Competition in Hybrid Annuity Model projects has begun to ease after the Ministry of Road Transport and Highways tightened bidding norms on 10 July, India Ratings and Research (Ind-Ra) said. The ministry raised the minimum available net worth requirement to 20 per cent of the estimated project cost from 15 per cent and increased package sizes, which reduced average bidder participation in FY26 from 13 to 10. Ind-Ra noted the decline was pronounced in the fourth quarter as newer awards featured higher bid costs and larger lots.

The agency said newer HAM projects had larger package sizes and higher bid costs, favouring developers with larger equity bases and stronger credit profiles. Awards to stronger sponsors improved for the first time in FY26 after an extended period of decline, reflecting a shift in the competitive landscape. Ind-Ra observed that developers with stronger finances were more likely to secure contracts.

Around half of the National Highways Authority of India’s under-construction HAM projects are expected to face delays exceeding 12 months owing to land and work-front issues, standardised construction periods, material sourcing challenges and approval delays, the agency added. Of the delayed projects, nearly 40 per cent are being executed by new sponsors that entered the HAM ecosystem after bidding norms were relaxed in 2021. That concentration among newer sponsors raises execution and credit risks.

Ind-Ra reported that stronger sponsors have monetised almost 80 per cent of their operational projects, while new sponsors have preferred the top-up route, with 55 per cent of completed projects using it. The agency noted that 67 per cent of projects held by new sponsors have leverage above 70 per cent, exposing them to higher credit risk. It also said the shift from HAM to build-operate-transfer remains uncertain despite recent revisions to the Model Concession Agreement aimed at improving bankability and lender protections; no awards were recorded under BOT in FY26 and only 209.8 km were awarded in FY25.