Highway To No Bids

The Two-Year Trap: Why India’s Highways Are Getting Stalled

By Dev Chandrasekhar

India’s National Highways Authority (NHAI) has a problem it cannot tender its way out of. Three highway packages spanning 912.3 km across Maharashtra and Gujarat, worth Rs 18,884.69 crore, attracted no bids under the Build-Operate-Transfer (BOT) model. In this, a private developer finances and builds a road, and recoups the cost through toll collection over a 20–30-year concession. 

The deadline was extended. Concession agreements were revised. Still nothing.

The silence is diagnostic. IRB Infrastructure carries Rs 3,500–4,000 crore in outstanding NHAI payments, it expects to recover over two to three years. Ashoka Buildcon has Rs 700 crore in asset-sale proceeds contingent on concession extensions, its CFO says, which will take one to two years to materialise.

KNR Constructions has flagged cutthroat competition eroding margins as a structural feature of how NHAI awards contracts.

Three companies, the same underlying stress, priced three different ways.

No single project illustrates the gap between stated ambition and delivery reality better than the Delhi–Mumbai Expressway. At 1,386 km, it is India’s longest expressway and was conceived as the reference benchmark for all greenfield construction that followed.

Originally promised for 2024, it slipped to October 2025. Three packages in Gujarat are now targeted for FY 2027–28, and the full corridor to Mumbai has no confirmed date. 

This matters because developers do not price projects against NHAI’s stated ambitions. They price them against what the ground actually requires. 

The Reluctant Market

India abandoned the BOT toll model roughly a decade ago after actual traffic volumes on newly opened corridors routinely fell 30–50% below the projections underpinning project financing . It made debt difficult to service, leaving lenders and NHAI holding assets worth far less than forecast.

The government responded with the Hybrid Annuity Model (HAM), under which it makes fixed semi-annual payments to the developer regardless of how much traffic uses the road, eliminating traffic risk entirely.

HAM worked so well that it reconditioned the entire industry. Developer balance sheets, lender credit models, and rating frameworks are all now calibrated to government-backed cashflows. 

PNC Infratech has a pipeline of 76 projects worth over Rs 1 lakh crore, almost all under HAM or EPC (Engineering, Procurement and Construction, where the government similarly bears all traffic risk). 

G R Infraprojects has stated plainly that if a developer cannot see a 15% return on investment from toll revenues, the project either goes HAM or does not get built. 

In response, the government has amended the Model Concession Agreement (MCA), the standard contract template, to include termination payments covering up to 150% of equity and 100% of debt; a floor-and-cap clause that adjusts the concession period by up to 20% depending on actual traffic; and NHAI financial support of up to 40% of project cost. 

These might be meaningful protections, but they have not produced a single bid across 912 km of tendered highway.

Leadership lessons from a record year of purpose-led growth

After 37 years in business, 2025 was a record-breaking year for Intrepid Travel. Revenue grew nearly 30%, with the company on track to hit $1bn in bookings in 2026.

But behind the numbers, the year pushed the leadership team to rethink priorities and make some hard calls — including a major reset to its climate strategy.

How they navigated that, what changed, and what they learned is all in the newly released Integrated Annual Report.

Take a look inside Intrepid

$3.7 billion

That’s how much Indian students and families spent on studying abroad in 2025, according to the Henley Education Report 2026. That’s a 31% jump from $2.83 billion in 2018.

The number of Indian students going abroad has also surged. It rose from 5,18,000 in 2018 to 8,93,000 at its peak in 2023—a jump of about 72%.

Flashpoint: For years, families have treated foreign education as an investment in better career prospects and migration opportunities. But that trend may be turning.

The report suggests outbound student mobility could slow in the coming years as immigration policies tighten in key destinations like the United States and Canada.

Recent policy shifts have directly hit student mobility. Canada capped international student permits in 2024 and tightened rules around post-graduation work permits, especially for private college partnerships. The US, while still a top destination, has seen longer visa processing times and growing uncertainty around work visas such as H-1B, a topic The Signal Brief covered in Oct 2025. 

The Turning Point: Rising costs, stricter visa rules, and growing domestic options, including foreign university campuses in India, are reshaping how families think about global education.

In other words, while spending has climbed sharply, the long-standing boom in Indians studying abroad may be entering a more uncertain phase.

RBI’s Economic Projections

The RBI’s Monetary Policy Committee has unanimously decided to keep the repo rate unchanged at 5.25% in its first meeting of FY27.

Trigger: The move comes amid growing concerns over inflation and economic growth, driven by rising crude oil prices and supply chain disruptions linked to the ongoing conflict in West Asia. The committee has also retained its “neutral” policy stance.

