s road infrastructure, alleviating transportation challenges, improving connectivity to ports and industrial centers, and increasing travel efficiency across various districts.