The Ministry of Road Transport and Highways (MoRTH) has revised the Model Concession Agreement (MCA) for build-operate-transfer (BOT) national highway projects as the government looks to increase private sector participation in road development. 
The revised agreement introduces a buyback provision, revenue support for concessionaires and a mechanism for sharing traffic risks between the government and private concessionaires. The changes are intended to address some of the financial and contractual concerns that have made BOT projects less attractive to private investors. 
According to the ministry, the revised MCA was prepared based on recommendations of an inter-ministerial committee constituted to examine the challenges being faced by different stakeholders in BOT projects. The changes seek to improve the financial viability of projects while providing greater clarity on the sharing of risks and returns. 
One of the key changes is the introduction of traffic-risk sharing through adjustment of the concession period. If traffic on a project remains below the expected level beyond the initial support period, the concession period can be extended to provide additional time for the concessionaire to recover its investment. On the other hand, if traffic performs substantially better than expected, the concession period can be reduced. 
The revised framework also provides for a buyback of the project in situations where traffic reaches the project's design capacity. Earlier amendments to the BOT framework had provided for NHAI to buy back a project when average daily traffic reached the prescribed design capacity over specified years. The provision is intended to give concessionaires an exit mechanism when a project reaches its planned capacity. 
The government has also been working on improving the support available to concessionaires during the construction phase. Earlier changes to the BOT MCA introduced construction support linked to physical progress, with the combined construction and equity support provisions allowing assistance of up to 40% of the total project cost under specified conditions. 
The latest revision comes at a time when the government is seeking to revive the BOT model for highway development. Around INR 2 lakh crore worth of BOT road projects have been reported to be in the pipeline, while concerns over traffic forecasts, contractual conditions and project risks have remained important factors affecting private investment. 
The National Highways Authority of India (NHAI) has also identified 54 highway projects with a combined capital cost of about INR 1.8 lakh crore, covering around 2,442 km, for award during the 2026-27 financial year. This pipeline provides a sizeable opportunity for private developers and infrastructure investors if the revised BOT framework improves project participation. 
The government had already widened the pool of potential BOT investors in May by allowing sovereign wealth funds, infrastructure funds, pension funds and private equity investors to bid for BOT projects under the public-private partnership (PPP) model. Previously, such large institutional funds were permitted to participate mainly in toll-operate-transfer (TOT) projects. The change followed difficulties in attracting private investment to some BOT projects because of concerns around contractual terms. 
The latest changes therefore build on the government's earlier efforts to bring more institutional capital into the highway sector. By addressing traffic risk, revenue concerns and exit options, the revised MCA seeks to give investors greater visibility over the financial performance of long-term road projects. 
National highways in India are developed through several execution models, including BOT toll, BOT annuity, Engineering, Procurement and Construction (EPC), Infrastructure Investment Trusts (InvITs) and the Hybrid Annuity Model (HAM). Under the BOT model, a private concessionaire is generally given a concession period of around 20 to 30 years to finance, construct and operate the highway before the asset is transferred back in accordance with the concession agreement. 
The changes also follow earlier efforts by MoRTH to amend BOT-related contractual provisions. The ministry's annual report for 2024-25 had noted that amendments to the BOT toll MCA were being worked on to reduce contractual disputes and encourage greater private sector investment. 
Source PTI