Will Toll Collection Growth in India Rise to 5-9%?
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Synopsis
The toll collection sector in India is poised for growth, with projections indicating an increase of 5-9% in FY26. This growth promises stability for the sector through FY27, backed by favorable inflation rates and robust toll collections.
Key Takeaways
- Projected toll collection growth of 5-9% in FY26.
- Stability in the toll road sector is anticipated through FY27.
- Inflation-linked toll rate hikes are expected.
- Debt coverage metrics for BOT toll road projects are likely to remain adequate.
- Road execution is projected to moderate slightly.
New Delhi, Jan 3 (NationPress) The growth of traffic and toll collections is anticipated to rise by 5-9% in FY26, which is expected to contribute to the stability of the toll road sector through FY27, according to a recent report.
The analysis from ICRA indicates that the outlook for the toll road sector remains positive, setting the stage for continuous expansion.
“Thanks to favorable WPI inflation, the projected hike in inflation-linked toll rates is around 3.2% for new projects and between 1.6% to 2% for older projects in FY2027,” stated M Rajashekar Reddy, Assistant Vice President & Sector Head at ICRA.
Consequently, toll collection growth is expected to enhance by 5-8% in FY27. With robust toll collections and manageable O&M costs, the debt coverage ratios for BOT toll road projects are projected to remain sufficient, the report noted.
The report also points out that the recent tightening of bidding criteria for Hybrid Annuity Model (HAM) and Engineering, Procurement, and Construction (EPC) projects is a positive development. However, competitive pressure is unlikely to diminish significantly as many players continue to meet the rigorous standards.
The National Highways Authority of India (NHAI) secured Rs 12,357 crore through Toll-Operate-Transfer bundles in the first nine months of FY26, bringing the total monetization since FY19 to Rs 1,04,990 crore. With more bundles on the horizon, total proceeds are projected to reach around Rs 1.3 lakh crore by the end of this fiscal year.
The Ministry of Road Transport and Highways (MoRTH) reported that road execution reached 3,468 km from April to October 2025, compared to 3,920 km in the same period last year. For the complete fiscal year FY2026, road execution is expected to moderate to 9,000-9,500 km, slightly lower than the 10,660 km achieved in FY25.
The ratings agency forecasts that road awards will reach 8,500-9,000 km in FY2026, a slight increase from the estimated 7,500-8,000 km in FY2025. A significant rise in order awards from the Ministry is vital to alleviate competitive pressure and bolster the sector, it highlighted.
Despite short-term challenges in construction, the outlook for the operational toll road sector remains stable, buoyed by anticipated steady traffic growth and controlled inflationary factors, it concluded.
Furthermore, the agency maintains a 'Stable outlook' on the larger construction sector, predicting a revenue growth of 8-10% for FY2027, slightly better than the 6-8% growth expected for FY2026.
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Point of View
The optimistic projections for toll collection growth offer a glimmer of hope for stakeholders in the road sector. The stability indicated by the report is crucial for long-term planning and investment in India's evolving transportation landscape.
NationPress
03/01/2026
Frequently Asked Questions
What is the expected toll collection growth in FY26?
The toll collection growth is expected to improve by 5-9% in FY26.
Who released the report on toll collection growth?
The report was released by ICRA.
What factors are contributing to the growth in toll collections?
Favorable WPI inflation and healthy toll collections are contributing factors.
What is the projected toll rate hike for new and old projects?
For newer projects, the toll rate hike is projected at around 3.2%, while for older projects it is between 1.6% to 2%.
How much has the NHAI raised through Toll-Operate-Transfer bundles?
The NHAI has raised Rs 12,357 crore through Toll-Operate-Transfer bundles in the first nine months of FY26.
