In a significant policy shift aimed at reviving private participation in highway development, the Ministry of Road Transport and Highways (MoRTH) has opened build-operate-transfer (BOT) road projects to large institutional investors, including sovereign wealth funds, pension funds, infrastructure funds and private equity players.
The move comes after four national highway projects worth nearly Rs 22,000 crore reportedly failed to attract bidders under the BOT model, prompting the government to revisit eligibility rules and ease concerns around rigid contract conditions.
Until now, large global and domestic funds were largely restricted to toll-operate-transfer (TOT) projects, where investors acquire operational highways generating stable toll revenue.
BOT projects, however, involve financing, constructing and operating highways over concession periods that typically range between 20 and 30 years, making them more exposed to construction and execution risks.
Under a modified request for proposal (RFP) framework issued by the ministry, institutional investors can now directly bid for BOT projects under the public-private partnership (PPP) model.
Importantly, the ministry has separated financial eligibility from construction capability — a key demand from large financial investors who were previously deterred by technical qualification requirements.
Under the new framework, institutional investors will primarily be assessed on their financial strength, while construction-related expertise can be fulfilled later through engineering partners or concessionaires appointed after the project is awarded.
The change is expected to make BOT projects more attractive to long-term capital providers looking for infrastructure exposure in India without directly taking on execution responsibilities.
India’s national highway network is currently developed through multiple execution models, including EPC (Engineering, Procurement and Construction), Hybrid Annuity Model (HAM), BOT, InvIT structures and TOT projects.
However, the BOT model, once the backbone of India’s highway expansion, has struggled in recent years due to financing constraints, traffic risks and disputes over concession agreements.
By bringing large institutional investors into the BOT ecosystem, the government is attempting to revive a model it sees as critical for expanding highway infrastructure while reducing pressure on public finances.
The move comes after four national highway projects worth nearly Rs 22,000 crore reportedly failed to attract bidders under the BOT model, prompting the government to revisit eligibility rules and ease concerns around rigid contract conditions.
Until now, large global and domestic funds were largely restricted to toll-operate-transfer (TOT) projects, where investors acquire operational highways generating stable toll revenue.
BOT projects, however, involve financing, constructing and operating highways over concession periods that typically range between 20 and 30 years, making them more exposed to construction and execution risks.
Under a modified request for proposal (RFP) framework issued by the ministry, institutional investors can now directly bid for BOT projects under the public-private partnership (PPP) model.
Relaxed norms aim to revive private investment
The revised norms significantly widen the pool of eligible bidders. According to the updated RFP document, bidders can include private entities, government-owned firms, Alternative Investment Funds (AIFs), foreign investment funds, natural persons, or consortiums formed through joint bidding agreements.Importantly, the ministry has separated financial eligibility from construction capability — a key demand from large financial investors who were previously deterred by technical qualification requirements.
Under the new framework, institutional investors will primarily be assessed on their financial strength, while construction-related expertise can be fulfilled later through engineering partners or concessionaires appointed after the project is awarded.
The change is expected to make BOT projects more attractive to long-term capital providers looking for infrastructure exposure in India without directly taking on execution responsibilities.
India’s national highway network is currently developed through multiple execution models, including EPC (Engineering, Procurement and Construction), Hybrid Annuity Model (HAM), BOT, InvIT structures and TOT projects.
However, the BOT model, once the backbone of India’s highway expansion, has struggled in recent years due to financing constraints, traffic risks and disputes over concession agreements.
By bringing large institutional investors into the BOT ecosystem, the government is attempting to revive a model it sees as critical for expanding highway infrastructure while reducing pressure on public finances.
