India's toll collection growth is set to moderate to 5-7 per cent in fiscal year 2027, a 150-200 basis point reduction, as the economic fallout from the West Asia conflict and a slowdown in commercial traffic impact the sector, according to a new report from Crisil Ratings.
Key Points
- India's toll collection growth is expected to moderate to 5-7 per cent in FY27, a decrease of 150-200 basis points, primarily due to the West Asia conflict and reduced commercial traffic.
- This moderation is anticipated to be temporary, with higher toll rate hikes driven by inflationary pressures expected to boost growth to 8-10 per cent in FY28.
- Commercial traffic, which accounts for about 75 per cent of toll collection, is vulnerable to the conflict's impact on industrial output, construction, and mining.
- Passenger traffic, less affected by geopolitical events, continues to benefit from increased vehicle ownership and improved road infrastructure, showing resilience.
- Despite some assets experiencing traffic decline due to diversions or environmental factors, the diversity within InvITs and pooled portfolios helps cushion the overall impact, maintaining stable credit profiles.
Economic impact of the West Asia conflict and a slowdown in commercial traffic are likely to see India's toll collection growth moderate by 150-200 basis points (bps) to 5-7 per cent year-on-year (Y-o-Y) in 2026-27 (FY27), according to Crisil Ratings.
Toll collection for Crisil's sample of 91 toll road assets, covering 10,000 km and 60 per cent of privately-operated concessions in FY26, stood at Rs 23,000 crore, a 7-8 per cent growth.
The projected moderation in FY27 is expected to be temporary and recouped in FY28 through higher toll rate hikes driven by inflationary pressures.
Crisil said this highlights the resilience of toll road assets through economic cycles.
Healthy operating performance and controlled leverage are expected to keep credit profiles stable.
Factors Influencing Toll Growth
Toll rate hikes in a financial year are linked to the previous year's Wholesale Price Index (WPI) inflation.
Manish Gupta, deputy chief ratings officer, Crisil Ratings, said, "Traffic growth, a function of economic expansion, is estimated at 2-4 per cent in the near term.
"A modest WPI inflation of last year will limit toll rate hikes this financial year, and consequently, toll collection will grow 5-7 per cent.
"However, next financial year's toll rates may see a steeper increase due to higher WPI inflation, expected this financial year amid the West Asia conflict.
"This will drive toll collection growth to 8-10 per cent next financial year."
Commercial traffic remains the backbone of toll collection, contributing about 75 per cent. Freight movement, linked to industrial output, construction and mining activity, may be impacted by the conflict, reflected in sequential degrowth in FASTag toll collections in March and April.
Passenger traffic continues to benefit from rising vehicle ownership, improved connectivity and time savings from better road infrastructure.
Though its share in toll collection is lower, passenger traffic growth has outpaced commercial traffic in recent years and is expected to remain resilient as it is less affected by geopolitical events.
Asset Performance and Policy Impact
While overall road traffic growth remains steady, about one-fourth of the assets in Crisil sample saw traffic decline over the past two financial years.
Diversion to new highways and expressways affected 12 per cent of the assets, while heavy monsoon, sand mining bans, post-surge normalisation and feeder route issues impacted another 12 per cent.
Anand Kulkarni, director, Crisil Ratings, said, "Notably, more than 80 per cent of the assets from Crisil Ratings sample are a part of infrastructure investment trusts (InvITs) or pooled portfolios.
Consequently, diversity of assets helps cushion the impact.
Controlled leverage maintained under the InvIT structure, along with resilient operating performance, will keep the debt service coverage ratio of toll road assets strong at 1.5 times this financial year and the next.
Consequently, credit profiles will remain stable."
Policy interventions have also influenced toll collection, though the impact has remained manageable.
The introduction of an annual pass for non-commercial passenger vehicles led to a 5-7 per cent impact on overall toll collection in the last quarter of FY26.
However, concessionaires are being compensated by the authority, preserving credit stability.
Crisil added that any sharp weakening in the macroeconomic environment amid the conflict, particularly affecting commercial traffic, will require close monitoring.
