The ambitious expansion of India's highway network, encompassing vast expressways and critical economic corridors, demands colossal financial investment. However, with the National Highways Authority of India (NHAI) grappling with a significant debt burden and the limits of government budgetary support being reached, a new financial instrument has taken centre stage: Infrastructure Investment Trusts (InvITs).
The New Engine for Highway Construction
Over the last four years, InvITs have emerged as a pivotal mechanism for recycling capital, monetising completed highway projects, and attracting long-term investors from both India and abroad. The dedicated trust established by NHAI, known as the National Highway Infra Trust (NHIT) or NHAI InvIT, has already successfully mobilised over ₹46,000 crore. This has been achieved by leasing operational highways to investors for extended periods of 20 to 30 years.
This innovative model is fundamentally altering the landscape of highway financing. It marks a strategic shift away from debt-heavy public expenditure towards a market-driven system focused on yield-based investment. This deep dive explores the workings of InvITs and their central role in India's revised road-financing strategy.
Understanding the InvIT Mechanism and Its Appeal
An Infrastructure Investment Trust (InvIT) is a regulated financial vehicle that enables investors to purchase a share in income-generating infrastructure assets. The trust holds operational assets like toll roads or annuity highways. Investors buy units of this trust, which are comparable to mutual fund units. The cash flows produced from these assets—such as toll revenue or annuity payments from the government—are then distributed to investors as regular returns.
The sponsor, in this case NHAI, utilises the substantial upfront capital raised to finance the construction of new highways. This process allows NHAI to unlock the immense capital tied up in completed projects and recycle it into fresh infrastructure development.
Several compelling factors have driven NHAI's increased reliance on this model. The authority's debt levels had previously crossed a staggering ₹4 trillion, forcing it to use large portions of its budgetary allocations for debt repayment. Although the current debt stands at about ₹2.5 trillion, it still constrains NHAI's ability to secure more loans. There was a growing consensus that the authority needed to become self-sustaining.
Furthermore, mega projects like the Delhi-Mumbai Expressway and other cross-country corridors require long-term, low-cost financing, for which InvITs have proven to be an effective solution. The government's own National Monetisation Pipeline has identified InvITs as a key tool for recycling operational assets. For investors such as pension funds, sovereign wealth funds, and insurance companies, InvITs offer predictable yields, making them an attractive asset class.
Performance and the Future of Highway Financing
The performance of highway InvITs so far has been strong and encouraging. The NHAI InvIT has provided consistent distributions to its unitholders since its listing in November 2021, with payments typically made quarterly. In the fiscal year 2025, the dividend distribution was approximately ₹9.5 per unit. The units have maintained stability in the market, and multiple rounds of asset transfers have successfully generated large capital for new construction.
Steady traffic growth on national highways has driven robust toll revenue, thereby strengthening the distributions from the trust. The success has been so pronounced that the Ministry of Road Transport and Highways has greenlit a public InvIT. An official indicated that this public offer is expected in the later part of the last quarter of FY26, aiming to raise ₹20,000-25,000 crore and involve retail investors as equity partners.
Looking ahead, InvITs are poised to become a permanent pillar of India's highway financing model. They enable faster project rollouts by providing upfront capital through monetisation. This also reduces the fiscal burden on the central government, allowing public spending to be redirected towards more strategic or less commercially viable projects. InvITs have already accounted for over 30% of the government's highway monetisation drive, which has yielded ₹1.43 trillion to the exchequer since 2021. The future may see NHAI creating sector-specific or region-specific InvITs, with more private developers also expected to launch their own trusts.
In essence, Infrastructure Investment Trusts represent a major evolution in how India finances its national highways. The country is decisively moving from a debt-driven, government-led model to a sophisticated, market-based, and investor-backed ecosystem that promises a faster, more sustainable path to infrastructure growth.
