Changing BOT Model can drive Rs 0.4-0.5 trillion Investment
ECONOMY & POLICY

Changing BOT Model can drive Rs 0.4-0.5 trillion Investment

According to a research by India Ratings and Research, changes to the build-operate-transfer (BOT) model are expected to increase investments in the road industry by around Rs 40-50 lakh billion during the current fiscal year. The proportion of these projects from FY25 is probably going to rise with the resuscitation of the BOT model, which has elements that offer a considerable amount of risk reduction above the previous model.

According to this model, Ind-Ra projects that capex requirements would be between Rs 0.4 trillion and Rs 0.5 trillion in FY25. The rating agency also expects that these requirements will climb gradually to Rs 1 trillion by 2030.According to the ratings agency, the BOT model's redesign is a calculated strategy to draw in private capital, which is expected to exceed Rs 1 trillion by 2030.

About 400 hybrid annuity model (HAM) road projects worth over Rs 4 trillion have been implemented by the government in India during the previous seven years, helping to adequately balance risk between public and private partners and increasing the activity of public-private partnerships in this sector. Also, international investors, notably a number of sovereign wealth funds and pension funds, have been drawn to the government's increased focus on monetisation through the National Monetisation Pipeline (NMP). The industry has benefited from the government's sustained emphasis on infrastructure development, stable regulations, establishment of the National Bank for Financing Infrastructure and Development (NaBFID), encouragement of the use of surety bonds, and introduction of FASTags.

According to a research by India Ratings and Research, changes to the build-operate-transfer (BOT) model are expected to increase investments in the road industry by around Rs 40-50 lakh billion during the current fiscal year. The proportion of these projects from FY25 is probably going to rise with the resuscitation of the BOT model, which has elements that offer a considerable amount of risk reduction above the previous model. According to this model, Ind-Ra projects that capex requirements would be between Rs 0.4 trillion and Rs 0.5 trillion in FY25. The rating agency also expects that these requirements will climb gradually to Rs 1 trillion by 2030.According to the ratings agency, the BOT model's redesign is a calculated strategy to draw in private capital, which is expected to exceed Rs 1 trillion by 2030. About 400 hybrid annuity model (HAM) road projects worth over Rs 4 trillion have been implemented by the government in India during the previous seven years, helping to adequately balance risk between public and private partners and increasing the activity of public-private partnerships in this sector. Also, international investors, notably a number of sovereign wealth funds and pension funds, have been drawn to the government's increased focus on monetisation through the National Monetisation Pipeline (NMP). The industry has benefited from the government's sustained emphasis on infrastructure development, stable regulations, establishment of the National Bank for Financing Infrastructure and Development (NaBFID), encouragement of the use of surety bonds, and introduction of FASTags.

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