In FY25, NHAI hopes to generate ₹54,000 Cr through highway monetisation.

Under the Toll-Operate-Transfer (TOT) model, highway assets are leased to private players for 15-30 years, allowing them to operate, maintain, and collect tolls in exchange for a one-time upfront concession fee to the government. The National Highways Authority of India (NHAI) has identified 86 highway stretches spanning 4,912 km for monetisation.

So far, it has monetised five stretches (Bundles 11, 12, 13, 14, and 16) and plans to award three more by the end of FY25. With a target to raise ₹54,000 crore through road asset monetisation in FY25, NHAI aims to fund new projects and reduce its debt, which stood at ₹2.76 lakh crore as of December 2024.

Nhai Highway Monetisation

NHAI Aims to Generate ₹54,000 Crore Through Highway Monetization in FY25

The National Highways Authority of India (NHAI) has set an ambitious target of generating ₹54,000 crore in revenue through highway monetization in the financial year 2024-25 (FY25). This move aligns with the government’s strategy to enhance private sector participation in infrastructure development and leverage existing highway assets for future growth.

The Need for Highway Monetization

Highway monetization is a crucial strategy for NHAI to fund new infrastructure projects without relying solely on budgetary allocations. As India rapidly expands its road network, monetizing existing highways provides an avenue for raising capital efficiently. The funds generated will be utilized for developing new roads, enhancing connectivity, and ensuring smoother transportation across the country.

With an ever-increasing demand for high-quality highways, private investors are keen on participating in long-term infrastructure projects. By offering well-maintained toll roads under different models, NHAI aims to attract significant domestic and international investments.

Monetization Methods and Strategies

NHAI plans to achieve this target through various monetization models, including:

1. Toll-Operate-Transfer (TOT) Model: Under this model, private players bid for operational highways and maintain them in exchange for toll revenues over a fixed concession period. NHAI has successfully raised substantial funds through previous TOT auctions and expects further success in FY25.
2. Infrastructure Investment Trusts (InvITs): Through InvITs, NHAI bundles highway assets into a trust and sells units to investors, ensuring steady returns while allowing NHAI to reinvest proceeds into new projects. The authority has already launched InvITs in previous years and will continue to use this model for monetization.
3. Asset Recycling: Monetizing operational assets and reinvesting in greenfield infrastructure projects is a strategy that aligns with India’s long-term economic vision. By recycling assets, NHAI can accelerate highway development without burdening public finances.
4. Public-Private Partnerships (PPP): The government is actively promoting PPP models where private companies finance, build, and maintain highways under revenue-sharing agreements. This model helps distribute financial risks while ensuring efficient project execution.

Challenges and Market Response

While highway monetization presents immense opportunities, certain challenges need to be addressed. Market conditions, investor sentiment, and global economic factors could impact the valuation of highway assets. Additionally, regulatory hurdles and land acquisition delays may pose risks to achieving the targeted revenue.

However, recent successful transactions under the TOT and InvIT models indicate strong investor interest. Global and domestic institutional investors, including pension funds and sovereign wealth funds, have shown enthusiasm for India’s highway assets, given the country’s economic growth and increasing vehicular movement.

Government’s Role and Future Outlook

The Indian government has been proactive in facilitating ease of doing business and creating an investor-friendly environment. Policy reforms, such as transparent bidding processes and improved dispute resolution mechanisms, have enhanced investor confidence.

Looking ahead, NHAI’s highway monetization drive will play a critical role in achieving the broader vision of a well-connected, modernized road network. By raising ₹54,000 crore in FY25, NHAI aims to not only strengthen infrastructure funding but also pave the way for enhanced mobility, economic growth, and job creation across India.

As the highway sector continues to evolve, successful monetization will set a precedent for future infrastructure financing, making India a global leader in innovative road development strategies.

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