Revamping BOT model to attract investment in road sector: India Ratings

India Ratings and Research (Ind-Ra) opines that the revamping of the built-operate-transfer (BOT) model is a tactical move to attract private capex, which is estimated to surpass INR 1 trillion by 2030, as per the government. The road sector in India has been at the forefront of performance and innovation and has played a crucial role in shaping the country’s economic growth trajectory, with a CAGR of about 14% over the past decade.

Picture courtesy: Dynapac

During the past seven years, the government has successfully rolled out about 400 hybrid annuity model (HAM) road projects in India, worth over INR 4 trillion, thereby balancing risk appropriately between private and public partners and has boosted the public-private partnership activity in the sector. Also, the government’s enhanced focus on monetisation via the National Monetisation Pipeline (NMP) has attracted foreign investors, including various sovereign wealth funds and pension funds. The government’s continued focus on infrastructure development, stable regulations, setting up an infrastructure financing bank NaBFID - the National Bank for Financing Infrastructure and Development, promoting adoption of surety bonds, and introduction of FASTags, have all worked positively for the sector.