8 hrs ago
National Highway Toll Growth Set to Recover in FY28
ICRA expects highway toll money to grow more slowly next year.
It says collections may rise by 7-9% in FY27, compared with 10% in FY26.
This is because fewer trucks and vehicles may use the highways and toll increases may be smaller.
Highway traffic depends partly on construction, mining and manufacturing activity.
In FY28, toll growth could improve to 10-12%.
This may happen because toll rates for many projects are linked to inflation readings.
The government also plans to award more road projects, although construction is expected to stay fairly steady.
New rules for BOT toll roads are intended to make private companies and lenders more comfortable investing.
ICRA expects national highway toll revenue growth to slow to 7-9% in FY27 from 10% in FY26.
Traffic growth is projected at 4.5-5.5% in FY27, alongside a smaller 3.4-4.0% toll-rate revision.
Toll growth is expected to recover to 10-12% in FY28 as WPI-linked toll revisions become steeper.
MoRTH may award 8,000-8,500 km of road projects in FY27, while construction remains range-bound at 9,000-9,500 km.
EPC remains dominant, but revised BOT toll rules aim to attract more private-sector participation and reduce project risks.
- Who
- ICRA, the Ministry of Road Transport and Highways (MoRTH), and highway developers and lenders are central to the outlook.
- What
- National highway toll revenue growth is expected to slow in FY27 and recover to 10-12% in FY28.
- Where
- The outlook concerns national highways and road projects in India.
- When
- The forecast covers FY27, or 2026-27, and FY28, or 2027-28; FY26 refers to 2025-26.
- Why
- Softer traffic growth and smaller toll increases are expected to weigh on FY27, while higher WPI-linked toll revisions are expected to support FY28 growth.
Reasons for Recovery
Factors Limiting the Upside
Toll-rate increases
Reasons for Recovery
ICRA expects WPI-linked revisions to support higher toll increases in FY28, including 6.2-6.4% for newer projects and 4.5-5.5% for older projects.
Factors Limiting the Upside
Toll-rate growth is expected to be limited to 3.4-4.0% in FY27, contributing to slower revenue growth.
Road project activity
Reasons for Recovery
Higher budgetary allocation and revised BOT toll rules could increase project awards and encourage private-sector participation.
Factors Limiting the Upside
Awards are expected to remain below levels seen from 2020-21 to 2022-23, while construction remains range-bound after a three-year slowdown in awarding.
Private investment
Reasons for Recovery
Revenue support during traffic shortfalls and project-termination provisions could reduce risks for developers and lenders.
Factors Limiting the Upside
ICRA said it remains uncertain whether the revised BOT framework will produce a meaningful revival in construction activity.
Key facts
- FY26 toll growth
- National highway toll collections grew 10% in 2025-26.
- FY27 toll forecast
- ICRA expects toll revenue growth of 7-9% in 2026-27.
- FY28 toll forecast
- Toll revenue growth is projected to recover to 10-12% in 2027-28.
- FY27 traffic forecast
- National highway traffic growth is expected at 4.5-5.5%.
- FY27 toll revision
- Toll rates are expected to rise 3.4-4.0% in 2026-27.
- Project awards
- MoRTH is expected to award 8,000-8,500 km of projects in 2026-27, compared with about 7,000 km in 2025-26.
- Road construction
- Construction is expected to remain at 9,000-9,500 km in 2026-27, versus 9,380 km in 2025-26.
Quotes
Suprio Banerjee
Co-Group Head, Corporate Ratings, ICRA
“Traffic growth on national highways largely moves in line with the gross value added (GVA) of construction, mining and manufacturing (CMM),”
financialexpress.com
“However, the extent to which it translates into a meaningful revival in construction activity remains to be seen,”
financialexpress.com
Sources
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