India’s state-owned highway builder is accelerating debt reduction as part of a broader move away from market borrowings, and towards budgetary support and asset monetization, in order to ease interest costs and strengthen its balance sheet.
According to two people aware of the matter, the National Highways Authority of India (NHAI) plans to reduce its debt to below ₹1.5 trillion in the current financial year (FY27), with an aim to eventually become a debt-free entity by 2030.
The first person cited above, who requested anonymity, said a significant portion of the debt reduction in FY27 is expected to come from the authority’s own resources and surplus earnings through asset monetization.
This includes monetising operational highway assets through toll-operate-transfer (TOT) bundles and infrastructure investment trusts (InvITs). The road transport ministry has set a monetisation target of ₹30,000 crore for FY27, to be achieved through new TOT bundles and NHAI’s InvIT platforms.
Further, a portion of increased budgetary allocations may be used to retire some debt. The central government has allocated a record ₹1,87,293 crore to NHAI for fiscal FY27, 10% higher than the revised budgetary support of ₹1,70,266 crore in FY26.
Notably, the highway builder has not raised funds from the market since October 2022, after its debt peaked at ₹3.5 trillion in FY22 due to heavy borrowing to fund an aggressive road construction push.
Since then, the authority has been on a deleveraging path.
The second person said that since October 2022, NHAI’s debt has fallen by around 37% from ₹3.43 trillion in FY23 to around ₹2.17 trillion (up to January) in FY26.
“For the past five years, NHAI’s debt has been falling by bigger margins each year,” the second person said. “We hope to make maximum reduction in debt in the current fiscal to be on the path of making the highway developer a debt free entity in the next three years.”
Annual interest payments—that peaked during the period to over ₹30,000 crore—are expected to fall to just over ₹20,000 crore in FY26. Negotiated settlements with banks have also lowered interest rates, resulting in interest savings of over ₹3,500 crore.
According to the first person, a debt free or lightly indebted NHAI may assume a larger role of operating and managing existing highways and making road travel safer while allowing highway construction by private entities. It would also allow the government to unlock funds by reducing budgetary support while allowing need-based borrowings to NHAI.
Queries emailed to the ministry of road transport and highways and NHAI on 30 March remained unanswered till press time.
Bhavik Vora, partner and transportation & logistics industry leader, Grant Thornton Bharat, said NHAI’s debt reduction, supported by higher budgetary allocations, creates headroom for a more structured and diversified financing approach, even as he noted that past borrowings have enabled rapid network build-out across key corridors such as the Delhi-Mumbai Expressway, Eastern Peripheral Expressway, and stretches under the Bharatmala programme.
He added that a fully debt-free position is not the end goal, as NHAI can continue to access debt markets in a disciplined manner for strategic, revenue-generating corridors, complemented by periodic InvIT issuances to recycle capital. Taken together, this signals a shift towards a more balanced model—combining selective borrowing with systematic asset recycling.
“The focus is likely to be on sustaining highway development at scale, while maintaining financial discipline and deepening private capital participation in India’s road infrastructure,” Vora said.
For perspective, NHAI’s debt stood at just ₹24,188 crore in 2014-15. With rapid expansion in highways thereafter, its debt shot up and peaked at ₹3.48 trillion in FY22. It has since declined steadily, falling to around ₹2 trillion now.
NHAI accounts for roughly half or around 70,000 km of the entire national highway length of 146,500 km. The authority reported record construction of 6,600 km of national highways in FY24, but construction has fallen since then to about 5,600 km in FY25 and 5,300 km in FY26. The construction may fall further in FY27.
