NHAI to Introduce Compensation Framework Ahead of Annual Highway Pass Rollout

In a significant policy move, the National Highways Authority of India (NHAI) is preparing to roll out a compensation framework for private highway operators and institutional investors, including overseas pension funds, to address potential revenue shortfalls arising from the launch of the new “annual pass” for private vehicles, scheduled to go live on August 15, 2025.

The annual pass scheme, aimed at easing the financial burden on commuters, will allow unlimited travel on national highways and expressways for a fixed annual fee. While the initiative marks a major step toward user-centric infrastructure, it has also raised alarms among major private players who have heavily invested in the sector under the government’s asset monetisation programme.

Key stakeholders such as Cube Mobility, IRB Infrastructure, the Adani Group, and long-term global investors, including the Canada Pension Plan Investment Board (CPPIB), Ontario Teachers’ Pension Plan Board, and the National Investment and Infrastructure Fund (NIIF), have voiced concerns over the potential erosion of projected returns based on existing toll-based revenue models.

In response, the Ministry of Road Transport and Highways (MoRTH) has constituted a committee tasked with formulating a detailed compensation mechanism within a month. The committee will engage in consultations with all relevant stakeholders and develop the framework based on:

1. Estimated revenue losses due to the annual pass scheme
2. Project-specific variations in toll agreements
3. Model-wise investor exposure, particularly under TOT and InvIT frameworks
4. Historical toll data analysis to accurately assess impact

Despite investor apprehensions, the August 15 rollout remains firmly on schedule. While making highway access more affordable for the public remains a core policy goal, the government also recognizes the importance of maintaining investor confidence, especially as it prepares to scale up monetisation efforts under its infrastructure roadmap.

This move reflects a maturing of the public-private partnership model in India’s infrastructure space, one that seeks to balance public interest with financial viability. The evolving policy stance signals a commitment to regulatory predictability, capital protection, and long-term trust-building, particularly for global funds eyeing India’s infrastructure market.

Key implications of this development include:

1. Reinforced confidence among current and prospective investors
2. Sustained momentum in the highway monetisation pipeline

By proactively addressing investor concerns linked to the annual pass rollout, NHAI demonstrates a balanced approach to infrastructure reform. The proposed framework reflects a commitment to fairness and financial responsibility, ensuring that public benefit and private investment continue to grow together.