2 weeks ago
Can InvITs power India's next highway expansion funding engine?
India wants to build many new highways, which costs a lot of money.
It has found a clever way to pay for them: investors buy rights to roads that are already built and collecting tolls.
When an operational road is sold to a special investment trust called an InvIT, the government gets cash it can use to build new roads.
India's highway authority has already raised about ₹1.5 lakh crore this way.
About 13,400 kilometres of new highways are planned over the next three years.
These investment trusts are becoming popular with big investors, like mutual funds and pension funds.
There are some risks too, such as traffic changing when new roads are built nearby.
Leaders say steady rules and fair toll pricing will keep investors confident.
If done well, InvITs could become a major engine for building India's next highways.
NHAI has mobilised around ₹1.5 lakh crore through highway asset monetisation, including ₹43,638 crore via private InvITs.
India plans a 13,400 km highway pipeline worth nearly Rs 8.3 lakh crore over the next three years, making diversified funding essential.
Highway InvITs raised more than ₹20,000 crore in the last 12 months and are moving toward a mainstream institutional asset class.
India's first public highway InvIT, Raajmarg InvIT, has launched, and NHAI plans to transfer nearly 1,500 km of operational highways to InvITs over the next three to five years.
Executives say traffic risk and regulatory uncertainty remain, calling for formula-based toll revisions and easing of limits on domestic institutional investors.
- Who
- The National Highways Authority of India (NHAI) and Infrastructure Investment Trust (InvIT) managers such as Capital Infra Trust and Vertis Infrastructure Trust.
- What
- India is shifting its highway funding model toward InvITs, which recycle capital from operational roads into new highway projects.
- Where
- India
- When
- Reported now; India's 13,400 km highway pipeline spans the next three years, with NHAI planning InvIT transfers over the next three to five years.
- Why
- To diversify highway funding, reduce pressure on budgetary support and bank lending, and attract long-term institutional capital for expansion.
Expansion advocates
Risk-cautious view
Highway traffic outlook
Expansion advocates
India's economic growth, urbanisation, manufacturing expansion and formalisation of the economy provide a structural basis for long-term growth in highway traffic.
Risk-cautious view
Traffic remains an economic variable that cannot be completely de-risked; new expressways, competing corridors, modal shifts and economic changes can impact traffic on individual assets.
Toll revision policy
Expansion advocates
Toll revisions should follow transparent, formula-based schedules instead of administrative discretion to keep investor confidence intact.
Risk-cautious view
The current approach leaves toll revisions subject to administrative discretion, creating unpredictability for InvIT investors.
Key facts
- Highway pipeline
- 13,400 km worth nearly Rs 8.3 lakh crore over next three years
- NHAI monetisation receipts
- Around ₹1.5 lakh crore mobilised
- Private InvIT contribution
- ₹43,638 crore
- InvIT fundraising (12 months)
- More than ₹20,000 crore
- InvIT industry AUM
- Approximately Rs 7 lakh crore
- First public highway InvIT
- Raajmarg InvIT
- NHAI highway transfer plan
- Nearly 1,500 km over next three to five years
- Monetisation routes
- InvITs, toll-operate-transfer (ToT), securitisation
Quotes
Gaurav Chandna
Joint CEO and Executive Director, Vertis Infrastructure Trust
““InvITs are a natural complement to NHAI’s asset monetisation programme. They provide a professionally managed platform through which operational infrastructure can move from government balance sheets to long‑term institutional capital.””
financialexpress.com
““InvITs are complementing the development of highways and expressways as India prepares for a highway pipeline of 13,400 km worth nearly Rs 8.3 lakh crore over the next three years. “”
financialexpress.com
Sources
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