Highway tolls burning a hole in your pocket? The government has a plan

Highway tolls are eating into commuters’ budgets, with costs rising year after year. Now, the government is weighing a plan to offer discounted toll passes that could bring relief to regular highway users, according to two people familiar with the matter. The proposed system would provide monthly, quarterly, or annual passes at discounted rates, reducing overall toll expenses for frequent travellers.

The extent of the discount is being designed to provide meaningful savings for frequent highway users, said one of the persons cited above. “Various models are being explored to ensure the offering remains attractive."

Read this | India cuts new highway target for FY26. But it is for the better

The move comes amid growing concerns over the rising cost of highway travel in India. Many newly developed routes are lined with multiple toll booths, significantly raising travel costs for both private and commercial vehicles. For instance, a one-way journey along the under-construction 1,386-km Delhi-Mumbai expressway could cost between ₹1,000 and ₹3,000, depending on the vehicle type.

Toll rates are typically determined by factors such as road construction costs and the presence of infrastructure like bridges and overpasses. According to a report by rating agency Icra Ltd, toll charges increased by over 3% in FY25 and are projected to rise by 3.5-4.2% in FY26.

Read this | Highway toll revenue growth slows, may fall short of FY25 target

The toll pass framework aims to ensure that highway concessionaires—private firms operating toll roads—do not suffer revenue losses. Any shortfall would be compensated through government budgetary allocations, said the other person familiar with the plan.

While private concessionaires have not officially been consulted on the proposal, industry estimates suggest that if annual toll collections are taken at ₹60,000 crore, the private vehicle share—about 26%—would amount to roughly ₹15,600 crore. A uniform 10% discount across all stretches would cost the government around ₹1,560 crore in compensation to the National Highways Authority of India (NHAI) or private operators. The financial impact would be lower if discounts are restricted to select highway sections.

If concessionaires were required to absorb the cost of discounted tolls, the valuation of Toll-Operate-Transfer (ToT) projects—where private operators bid for long-term tolling rights—could be affected, industry experts say.

“A discounted annual toll pass could significantly reduce travel costs for frequent commuters, enhancing affordability and ease of movement," said Shailesh Agarwal, Partner - Risk consulting, EY India.

He noted that states such as Maharashtra and Tamil Nadu have already experimented with monthly toll passes, demonstrating the feasibility of such models.

The plan also envisions leveraging India’s FASTag system for seamless digital payments and introducing tiered pricing for different user categories, including corporate fleets and local commuters. Similar concessions in Karnataka and Gujarat could serve as models for a nationwide rollout, Agarwal added.

Commercial vehicles dominate India’s toll collections, accounting for 74% of total revenue. User fee collection on national highways surged to ₹55,882 crore in FY24, up from ₹48,032 crore in FY23 and ₹33,929 crore in FY22. The Ministry of Road Transport and Highways (MoRTH) is targeting ₹70,000 crore in toll revenue for FY25.

Also read | Cube Highways to acquire NIIF’s Athaang Infrastructure Road assets in $725 million deal

MoRTH is also working on a global navigation satellite system (GNSS)-based toll collection system that would enable barrier-free, distance-based tolling. This system is expected to improve toll efficiency, reduce congestion at toll booths, and curb revenue leakages.