The toll-operate-transfer (TOT) model is a key component of India’s highway asset monetisation strategy, allowing the National Highways Authority of India (NHAI) to unlock value from operational toll roads while funding other greenfield projects in the pipeline. Introduced in 2016, on a cumulative basis, the TOT model has awarded bundles over Rs 500 billion up till January 2026, with recent bundles such as TOT-18 in Odisha underscoring bidder enthusiasm despite growing emphasis on infrastructure investment trusts (InvITs).
NHAI aims to raise Rs 350 billion-Rs 400 billion through monetisation in financial year 2025-26, as against the budgeted Rs 300 billion. It is expected to raise Rs 210 billion-Rs 250 billion from new TOT bundles. In line with this, as India moves towards the goal of 185,000 km by 2030, and further up to 237,000 km by 2047, the TOT model’s blend of upfront capital and operational efficiency will be pivotal.
Evolving policies supporting the TOT success
Under the TOT model, private entities bid for the highest upfront premium to secure rights over mature highway stretches, typically 15-20 years for toll collection, operations and maintenance (O&M), and minor augmentations, before transferring it back to NHAI. Unlike build-operate-transfer (BOT) models burdened by construction risks, TOT leverages established revenue streams from publicly funded assets, bundling smaller clusters for scale, geographically contiguous to optimise logistics and toll predictability.
Bidding for these TOT stretches now involves a two-stage process: technical qualification followed by financial bids against undisclosed reserves. This spurs premiums up to 1.5-2 times the estimates and attracts diverse players, domestic trusts such as IRB, foreign funds such as Macquarie, and key maintenance players such as PATH Highways, drawn to annuity-like stability amid 8-10 per cent toll escalation clauses.
While the TOT model has shown consistent success, there are still some doubts about the preferred route, following MoRTH’s announcement to phase out TOT in favour of InvITs. This decision is expected to increase the reliance on InvITs in contrast to NHAI’s road map to offer three TOT bundles each quarter. This has created uncertainty regarding the future of the TOT model. However, achieving the overall aforementioned NMP targets will require a transparent and well-coordinated execution strategy, with the realisation that all monetisation models are complementary rather than competing models.
Charting the TOT trials and breakthroughs
The TOT model’s debut in February 2018, Bundle 1 (676 km across nine states), marked a milestone, with the Macquarie-Ashoka joint venture winning the bundle for Rs 96.81 billion, 50 per cent above reserves, from 11 qualified players. This success contrasted with the cancellation of Bundle 2 in 2019 over tepid bids, exposing early challenges such as aggressive reserves and fragmented stretches.
Following this, adaptations paid off with Cube Highways winning TOT Bundle 3 (566 km, Maharashtra-Rajasthan) for Rs 50.11 billion in 2020, despite Covid-19 pandemic disruptions. Bundles 4 and 6 faltered again, but 2021 saw Bundle 5 awarded to Adani (Rs 20.17 billion) and DP Jain (Rs 16.26 billion), totalling 566 km. Bundle 7 in 2022 fetched Rs 62.27 billion from Indian Highways Management Company Limited, bundling 566 km in Madhya Pradesh and Rajasthan.
Post 2023, the TOT monetisation momentum hit a full stride, fully achieving the monetisation target of Rs 100 billion for 2023-24 with the award of four bundles: TOT-10 (Rs 31.8 billion), TOT-11 (Rs 41.47 billion), TOT-14 (Rs 33.19 billion) and TOT-15 (Rs 53.22 billion). Awarded in September 2024, Bundle 16 (251 km, NH-44 Telangana) drew five bids, and was finally won by the Highway Infrastructure Trust at Rs 66.61 billion.
Continuing this momentum, IRB Infrastructure won the Rs 92.7 billion 366 km NH-27 bundle (Lucknow-Ayodhya-Gorakhpur) in November 2024, enhancing its massive road asset portfolio.
The year 2025-26 opened on a strong note, with bids for bundles 20-22 invited in July 2025, for 375 km. However, the award for these bundles was stalled. In January 2026, IRB Infrastructure won a TOT-18 bundle (Odisha, Rs 30.87 billion), exemplifying further expansion. The concession period for the bundle is 20 years.
Overcoming challenges
Valuation gaps plagued early bundles (for example, TOT-4 was annulled at 70 per cent shortfall) due to traffic volatility, land acquisition delays and 7-8 per cent capital mismatch cost. Covid-19 slashed tolls by 40 per cent in 2020-21, eroding confidence until NHAI introduced 75 per cent revenue shortfall protections.
Political toll holidays and FASTag transitions posed risks, yet premiums averaged 1.4x reserves by 2025, buoyed by 12 per cent CAGR toll growth. “Reserve recalibration post-tech bids revived TOT,” as per NHAI officials. Environment clearances and arbitration backlogs persist, but digital tolling cut leakages 25 per cent.
The road ahead
NHAI’s recent monetisation strategy envisages issuing three TOT bundles each quarter. However, after a period of uncertainty around the TOT model, the momentum appears to be returning, with the authority monetising two bundles (TOT-17 and 18) in Q3 2025-26. In July 2025, NHAI invited bids for three new TOT bundles (20, 21 and 22). Meanwhile, bids remain open for TOT Bundle 19, and the concessionaire for Bundle 15 is yet to be finalised. The authority aims to close the bids for these bundles in 2025-26 itself.
In a recent development, Macquarie has initiated plans to sell TOT Bundle 1, the first and highest-valued bundle awarded by NHAI to date. It is seeking an enterprise value of Rs 100 billion for the nine road assets portfolio. Furthermore, it is looking to sell these assets in three separate bundles. In another key development, Adani Road Transport has signed a share purchase agreement to acquire TOT 5 (A-2) from D.P. Jain for an enterprise value not exceeding Rs 13.42 billion.
All in all, despite the lack of policy clarity, the recent developments indicate a renewed and much stronger push to further accelerate road monetisation efforts.
Himanshu Tagore
