India’s infrastructure requirements will continue to grow as the country advances towards the goal of becoming a $5 trillion economy. To support this growth, the government has been exploring innovative funding mechanisms to sustain and encourage ongoing development. One such initiative aiming to create an alternative funding source, beyond traditional budgetary resources, is the National Monetisation Pipeline (NMP). Under the first phase of the NMP (NMP-I) announced in the Union Budget 2021-22, the road sector was assigned a monetisation target of Rs 1.6 trillion for a four-year period from 2021-22 to 2024-25, accounting for over 26 per cent of the total target. By the end of the programme in March 2025, the sector had achieved approximately 73 per cent of the assigned target, raising over Rs 1.15 trillion and making a significant contribution to the overall monetisation effort.
Asset monetisation has remained a key focus area for the Ministry of Road Transport and Highways (MoRTH) and the National Highways Authority of India (NHAI). Recent developments indicate a renewed and much stronger push to further accelerate these efforts. In June 2025, NHAI, for the first time, released a detailed asset monetisation strategy in the public domain, outlining specific plans and objectives. In contrast, MoRTH announced plans to phase out the toll-operate-transfer (TOT) model and increase reliance on infrastructure investment trusts (InvITs). Against this backdrop, the policy clarity around the TOT model remains unclear. However, despite the announcement to phase out TOT, NHAI has invited bids for three new TOT bundles as outlined in its strategy. Meanwhile, the InvIT model is taking centre stage, with two key plans already set in motion – the launching of a public InvIT and the fifth round of InvIT monetisation.
Progress so far
Monetisation has emerged as a key tool to attract private capital for highway development. By unlocking value from operational assets, it provides funding for new projects while offering stable investment opportunities free from construction risks for investors looking to invest in the road sector. Additionally, private participation brings advanced technologies and management practices, enhancing the life and quality of assets, since private players are required to take on the operations and maintenance (O&M) of these assets. In essence, it becomes a continuous cycle, where existing assets are converted into a funding source, which is then utilised in the creation of new assets, and the cycle goes on.
So far, three models have been used for asset monetisation. The first two primary models, InvIT and TOT, involve leasing road assets for a fixed concession period, granting toll collection rights in exchange for an upfront lump sum amount. The third model is toll securitisation, through which NHAI raises long-term financing from banks by securitising future toll collections. So far, this mode has only been utilised for the 1,337 km Delhi-Mumbai Expressway, where future toll receipts were used as collateral to secure bank credit for project development.
In 2018-19, NHAI in its first asset monetisation attempt offered a TOT bundle, raising Rs 96.82 billion from a 681 km highway stretch awarded to a joint venture between the Macquarie Group and Ashoka Buildcon. Since then, the authority has monetised road assets spanning 6,246 km, mobilising over Rs 1.4 trillion collectively. Of this, the TOT model accounted for Rs 489.95 billion through the monetisation of 2,564 km, representing 34 per cent of the total share. The first round of InvIT monetisation was initiated in 2021-22. Since then, 2,345 km of roads have been monetised in four rounds. Between 2021-22 and 2024-25, InvITs mobilised Rs 436.38 billion, contributing around 31 per cent to the overall monetisation value, while the remaining Rs 501.25 billion was raised through toll securitisation of the 1,337 km Delhi-Mumbai Expressway.
NHAI’s new strategy
In June 2025, NHAI released an asset monetisation strategy aimed at accelerating and enhancing the effectiveness of its monetisation efforts. The strategy is built on three principles, value maximisation, transparency and market development, under which the authority has outlined key objectives.
To maximise value generation, NHAI plans to codify processes for systematically identifying attractive assets for monetisation so that the acceptance rate of bids increases. An asset register is planned to be prepared, listing assets with high monetisation potential based on criteria such as asset age, revenue growth and the legal status of an asset. Additionally, guiding principles will be developed for evaluating revenue and traffic potential, asset valuation, and other financial and technical parameters to arrive at robust reserve prices for these public assets below which they will not be monetised.
To enhance transparency, the authority will standardise procedures and technical documentation across pre- and post-bidding stages. This will ensure consistency across transactions. Additionally, information such as upcoming monetisation pipelines and assumptions regarding the valuation of an asset will be made available on public platforms for investor clarity.
Finally, NHAI aims to increase private participation by expanding the investor base and enhancing stakeholder engagement. The authority has laid out key plans to achieve the same.
It plans to launch a public InvIT in addition to its existing private InvIT, to widen the investor base and mitigate the risk of concentration of a few investors in its private InvIT. Additionally, a few key announcements have been made to scale up InvIT-based monetisation. NHAI has identified nine road stretches spanning over 550 km across Maharashtra, Odisha, Andhra Pradesh and West Bengal for monetisation in 2025-26 under InvIT round 5. Additionally, under the public InvIT initiative, units worth approximately Rs 250 billion are expected to be reserved for retail investors, accounting for 30-40 per cent of the total issue size.
Meanwhile, the future of the TOT model remains uncertain. The NHAI had outlined plans to offer three TOT bundles each quarter, segmented into small, medium and large bundles, indicatively valued at Rs 20 billion, Rs 50 billion and Rs 90 billion respectively. In line with this, NHAI invited bids for three new TOT bundles (20, 21 and 22). Meanwhile, bids for bundles 18 and 19 are currently open, while bundle 15 and 17 is yet to be awarded. However, a recent announcement by MoRTH indicates a shift in policy direction, with plans to gradually phase out the TOT model in favour of InvITs, raising questions about the future of this model.
The way forward
With the closure of NMP Phase I, the government has launched NMP Phase II, significantly raising the monetisation goal. The target for highway asset monetisation has more than doubled to Rs 3.5 trillion for the period 2025-26 to 2029-30. Achieving this will require a significant increase in the frequency and volume of InvIT issuances, in case the TOT model is phased out. While the government’s goal remains to maximise value for both investors and the public by unlocking the full potential of public assets, the choice of monetisation model will be critical.
InvITs and TOTs attract different classes of investors. While the launch of public InvITs may broaden investor participation, phasing out the TOT model could risk losing a segment of existing investors. Players across the infrastructure value chain have shown interest in the TOT model, ranging from infrastructure investment firms such as Cube Mobility to construction companies such as IRB and Adani. Further, relying solely on InvITs may present challenges in meeting the ambitious targets set under NMP-II. That said, concerns have been raised periodically about the viability and returns of the TOT model in comparison to InvITs. If the authorities choose to continue with TOT, strategy revision by NHAI will be essential to maximise value from assets monetised under the TOT model. Ultimately, achieving the targets under NMP-II will require a transparent and well-coordinated execution strategy.
Bhavya Bhandari
