NEW DELHI: The Centre is preparing a policy to compensate highway developers for potential revenue losses under a barrier-free tolling system, seeking to remove a key hurdle to rolling it out across public-private partnership (PPP) projects, two officials aware of the matter said.
The move targets a core concern with multi-lane free flow (MLFF) tolling: while the system allows vehicles to pass without stopping, private operators fear some traffic could go undetected, weakening toll collections. By offering a compensation framework, the government aims to underwrite that risk and maintain investor confidence as it shifts to the new system.
“While the system is expected to ease congestion and improve efficiency on national highways, private operators have flagged risks of revenue loss if some vehicles pass undetected without paying toll. We had few rounds of meetings with highway developers and based on the inputs received, a policy addressing concerns on revenue leakage would be notified within a month,” said one of the officials cited above.
According to the second official aware of the development, the proposed policy will establish a compensation framework to offset such losses and safeguard the revenue streams of PPP concessionaires. The move is aimed at ensuring investor confidence as India transitions to next-generation tolling infrastructure.
Under MLFF, physical toll plazas are replaced with overhead gantries equipped with automatic number plate recognition (ANPR) cameras and radio frequency identification (RFID) readers linked to FASTag accounts, allowing vehicles to travel at highway speeds without stopping.
With toll collections growing 14% year-on-year to a record ₹82,900.16 crore across all tolled roads in FY26, even small leakages could become material for private operators.
The government plans to scale this system across the country’s 1,46,560-km national highway network, through the ministry of road transport and highways (MoRTH) and the National Highways Authority of India (NHAI).
Pilots of the new system are underway in Gujarat, with a plan to expand it to all 1,150 existing toll plazas within a year.
Even as pilots are underway, the revenue risk remains a key concern. At present, public-funded highway projects have provisions to address limited instances of toll collection lapses. However, with MLFF expected to increase the possibility of missed detections due to its fully automated nature, the government is working on a mechanism to account for a higher number of such instances in PPP projects. As in the existing system of toll collection, the new policy is expected to fix base toll collection and provide incentives over it based on free passes at plazas supporting MLFF.
The policy is expected to be rolled out alongside the phased implementation of MLFF across key highway corridors, effectively underpinning the transition.
Queries emailed to MoRTH and NHAI on 21 April remained unanswered till press time.
De-risking rollout
“The compensation framework is a timely and pragmatic intervention to safeguard revenue certainty for PPP highway projects,” said Kuljit Singh, partner and national infrastructure leader at EY India, adding that balanced risk allocation and strong enforcement would be key to sustaining lender confidence.
India’s push towards MLFF builds on the success of FASTag, which now accounts for over 97% of toll payments and processes more than 3 million transactions daily. “Extending a similar compensation model to MLFF should address revenue concerns and keep private investment confidence strong,” said Kushal Kumar Singh, partner at Deloitte India.
As more highway projects are being developed and operated under the PPP model, with private infrastructure companies responsible for toll collection, ensuring certainty on revenue has become critical to maintaining investor interest across BoT (build operate transfer), ToT (toll operate transfer) and HAM (hybrid annuity) projects.
Experts said MLFF could significantly cut waiting time at toll plazas, currently averaging 47 seconds per vehicle, and reduce fuel consumption and logistics costs. “It represents a substantial step forward in modernising India’s highway tolling system by enabling seamless, high-speed movement and reducing congestion,” said Nilachal Mishra, partner and head of government and public services at KPMG in India.
However, the transition faces execution risks. The system relies on high-speed ANPR cameras, many of which are imported, raising concerns around data security and vendor certification. The government has asked the Standardisation Testing and Quality Certification (STQC) Directorate under the ministry of electronics and IT to vet and approve vendors, a process that could affect rollout timelines.
To avoid delays, authorities are considering phased implementation, starting with lower-speed camera systems while high-speed equipment undergoes scrutiny. “Proactive transition risk-management frameworks will play a key role in protecting project cash flows and enabling smooth scale-up,” Singh of EY added.
The government had earlier explored a satellite-based tolling model using Global Navigation Satellite System (GNSS), but opted for MLFF as a more immediately deployable solution leveraging the existing FASTag ecosystem.
With over 1,150 toll plazas currently operational and more expected to come up, NHAI has begun initial tenders and pilot projects. Officials indicated that bids for 200–300 plazas could be invited monthly once the system stabilises.
If implemented effectively, MLFF is expected to eliminate queuing, reduce emissions, and improve logistics efficiency. Over time, experts believe it could enable largely unmanned highways, though robust enforcement and system accuracy will be critical in the transition phase.