The Ministry of Road Transport and Highways (MoRTH) has revised bidding rules to permit large institutional investors, including sovereign wealth funds, pension funds and private equity firms, to participate directly in build-operate-transfer (BOT) highway projects under the public-private partnership (PPP) model. The move follows a weak private sector response to a number of BOT projects, with four projects worth around Rs 220 billion (bn) reportedly failing to attract bids amid concerns over contract terms and project risks. The revised framework is being positioned as a measure to expand the investor base and address bottlenecks in project mobilisation.

Under the modified request for proposal framework, entities such as infrastructure funds, Alternative Investment Funds (AIFs) and foreign investment funds may now submit bids independently or as part of consortiums, whereas earlier their participation was largely limited to toll-operate-transfer projects. The norms also ease technical qualification requirements for institutional investors, allowing construction-related expertise to be fulfilled through concessionaires or engineering partners appointed after award. Bidders will continue to be evaluated on financial strength.

MoRTH expects that allowing diverse long-term investors will improve private capital flow into the highway sector and help revive projects that have stalled for lack of bidders. National highways are developed through multiple models, including build-operate-transfer (BOT) in both toll and annuity forms, engineering, procurement and construction (EPC), the Hybrid Annuity Model (HAM) and Infrastructure Investment Trusts (InvITs). Under the BOT model, private entities finance, construct and operate projects for a concession period of 20 to 30 years and recover investments through toll collections.

The change could attract investors with longer maturity profiles and different risk appetites, potentially enabling more creative financing and secondary market structures. Project award and execution will remain contingent on contract design, risk allocation and traffic performance, factors that have deterred bidders in the past. The ministry has signalled that the revisions form part of a broader effort to diversify financing channels and accelerate delivery of national highway capacity.