India Highway Toll Collection Growth to Fall in FY26 Amid West Asia Conflict, Says Crisil Ratings

Growth in toll collections on Indian highways is expected to moderate to between 5-7 per cent this financial year, weighed down by the economic fallout of the ongoing West Asia conflict and a deceleration in commercial vehicle traffic, according to Crisil Ratings. The ratings agency warned on Wednesday that toll collection growth could fall by approximately 150 to 200 basis points year-on-year, as freight movement and industrial activity come under pressure from geopolitical uncertainty. 

Based on a study of 91 toll road assets spanning nearly 10,000 km and covering around 60 per cent of privately operated road concessions, traffic growth is expected to hold at 2 to 4 per cent in the near term.

Revenue growth is also likely to be constrained by relatively modest Wholesale Price Index-linked toll hikes during the current financial year. 

However, Manish Gupta, Deputy Chief Ratings Officer at Crisil Ratings, noted that higher WPI inflation anticipated this fiscal, itself a consequence of the West Asia conflict, could lead to steeper toll rate increases in the following year, potentially allowing toll collection growth to recover to between 8 and 10 per cent.

Commercial vehicles remain the backbone of toll revenue, accounting for nearly 75 per cent of overall collections, rendering the sector acutely sensitive to trends in industrial production, mining and construction activity. 

FASTag toll collections recorded a sequential decline in both March and April, which the agency said points to mounting pressure on freight movement.

Passenger vehicle traffic, by contrast, continues to hold up well, underpinned by rising vehicle ownership, better road connectivity and faster journey times made possible by an expanding expressway network. Passenger traffic growth has outpaced that of commercial vehicles in recent years and remains comparatively insulated from geopolitical disruption, Crisil said.

Not all assets in the sample have fared equally, however. Nearly one quarter witnessed a decline in traffic over the past two financial years, attributed to diversion onto new highways and expressways, heavy monsoon conditions, sand mining bans and disruptions to feeder routes.

On the structural side, more than 80 per cent of the sampled assets sit within Infrastructure Investment Trusts or pooled portfolios. Anand Kulkarni, Director at Crisil Ratings, said this provides meaningful diversification benefits and helps cushion volatility at the individual asset level.

Debt service coverage ratios for toll road assets are expected to remain stable at around 1.5 times both this financial year and next, supported by resilient operating performance and disciplined leverage, the report added.