Driving Growth: India's ambitious highway plans to generate INR 1 lakh crore by 2028


With over 8,551 kilometres of new projects awarded in FY24 and a target to double that figure by FY25, India's road network is on an ambitious trajectory. The surge in toll revenue, predicted to exceed INR 1 lakh crore by 2028, is attracting Infrastructure Investment Trusts (InvITs) and unlocking new funding avenues. Backed by the government's asset monetization program, this road expansion promises a more connected, efficient, and prosperous India. As toll collections soar and investor confidence grows, the road sector emerges as a cornerstone of India's economic growth story.

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India's road network is undergoing a significant transformation. Dust has settled on blueprints as the government accelerates highway construction. Awarding over 8,551 kilometres of new projects in the last fiscal year (FY24) and aiming to double that figure to 17,000 kilometres by FY25, this ambitious plan promises to more than double the length of operational highways in India. By 2028, the total length of operational highways is expected to surge from over 10,000 kilometres in FY24 to 22,500 kilometres.

This rapid expansion translates into a significant revenue stream for the government. As projects near completion, they morph into operational toll roads, generating a steady stream of revenue. Experts at SBI Caps predict annual toll collections to surpass INR 1 lakh crore by 2028, a significant leap from the INR 65,000 crore collected in FY24. To further boost revenue, the National Highways Authority of India (NHAI) recently implemented a 5% hike in toll rates.

This surge in revenue is attracting a new breed of investor: Infrastructure Investment Trusts (InvITs). Imagine a pool of funds from institutions like pension funds. InvITs allow these investors to tap into this growing revenue stream by investing in operational road projects. The returns? Steady and reliable income generated from toll collections, exceeding INR 77,000 crore as early as this fiscal year (FY25). Several InvITs are already operational, with more on the way, backed by players like PE firm Actis and IL&FS Transportation Networks.

This ambitious road expansion creates a domino effect of benefits. Investors, like pension funds, can access steady returns through InvITs, with NHAI's asset monetization program potentially generating up to INR 43,000 crore in new funding. Road developers are freed from tied-up capital in completed projects, allowing them to fuel further growth. The most significant impact is on the broader economy. Improved roads, the arteries of a nation, will see faster movement of goods and people. This translates to businesses saving on logistics costs, boosting their efficiency and profitability. Consumers can also expect to benefit from potentially lower prices due to reduced transportation costs. With all these advantages in play, India's road sector is poised for a remarkable journey, paving the way for a more connected, efficient, and prosperous nation.

With the government firmly behind the wheel, rising toll revenue exceeding INR 77,000 crore as early as this fiscal year, and the growing popularity of InvITs, India's road sector is poised for a remarkable journey. This ambitious INR 1 lakh crore investment opportunity promises to pave the way for a more connected, efficient, and prosperous India.

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