Revamped BOT Model to Drive Trillion-Dollar Capex Boom in India by 2030

India Ratings and Research (Ind-Ra) highlights that the revamping of the built-operate-transfer (BOT) model aims to attract private capital expenditure, estimated to exceed Rs 1 trillion by 2030. This, along with the Hybrid Annuity Model (HAM) road projects and National Monetisation Pipeline (NMP), has boosted public-private partnerships and foreign investments.

India Ratings and Research (Ind-Ra) on Tuesday said the revamping of the built-operate-transfer (BOT) model is a tactical move to attract private capex, which is estimated to surpass Rs 1 trillion by 2030, as per the government.

According to the rating agency, during the past seven years, the government has successfully rolled out about 400 Hybrid Annuity Model (HAM) road projects in India, worth over Rs 4 trillion. This approach has balanced risk appropriately between private and public partners, thereby boosting public-private partnership activity in the sector.

Also, the government’s enhanced focus on monetisation via the National Monetisation Pipeline (NMP) has attracted foreign investors, including various sovereign wealth funds and pension funds, it added.

Ind-Ra asserted that developers need to be mindful of aggressive bidding, taking projects beyond the appetite of their balance sheet, and overestimating toll revenue for greenfield projects to protect them from volatilities in the longer run.

The road sector in India has been at the forefront of performance and innovation and has played a crucial role in shaping the country’s economic growth trajectory, with a CAGR of about 14 per cent over the past decade, it said.

As per Ind-Ra, BOT model of road development will drive investments worth Rs 0.4 trillion-Rs 0.5 trillion in FY25.