India’s 30-year-old National Highway Toll Policy could Soon be Overhauled

India could reportedly soon overhaul its three-decade-old tolling principles for national highways, with the government initiating a review to create a more realistic user-fee structure.

The existing toll structure is based on norms set in 1995 and revised in 2008. It relies on three core parameters: vehicle operating cost, vehicle damage factor, and users' willingness to pay.

Toll rates are determined by the total cost of building and maintaining a road, plus a profit margin, which is then divided by the estimated number of vehicles that will use it. The Vehicle Damage Factor (VDF) quantifies the relative damage a vehicle inflicts on the road surface, while 'willingness to pay' helps set prices that ensure the financial viability of the toll road.

Officials argue that these parameters are no longer reflective of the present-day scenario, citing changes in vehicle technology, higher operational costs, and the increased capacity of modern highways.

The current base rates are adjusted annually based on the Wholesale Price Index (WPI), but the foundational formula has remained static.

The Ministry of Road, Transport and Highways has tasked the NITI Aayog to review the current user-fee models. The Aayog has engaged academic institutions to assist in the process and is expected to submit its recommendations by the end of the current financial year.

The objective is to develop effective user-fee models that are aligned with the economic and infrastructural realities of today.

The review comes at a time when India's toll collection is on the rise. The country has approximately 855 toll plazas on its national highway network. In 2024-25, toll collection stood at ₹73,000 crore and is projected to cross ₹80,000 crore in the current fiscal year, marking an 18.6% increase in collections during the first six months compared to the same period last year.

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