India is witnessing an unprecedented surge in road infrastructure investment, marking a transformative phase in connectivity and economic development. With a concerted push to improve transportation networks and facilitate the country’s rapid urbanization, the National Highways Authority of India (NHAI) has launched a series of ambitious road development initiatives. This infrastructure drive is essential to reduce travel times, streamline freight movement, and fortify India’s roadways for the future.
Under the National Monetisation Plan (NMP), NHAI has utilized innovative financing methods to attract substantial investor interest, both domestic and global. This focus on Toll, Operate, and Transfer (TOT) bundles and Infrastructure Investment Trusts (INVITs) has already yielded impressive results, enabling the authority to enhance roadways at an unprecedented scale.
Why Investors Are Flocking to India’s Roads
Sharat Goyal, CEO of Impact Infracap, highlighted the recent achievements, noting, “Road investments in India have accelerated at a dizzying pace over the last few years. NHAI has awarded 16 Toll, Operate and Transfer (TOT) bundles so far, raising around INR 49,000 crore through TOT and an additional INR 25,900 crore through its INVIT under the National Monetisation Plan (NMP).”
A primary driver behind this growth has been the robust increase in traffic and toll revenues, which Goyal explained is fueled by several factors: “Total toll collection in India has grown 2.6 times in the past five years, reaching approximately INR 65,000 crore for FY24. Initiatives such as FASTag and steady inflation indexation, along with economic growth that supports passenger and freight volumes, have significantly boosted revenue.”
The stable INVIT regime is a strong lure for both active and passive investors, Goyal added, explaining that it “creates a monetisation opportunity for developers, while providing financial investors the chance to participate in projects.” This model has paved the way for infrastructure developers, such as IRB and GR Infrastructure, to build INVITs and attract a diverse pool of investors, including I Squared Capital, KKR, and CDPQ. “It has allowed relatively passive investors, like BCI and AIMCO, to join the road investment ecosystem, creating a unique mix of stakeholders,” he added.
With these strategic investments and innovative financing models, India’s road infrastructure is set to enter a new era, fostering seamless connectivity and robust economic growth.