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India Ratings and Research (Ind-Ra) has maintained a neutral outlook for India’s transport infrastructure sector for FY27, citing stable operational assets and healthy growth in highway toll revenue. The agency expects higher NHAI road awards through the hybrid annuity and build-operate-transfer models, a strong InvIT ecosystem and steady domestic air traffic to support the sector. However, delays in under-construction HAM projects and near-term pressure on aviation traffic remain concerns. Road InvIT assets under management stood at INR 3,168 billion as of March 2026 and could reach around INR 6,000 billion by FY30.
India Ratings and Research (Ind-Ra) has given a neutral outlook to the country's transport infrastructure sector for FY27, supported by stable operational assets and satisfactory growth in highway toll revenue.
The agency expects an increase in road project awards by the National Highways Authority of India (NHAI) through the hybrid annuity model (HAM) and build-operate-transfer (BOT) routes. A strong infrastructure investment trust (InvIT) ecosystem and steady domestic air traffic growth are also expected to support the sector.
Under HAM, the government and private developer initially share the project cost, with the remaining amount paid to the developer through regular annuity payments. Under BOT, the developer bears the project cost and recovers the investment through toll collections over a longer period.
Ind-Ra expects toll roads to continue recording strong revenue growth through the remainder of FY27, supported by economic activity and higher toll rates. However, nearly half of NHAI's under-construction HAM projects could face delays of more than 12 months due to land and workfront availability, standardised construction timelines, material sourcing issues and approval delays.
Operational HAM projects are seeing strong sponsors monetise their assets, while newer sponsors are increasingly raising debt, the agency said.
Competition for NHAI's HAM projects is also showing early signs of easing. Ind-Ra attributed this to larger package sizes and tighter net worth requirements introduced under directives issued by the Ministry of Road Transport and Highways.
The InvIT market remains another positive factor for the sector. Road InvITs had assets under management of INR 3,168 billion as of March 2026. Ind-Ra expects total road InvIT AUM to reach around INR 6,000 billion by FY30, supported by NHAI's periodic asset monetisation under National Monetisation Programme 2.0. The share of HAM assets within InvITs could reach around INR 1,000 billion over the same period as more projects become operational.
Recent Reserve Bank of India changes to lending rules for InvITs state that the combined exposure of all banks to a borrowing InvIT, including its underlying special purpose vehicles and holding companies, cannot exceed 49 per cent of the InvIT's asset value. Once borrowing crosses this limit, InvITs will need to use the non-convertible debenture route.
Ind-Ra expects InvITs to be able to access the capital markets for debt raising, citing their credit profiles and sponsor backing.
Rasika K, Analyst, Infrastructure & Project Finance Group at Ind-Ra, said the recent amendments to the BOT Toll Model Concession Agreement are aimed at making the model more attractive by strengthening lender protections, introducing traffic-risk sharing and reducing execution risks. These measures are expected to encourage greater private-sector participation.
For the aviation sector, Ind-Ra has revised its airport rating outlook to stable while retaining a neutral outlook for aviation for the rest of FY27. The agency cited slower passenger growth amid higher fuel costs and the impact of the West Asia conflict.
Domestic air traffic has remained relatively resilient, while international traffic has declined due to geopolitical tensions. Measures such as aviation turbine fuel price caps and liquidity support have helped stabilise domestic traffic.
Ind-Ra analyst Vandan Pasad said that despite near-term geopolitical uncertainty, Indian airports continue to have support from domestic demand, the regulatory environment and ongoing infrastructure expansion. The agency also expects increasing revenue from non-aeronautical businesses and new airport capacity to strengthen airport operations over the medium to long term.
Source PTI
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