The Centre is close to finalizing a new model concession agreement (MCA) to govern the BOT model, which will open highway bidding to private equity firms and fund houses, two road ministry officials familiar with the plan said. The new MCA is likely to be out by the end of the month, as India moves to revive BOT after years of experimenting with alternate models. Under BOT, a private firm builds a project, operates it and levies tolls for a set period, and hands it back to the government.

Clearer provisions

The new MCA may specify clearer provisions on termination payments, traffic risk-sharing, change-in-law protections and dispute resolution timelines, areas that had deterred private investors during the first wave of BOT expansion from the late 2000s. According to one of the two officials cited above, the new MCA will rationalize risk allocation, provide greater flexibility in equity structuring, and allow financial investors lacking construction experience to bid directly, if they meet technical criteria through partnerships or independent engineering arrangements.

The new MCA comes against the backdrop of plans to auction 5,000 km of national highway projects worth ₹75,000 crore under BOT in FY27, as Mint reported on 18 January. This will be nearly 50% of all highway projects for the year, a sharp pivot from the current model where only 10% of projects go into BOT.

“The move is expected to widen the competitive landscape beyond traditional road developers and construction companies, many of whom have faced balance sheet constraints in recent years,” the second official said. However, the ministry is also keen to ensure that competition does not revive the past of aggressive bidding and heavy debt stalling projects and boosting bad loans.

In an effort to prevent irrational bidding that once plagued BOT, there will be tight checks on bidders’ qualifications and revenue projections, the first official said. Fund houses and PE firms will also need to adhere to a separate set of eligibility and net worth criteria.

New models

After the souring of BOT in the 2010s, India shifted to newer models where the government took on construction risk and partly mitigated revenue risk, through the hybrid annuity model (HAM), and the engineering, procurement and construction (EPC) model. Of late, BOT is back in favour, with the Centre pointing to stable traffic, toll transparency, and mature regulation. Allowing deep-pocketed institutions is seen as the next logical step in that direction.

So far, global and domestic funds including Macquarie, I Squared Capital, Brookfield, Abu Dhabi Investment Authority (ADIA), CPPIB (CPP Investments), and the Ontario Teachers’ Pension Plan (OTPP) have largely invested in toll roads with established traffic and predictable cash flows, through platforms sponsored by developers or via infrastructure investment trusts (InvITs). These entities also need permission to take over operational highway projects awarded under the Toll Operate Transfer (ToT) route. Many global funds have been active buyers of operational highways, often acquiring stakes from stressed developers or sponsoring InvIT platforms. However, these investments come after traffic stabilizes and regulatory risks fade.

“By enabling them to bid directly for greenfield BOT projects, the government hopes to attract long-term patient capital that is comfortable with infrastructure risk but seeks greater control over project structuring,” the first official said.

Spokespersons infrastructure players such as ADIA, Brookfield, General Atlantic, and OTPP declined comment. Queries emailed to the spokespersons of the road ministry, Macquarie, Brookfield, BlackRock, Mubadala, and CPPIB on 13 February remained unanswered.

Broader objective

For the government, the broader objective is to crowd in private capital without increasing fiscal burden, while sustaining the pace of highway construction. For investors, the new framework could offer a rare opportunity to enter at the creation stage of assets in one of the world’s fastest-growing road networks.

Vinayak Chatterjee, co-founder of Feedback Infra Pvt. Ltd, a consultancy, termed it a “good development” that will open up the highway sector for investment by cash-rich institutions. So far, investment by funds have largely been in brownfield projects,” Chatterjee said.

“All funds also have infrastructure departments that could now actively participate in greenfield highway development projects that will also reduce balance sheet risk for these entities as they would now be able to structure their risk appetite in better fashion as they would’ve in control of projects right from construction to operation stage,” added Chatterjee, who is also the founder and managing trustee of The Infravision Foundation, a infrastructure-focused think tank.

Road map

The Union road ministry plans to boost highway awards to ₹3 trillion annually for a few years to expand national highway length from present 1,46,000 km, adding another 75,000-1,00,000 km. A big focus is on building high-speed access-controlled road networks where the target is to take up the capacity from present 3,000 km to around 50,000 km. Widening the investor base, including a provision to rope in cash-rich funds, is expected to help construction of these expensive projects.

Manish Aggarwal, partner, Deloitte India, welcomed the move, adding financial investors have been traditionally wary of construction risk. However, many of them have gained experience in maintaining roads and expanding capacity when required, he said.

“Partnering with the EPC companies at the preparation of the bidding itself would help in bids being more prudent both in terms of construction costs and diligence on projected traffic, avoiding the projects going into stress like we have seen in the past, especially for the BOT toll model. We could see strong interest from active financial investors in the ,sector including infrastructure-focussed funds, global pension and sovereign funds,” Aggarwal added.

Local hurdles

However, another infrastructure expert was not convinced.

“Highway construction in India entails interaction with several local stakeholders such as local regulatory agencies, local contractors, local material suppliers, local labour etc. These aspects may be difficult to address by pure fund houses, especially foreign fund houses. Hence, instead of participating in greenfield projects as sole bidders, international funds may prefer to do equity JVs with reputed construction companies to participate in greenfield projects. Thus, opening-up of greenfield projects to international funds may have limited impact on the participation of bidders,” said Kuljit Singh, partner and national infrastructure leader, EY India.

For large investors, direct entry into greenfield projects offers two strategic advantages, the first official said. “First, it allows them to shape capital structure and risk allocation from the outset, rather than inheriting legacy issues. Second, it enables better lifecycle returns by capturing value from construction through operations, instead of paying a premium for de-risked assets.”

“At the same time, the model is expected to reduce pressure on traditional developers’ balance sheets. Instead of fully financing and constructing projects before monetising them, developers could partner with funds at the bidding stage, thereby lowering upfront equity commitments and leveraging funds’ lower cost of capital,” he added.

MCA success

Analysts say the success of the revised MCA would depend on how effectively risks are recalibrated between the public and private sectors. Construction delays due to land acquisition, environmental clearances, or utility shifting have historically eroded project viability. Clearer timelines and compensation mechanisms will be critical to restoring investor confidence.

“If implemented effectively, the changes could mark a structural shift in how India finances its highway expansion—moving from developer-led, bank-funded models to institutionally backed, equity-heavy structures aligned with global best practices,” Chatterjee of Feedback Infra said.

In the Union budget for 2026-27, the road ministry was allocated a significantly increased budget of ₹3.10 trillion, up by around 8 % from the previous year’s allocation of ₹2.87 trillion (revised estimates), to accelerate the development of national highways, expressways, and greenfield access-controlled corridors.

The share of BOT projects in highway contract awards is down from a high of 90% a decade ago to less than 10% now. Private investors have so far shied away from taking up the entire risk of construction of highways, and have instead opted for projects that have been awarded under HAM and EPC models.

Between 2007 and 2014, in fact, only BOT models were used to build highways. The model accounted for 96% of all projects awarded in 2011-12. But this progressively reduced as investor appetite for risk waned and several faced liquidity issues to complete projects won on ambitious bids. In 2018-19 and 2019-20, no projects were awarded on the BOT model. The last time before the Nashik-Solapur-Akkalkot project award in December, was when NHAI tried to assign BOT projects in 2020 but it took a year for it to be awarded in 2021. In FY24 and FY25, road developer NHAI could not award any projects on BOT mode. MoRTH plans to award 10,000 km of highways in FY27.