Alongside the rate decision, the RBI revised its economic projections. GDP growth for FY27 is now estimated at 6.9%, lower than the 7.6% expected for FY26. Inflation, on the other hand, is projected to rise to 4.6% for FY27, up from the earlier estimate of 4.2%. India had recorded a GDP growth of 7.6% in FY26.

“The projections on growth and inflation—the first estimates by the MPC for fiscal 2027 following the release of the new data series—reflect the recognition that the impact on growth could be greater than that on inflation in the near term. Part of the moderation in India’s GDP growth expected is also due to a statistical high-base effect of fiscal 2026.” said Dipti Deshpande, Principal Economist, Crisil Ltd.

According to QuantEco Research, the 10-year G-sec yield has eased from 7.09% to around 6.93%, helped by a sharp pullback in crude oil prices after the Middle East ceasefire and the absence of any hawkish signals in the RBI’s policy stance. While this broadly aligns with earlier expectations, upside risks remain due to geopolitical uncertainties and their potential impact on inflation and the fiscal deficit.

Forecast: Even so, the central bank flagged continued upside risks to inflation, particularly from elevated global energy prices, supply chain bottlenecks, and the impact of the Super El Niño weather pattern.

Airlines Get Tariff Relief

India's airport tariff regulator has ordered a 25% cut in landing and parking charges at major airports for three months. The Airports Economic Regulatory Authority of India (AERA), acting on government directions, said the reduction applies immediately, with revenue under-recoveries to be addressed in future tariff reviews.

Context: The move follows requests from IndiGo and Air India, which are facing a double blow — spiralling costs from the Iran conflict and a continuing ban on flying over Pakistani airspace. Airport and air navigation charges are airlines' third-largest expense globally, after fuel and labour, according to IATA.

Setup: IndiGo shares surged 10% on Wednesday, hitting the upper circuit, as the broader sector rallied after the US announced a two-week ceasefire with Iran.

Ceasefire Fuels Relief

India is set to receive its first Iranian oil cargo in seven years after the US temporarily lifted sanctions on Iranian oil, with state-run Indian Oil Corp's shipment aboard the vessel Jaya expected on the east coast later this week, Reuters reported.

The development follows a US-Iran ceasefire brokered by Pakistan, which suspended a six-week conflict that had choked global energy supplies and blocked the Strait of Hormuz. India also expects Washington to extend its waiver on Russian oil purchases to further ease prices.

Catch Up Quick: On the domestic front, the government moved to cushion the economic blow. The cabinet raised the nutrient-based fertiliser subsidy by 11.6% to Rs 415.34 billion for the summer crop season, shielding farmers from a 20% rally in global DAP prices. India also issued a tender to import 2.5 million tonnes of urea amid tightening domestic supplies.

Impact: The World Bank has warned that South Asia's growth would slow to 6.3% in 2026, down from 7%, citing energy market disruptions and import dependence, Reuters reported. India, however, reported adequate coal stocks — 220 million tonnes — sufficient for 24 days of power generation.

Cabinet Clears Refinery Boost

India's cabinet has approved an 84% increase in project costs for HPCL Rajasthan Refinery Ltd (HRRL), raising the total outlay to Rs 794.59 billion ($8.60 billion). New Delhi also cleared an additional equity infusion of Rs 89.62 billion by HPCL, taking its total equity investment to Rs 196 billion. HPCL holds a 74% stake in the joint venture, with the Rajasthan government owning the rest.

The Lead: The refinery is set to begin commercial operations in July, creating 10,000 direct jobs. It will process both locally sourced Rajasthan crude and imported crude, producing petrol, diesel, polypropylene, polyethylene, benzene, toluene and butadiene.

Setting: The output targets sectors including transportation, pharma and paints, and is expected to reduce India's import dependence and conserve foreign exchange, the government said.

The 15-Minute Retirement Plan

Retirement savings face two quiet threats: cash flow gaps and inflation eroding purchasing power over time. The 15-Minute Retirement Plan helps investors with $1,000,000 or more account for both and build a portfolio designed to last the distance.

Download your free guide.

Markets Celebrate Ceasefire

On Episode 841 of The Core Report, financial journalist Govindraj Ethiraj talks to Aditi Nayar, Chief Economist & Head - Research & Outreach at ICRA as well as Dr. Ranjeet Mehta, CEO & Secretary General at PHDCCI (PHD Chamber of Commerce and Industry).

• Markets celebrate ceasefire but will it last?

• RBI holds interest rates as expected, lowers GDP forecasts

• What is early data telling us on the war impact and outlook?

• India needs more than 50 widebodied aircraft and why jet fuel supplies will take time to return to normal

• An Indian delegation went to China after more than 5 years, first impressions