Road Ministry Updates BOT Rules to Boost Private Highway Investment

The Ministry of Road Transport and Highways (MoRTH) has revised the Model Concession Agreement (MCA) for Build-Operate-Transfer (BOT) national highway projects. The move aims to attract more private sector companies and investors to highway development.

The revised agreement includes a buyback option, revenue support for concessionaires and traffic-risk sharing between the government and private developers. These changes are aimed at making BOT projects easier to finance and more attractive to private players.

New Rules to Share Traffic Risk

Under the revised MCA, traffic risk will be shared between the government and the concessionaire through changes in the concession period. If traffic remains below the expected level even after the initial support period, the concession period can be extended. 

If traffic performs much better than expected, the concession period can be reduced.This system is intended to provide better protection to private developers against changes in traffic levels.

Revised Agreement Based on Committee Recommendations

MoRTH said the revised MCA was prepared based on recommendations from an inter-ministerial committee. The committee was formed to study the challenges faced by different stakeholders in BOT highway projects. The revised agreement aims to address these issues and make BOT projects more bankable and attractive for private investment.

NHAI Plans 54 Highway Projects in 2026-27

The changes come as the National Highways Authority of India (NHAI) plans to award 54 highway projects in 2026-27.These projects have a total estimated capital cost of ₹1.8 lakh crore and cover around 2,442 km. The revised BOT agreement could help bring more private participation into these upcoming highway projects.

Large Funds Allowed to Bid for BOT Projects

In May 2026, MoRTH allowed large funds and institutional investors to bid for BOT projects under the Public-Private Partnership (PPP) model.The move came after some BOT projects failed to attract private investment because of concerns over contract terms.

Earlier, large funds were allowed to participate mainly in Toll-Operate-Transfer (TOT) projects. The ministry has now opened BOT projects to sovereign wealth funds, infrastructure funds, pension funds and private equity investors.

Different Models Used for Highway Development

National highways in India are developed through several models, including BOT (Toll), BOT (Annuity), Engineering, Procurement and Construction (EPC), Infrastructure Investment Trust (InvIT) and Hybrid Annuity Model (HAM).

Under the BOT model, the government gives a private developer a concession period of around 20–30 years. During this period, the private player finances, builds and operates the highway project.The revised MCA is aimed at reducing some of the risks faced by private developers and encouraging greater private sector participation in India's highway development.