Over the past four years, InvITs have emerged as one of the most important tools for recycling capital, monetising completed highway assets and attracting long-term domestic and global investors. NHAI’s dedicated trust — NHAI InvIT — has already raised over ₹46,000 crore by leasing operational highways to investors for 20-30 years.
The model is transforming how highways are financed, shifting from debt-heavy public spending to market-driven, yield-based investment.
Here’s a deep dive into how InvITs work and why they are now at the centre of India’s road-financing strategy.
What is an InvIT and how does it work?
An infrastructure investment trust (InvIT) is a regulated vehicle that allows investors to own a share in income-generating assets. The vehicle holds operational assets such as toll or annuity highways.
Investors buy units of the trust, which are similar to mutual fund units. The cash flows generated from these assets – such as toll revenue or annuity payments – are distributed as regular returns. The sponsor – in this case, NHAI – uses the upfront funds raised to build more highways. InvITs allows NHAI to unlock capital tied up in completed projects and recycle it into new construction.
Why has NHAI raised its reliance on InvITs?
Several factors have made InvITs crucial, including its ability to fast-track monetisation, which has become important to mobilise funds for further investment in infrastructure. Also, NHAI debt levels had crossed ₹4 trillion a few years ago and it has used large portions of budgetary capital allocation to repay debt, which currently stands at about ₹2.5 trillion.
High debt limits the ability of NHAI to take more loans. Though the government provided capital to NHAI for the past four years, disallowing it to borrow from the market, it was felt that the authority should be self-sustaining and manage funds on its own.
Mega expressways such as Delhi-Mumbai and cross-country corridors need long-term, low-cost financing where InvITs prove to be an effective vehicle. The government’s National Monetisation Pipeline identifies InvITs as a key tool for recycling operational assets.
Also, pension funds, sovereign wealth funds, insurance firms and domestic institutions prefer InvITs because of predictable yields. In essence, InvITs help NHAI reduce debt, attract private capital and maintain construction momentum simultaneously.
How does the NHAI InvIT structure its assets and returns?
The NHAI InvIT – National Highway Infra Trust or NHIT – follows a 20–30-year concession model where investors receive the rights to operate, maintain and collect tolls on a cluster of highways. The InvITs are portfolio based and yield focused.
The portfolio-based approach allows the bundling of 4-6 completed highway stretches into one package to reduce risk. It is yield focused as investors typically earn 8-12% annual returns, depending on traffic growth and toll policies.
Besides, InvITs provide a transparent governance model as the Securities and Exchange Board of India’s guidelines require independent trustees, regular audits and cash flow distribution.
There is long-term certainty on revenue flows as it comes from mature assets with stable traffic patterns. This structure makes the trust attractive to conservative, long-term investors seeking steady cash flow.
Who invests in highway InvITs and why?
InvITs draw interest from global pension funds including those from Canada and Australia. They also attract investments from sovereign wealth funds, domestic insurance companies and mutual funds as well as retail investors and high net worth individuals, who have participated in debt issues of NHAI’s InvITs.
The appeal for InvITs comes from its ability to provide long-term, inflation-linked returns, low correlation with equity market volatility, stable cash flows backed by government concession agreements and strong regulatory oversight under Sebi.
In a low-yield global environment, India’s InvITs offer a rare combination of stability and attractive returns.
How have InvITs performed so far in the highway sector?
The early performance has been strong and encouraging. NHIT has provided consistent distributions to its unitholders since listing in November 2021. The distributions are typically paid quarterly.
In FY25, dividend distribution was about ₹9.5 per unit. NHAI’s InvIT units have remained stable in the market while multiple rounds of asset transfers have successfully raised large capital for fresh highway construction.
Traffic growth on national highways has driven steady toll revenue, strengthening trust distributions. Overall, InvITs are proving to be reliable, scalable and investor-friendly, encouraging more monetisation rounds each year.
Based on the success of NHAI’s first private InvIT, the ministry of road transport and highways has allowed the authority to launch a public InvIT that will rope in retail investors to participate as equity partners.
“This InvIT would come out with its maiden public offer in the later part of the last quarter of FY26 to raise ₹20,000-25,000 crore,” a ministry official said on condition of anonymity.
What does this mean for India’s future highway financing model?
InvITs are set to become a permanent pillar of highway financing, enabling faster project rollouts as monetisation provides upfront capital for new construction. Also, InvITs as a vehicle would reduce the fiscal burden on the Centre and allow government spending to shift towards strategic or less viable projects.
InvITs also provide for deeper capital markets as more infrastructure assets enter formal investment channels. InvITs account for over a 30% share in the government’s highway monetisation exercise, which has yielded ₹1.43 trillion to the exchequer since 2021.
Going forward, NHAI may create sector-specific or region-specific InvITs and more private developers are expected to float their own trusts. Thus, InvITs represent a major evolution in how India finances its national highways — shifting from a debt-driven, government-led model to a market-based, investor-backed ecosystem.