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Focus: Toll Road Evolution - Getting Ready for the Next Generation of Projects in India?

India’s National Highway network has undergone an impressive upgrade in recent years. While the nature of most of the schemes has been relatively low risk from an investor perspective, the next generation of projects are likely to present greater challenges and potentially greater returns.

Tolls are not new in India, with the Arthasastra (4th century BCE) noting their use. However, the current toll road program in India dates back to the late 20th Century, when the National Highways Authority of India (NHAI) launched one of the world’s largest road PPP programmes, the National Highway Development Programme (NHDP).

The aim was to upgrade, rehabilitate and widen major highways to a world class standard to promote social and economic growth across the country.

Four Stage Evolution of Toll Roads
When one looks around the world one is immediately struck by what appears to be a fairly common four stage evolution of the toll road market.

This four stage life cycle for tolling in a country is as follows:

  • Stage 1: Natural Barriers
  • Stage 2: Inter Urban Network
  • Stage 3: Congestion Busters
  • Stage 4: Road Pricing

While every country or region may not transition through every stage this seems to be a model that, in general, fits.

The drivers of evolution through the four stages being traffic growth, technological development, and the ever evolving balance of priorities between economic growth on the one hand and social and environmental objectives on the other.

So, where is India in this evolutionary process, what is the next step, and what does that mean for private investors?


LeighFisher and Jacobs.


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