NHAI has mandated timplementation of the National Electronic Toll Collection program for all national highways, which will help reduce the congestion, time taken to process toll at highways and enable reduction in revenue leakages
Have you experienced long queue at a highway toll gate for your turn to come and the driver car at the toll gate is either arguing or fumbling for cash to pay? That frustrating experience is set to go away thanks to National Highways Authority of India (NHAI).
NHAI has now mandated implementation of the National Electronic Toll Collection (NETC) program for all national highways. This will reduce the congestion on highways, time taken to process toll and enable a reduction in revenue leakages. This is a huge positive for all the participants including vehicle owners, logistics providers, concessionaires, and of course the government.
The program utilises a passive RFID tag attached to the vehicle, called FASTag, which is read every time it enters the toll gate, upon which, the toll gets deducted automatically from the vehicle owner’s account. This is a one of its kind implementation and the scale it can achieve is huge. The FASTag is akin to an AADHAR of the vehicle. The RFID based contactless payment solutions have a much wider scope of usage, including payments for fuel, parking, RTO fees to name a few. The NHAI toll collection is estimated at Rs 30,000 crore alone, which points to a huge market getting disrupted.
The central government is pulling out all stops to implement the program. The target is to convert all except one lane on the national highway tolls to FASTAG lanes. Further, as per new directive all new vehicles from March 2018 to be fitted with a FASTAG.
I expect the FASTAG program to be made part of the Smart City program as well. The program is being rolled out to State highways and city toll roads and is expected to facilitate a seamless movement of vehicles, owing to the automation of the toll collection process.
This will result in several significant improvements in controlling road traffic by enabling faster throughput and reducing congestion, as well as reducing or stopping the irregularities in toll revenues. As a result, greater transparency and project accountability will ensue.
The FASTAG is linked to one’s bank account (current or savings) or wallet and aims at offering non-stop movement of vehicles through toll booths, making the entire process cashless and faster. Since the aim is to completely remove the need for cars to stop, the system will scan the FASTag the moment a vehicle enters the toll gate, after which, the toll will be deducted from the linked account.
In the incidence of a failed transaction, the system would make a note and post a credit in the account of the user – to be repaid upon recharge of the wallet or posting some balance into the linked CASA, and still allow the vehicle to pass through, but raise a flag. While the infrastructure for the NETC program is going to be provided by the NPCI, banks have been mandated to roll out the program.
The system is already under implementation. State Minister of Transport, Shri Nitin Gadkari stated that another 3,500 lanes on the national highway network would be converted to FASTag’s by Q1’18 and that 7.5 lakh new vehicles already have been affixed with FASTag.
Another 25 lakh vehicles are expected to be fitted with FASTag in the coming months. E-tolls currently are fetching INR 10 Cr a day and the total collection is expected to grow ~30 percent annually.
NHAI also launched two mobile Apps – MyFASTag and FASTag Partner, which will ease the process and work alongside the toll booths. Using the apps, vehicle owners will be able to buy or recharge FASTags.
As soon as the toll transaction takes place, the vehicle owner will receive an SMS with the requisite details, on his registered mobile number. In addition to that, the apps will also help keep track of transactions, as well as provide a means for online grievance redressal. The pilot project is also considering ways to integrate the system with the existing prepaid wallets, under the FASTag programme.
While initially, only toll collections are going to be conducted using this system, the RFID based contactless payment system could potentially have many more applications. As mentioned earlier, while fuel and parking are perhaps immediate low hanging fruits for the FASTAG based contactless payments, there could be many more applications.
For instance, in the future, payments for orders at drive-through restaurants along-side highways and fuel retail establishments and car washes, could be made using the same infrastructure. In addition to that, the digitisation and mapping of every vehicle also offer a tremendous pool of real-time data to traffic authorities, using which, traffic and congestion planning can be made more efficient.
The RFID tag is, in fact, much akin to an AADHAR system for vehicles, and could help in limiting or regulating traffic in certain areas of the city at a certain time, and even direct vehicles to alternate routes in times of catastrophe.
The NETC program is based on a similar model, in use in many countries like US, Canada, UAE etc. The FASTag program will help make travel more convenient, faster, and environment-friendly, but will eventually help usher in a revolutionary transformation of all transport and related systems, all over the country.
(The author Tapas Sarkar is the Executive Director & Partner, 7i Advisors LLP, an investment banking firm. Views are his personal)