India Ratings and Research (Ind-Ra) is sticking with a neutral outlook for the country’s transport infrastructure segment heading into FY27, pointing to steady performance from assets already in operation and continued momentum in highway toll collections.
The credit rating agency anticipates the National Highways Authority of India (NHAI) will roll out more road contracts under both the hybrid annuity model (HAM) and build-operate-transfer (BOT) frameworks in the year ahead. Under HAM, construction costs are split upfront between the government and the private developer, with the developer recovering the balance through scheduled annuity payments over time. BOT works differently — the developer funds the project entirely and earns back its investment through toll collections over an extended concession period.
Toll Revenue Strong, But HAM Timelines Slipping
Ind-Ra projects toll road revenues will keep climbing through the back half of FY27, driven by broader economic activity and upward adjustments in toll rates. That said, the agency warned that close to half of NHAI’s HAM projects still under construction risk running more than a year behind schedule, hampered by land acquisition bottlenecks, workfront constraints, standardized build timelines, supply-chain issues around materials, and slow-moving approvals.
Among projects already operational, established sponsors are actively cashing out through asset sales, while newer entrants are leaning more heavily on debt financing to fund operations, according to the agency.
Interestingly, competitive intensity for new HAM bids appears to be cooling somewhat — a shift Ind-Ra links to larger contract package sizes and stiffer net-worth eligibility thresholds mandated by the Ministry of Road Transport and Highways.
InvIT Ecosystem Set to Nearly Double by FY30
Infrastructure investment trusts remain a bright spot. Road-focused InvITs held assets under management worth ₹3,168 billion as of March 2026, and Ind-Ra expects that figure to swell to roughly ₹6,000 billion by FY30 — fueled in part by NHAI’s ongoing asset monetization drive under National Monetisation Programme 2.0. HAM-specific assets held within InvITs could climb to around ₹1,000 billion over that same stretch as more projects reach completion.
A recent Reserve Bank of India rule change also reshapes how InvITs can borrow: combined bank exposure to any single InvIT — spanning its subsidiary SPVs and holding entities — is now capped at 49% of the trust’s total asset value. Once that ceiling is hit, InvITs will have to turn to non-convertible debentures for further debt raising. Ind-Ra believes the sector’s credit strength and sponsor support should still allow InvITs to tap capital markets effectively for debt.
Rasika K, an analyst on Ind-Ra’s Infrastructure & Project Finance team, noted that recent revisions to the BOT Toll Model Concession Agreement are designed to make the structure more appealing — strengthening protections for lenders, introducing mechanisms to share traffic-volume risk, and cutting down execution risk. The changes are expected to draw greater private-sector interest going forward.
Aviation Outlook Stays Neutral Amid Regional Tensions
On the aviation side, Ind-Ra has upgraded its airport rating outlook to stable, though its overall sector view for the rest of FY27 remains neutral. The agency pointed to slowing passenger growth, driven by elevated fuel costs and fallout from the West Asia conflict.
Domestic air travel has held up comparatively well, even as international traffic has softened under geopolitical strain. Government interventions — including caps on aviation turbine fuel pricing overseen by the Ministry of Civil Aviation and liquidity support measures — have helped keep domestic travel demand stable.
Ind-Ra analyst Vandan Pasad noted that Indian airports continue to benefit from resilient domestic demand, a supportive regulatory framework, and ongoing capacity expansion, even amid near-term geopolitical uncertainty. The agency also expects growth in non-aeronautical revenue streams and new airport capacity to bolster operations over the medium to long term.
