Gadkari opens Rs 25,000 cr highway fund to retail investors, ditches 'lowest bidder' rule for better roads: Report

Gadkari told Mint that a final decision on increasing retail participation in upcoming InvIT rounds would be taken in the next two to three months.

The National Highways Authority of India (NHAI) will reserve Rs 25,000 crore worth of units for retail investors under its infrastructure investment trust (InvIT) issue in the current financial year, Union Road Transport and Highways Minister Nitin Gadkari told Mint. The allocation represents 30–40 percent of the total public issue. The move is aimed at attracting small investors to the highways sector, as the government targets construction of 10,000 km of highways and monetisation of Rs 50,000 crore worth of road assets this fiscal.

NHAI’s InvITs hold completed, toll-generating highway projects. Investors who buy these units earn regular income from toll collections. This is part of the government’s broader plan to use public-private partnerships and alternative funding sources to speed up infrastructure development.

In October 2022, NHAI’s first InvIT issue of non-convertible debentures (NCDs) raised Rs 1,500 crore with 25 percent reserved for retail investors. It offered a 7.9 percent coupon payable every six months, translating to an annual assured return of 8.05 percent.

Gadkari told Mint that a final decision on increasing retail participation in upcoming InvIT rounds would be taken in the next two to three months.

NHAI launched its first InvIT, the National Highways Infrastructure Trust (NHIT), in October 2021. Since then, it has raised Rs 43,638 crore through four rounds from FY22 to FY25, covering 2,345 km of highways, the Mint report added.

The report also adds that NHAI will no longer award detailed project report (DPR) contracts based solely on the lowest bid. The government will now prioritise the technical expertise and experience of consultants.

“The aim is to undertake qualitative transformation of the sector at par with international standards,” Gadkari told Mint. He said the current practice of choosing the lowest bidder, known as L1, often compromises project quality and contributes to accidents and poor road construction.

Under the new policy, only agencies with sector experience, trained personnel, and proven capability will be eligible to prepare DPRs, though the final pricing will still be competitive.

The National Highways & Infrastructure Development Corporation Ltd (NHIDCL), which is responsible for building strategic roads in border areas, will soon have a permanent cadre of personnel. The initial recruitment will include 1,000 people from the respective states where roads are being developed.

This move comes against the backdrop of heightened border infrastructure focus following India’s brief military conflict with Pakistan. Strategic road projects are underway in areas like Arunachal Pradesh (1,560 km), Meghalaya (200 km high-speed corridor), and Jammu & Kashmir (tunnel-based roadways).

Recruitments for the new cadre will be finalised in coordination with the Union Public Service Commission (UPSC). The focus will be on hiring people native to border states such as Uttarakhand, Himachal Pradesh, Arunachal Pradesh, Meghalaya, and Jammu & Kashmir.

“Infrastructure is very important for the progress of any country,” Gadkari said. “Our government, ever since 2014, has given the highest priority to infrastructure development.”

He added that good infrastructure not only boosts industrial development and creates jobs but also attracts capital investment and exports, all contributing to India’s goal of becoming a $5 trillion economy and the world’s third-largest economic power.