Competition intensity in Hybrid Annuity Model (HAM) projects is showing the first signs of reduction in recent years after a notification issued by the Ministry of Road Transport and Highways (MoRTH) on July 10 increased package sizes and tightened net worth requirements, according to India Ratings & Research, a credit rating and research agency.
“In FY26, particularly in the fourth quarter, newer HAM projects that were awarded had relatively larger package sizes,” said S Suryanarayanan, Analyst at India Ratings & Research, speaking at a webinar on infrastructure sector outlook today. He added newer projects had higher bid costs, leading to the participation of developers with larger equity bases or stronger credit profiles. Awards to strong sponsors also improved for the first time in FY26 after an extended period of decline.
In a recent notification, MoRTH tightened bidding rules for HAM projects, raising the minimum available net worth requirement to 20 per cent of the estimated project cost, up from 15 per cent earlier. As FY26 progressed, average bidder participation in HAM projects dropped from 13 to 10, and it is expected to continue on a downward trajectory.
Moreover, around half of the National Highways Authority of India’s under-construction HAM projects are expected to face delays exceeding 12 months due to land and work-front issues, standardised construction periods, material sourcing challenges, and approval delays, the agency said.
Of the delayed projects, nearly 40 per cent are being executed by new sponsors who entered the HAM ecosystem after MoRTH relaxed its bidding norms in 2021.
The agency also said while stronger sponsors have monetised almost 80 per cent of their operational projects, new sponsors have preferred the top-up route, with 55 per cent of completed projects using it. Ind-Ra added that 67 per cent of projects held by new sponsors have leverage above 70 per cent, exposing them to credit risks.
India Ratings also said a shift from HAM to BOT remains uncertain, even as recent changes in the Model Concession Agreement (MCA) aim to improve bankability and revive participation under the BOT mode. MoRTH had recently revised the MCA, aiming to make BOT projects risk-free and attractive for the private sector.
In FY26, no awards were given under the BOT mode, while a meagre 209.8 km was awarded in FY25. “The recent amendment in BOT (Toll) MCA aims to enhance the BOT model’s attractiveness by strengthening lender protections, introducing traffic-risk sharing mechanisms, and reducing execution risks,” Rasika K, Analyst, Infrastructure & Project Finance Group at Ind-Ra, said.
