INTERVIEW - Govt seeks foreign funds role in roads

By Surojit Gupta and Tony Munroe

NEW DELHI (Reuters) - India wants foreign investors to fund as much as half of the $20 billion a year it has earmarked for road building, Transport Minister Kamal Nath said on Tuesday.

Building roads has become a priority for the new Congress-led government as it aims to generate demand across the country, and Nath's appointment is seen by analysts as an attempt to push that agenda harder.

Road construction activity in the previous Congress administration got mired in bureaucratic hurdles and funding delays.

"We are looking at all funds. We are looking at sovereign wealth funds. We are looking at private equity. We are looking at pension funds," Nath said in an interview at his residence, a day after India's new budget plan included a 23 percent increase in funding for national highways.

Nath also said the government might consider raising taxes on petrol and diesel to pay for road building.

"We may examine increasing the petrol and the diesel cess we have," he said. "At a later stage we will examine it."

Nath said he planned to meet with investors from Europe, the United States and Asia, including Hong Kong and Singapore, in the next two or three months to discuss which financing platforms would be most effective.

"In the next year the investment is close to $10 billion from overseas," he said, adding that his ministry wanted foreign funds to account for half or slightly less than half of road investment in coming years.