India National Highway Toll Rates Expected to Rise Sharply in FY28 Amid Slower Traffic Growth

Motorists and logistics companies in India should prepare for a significant increase in the cost of using national highways starting in April 2027. According to recent industry estimates, annual toll revisions on newer highway projects are expected to climb to between 6.2 percent and 6.4 percent. This marks a sharp rise from the 3.4 percent to 4 percent increase seen this year. Meanwhile, older highways are projected to see charges increase by 4.5 percent to 5.5 percent.

This upward trend in toll collections is occurring despite a simultaneous deceleration in highway usage. Traffic volume on national highways is projected to grow by 4 percent to 5 percent in fiscal year 2028 (FY28). This follows a projected growth of 4.5 percent to 5.5 percent in FY27 and 6 percent in FY26. However, total toll collections are expected to move in the opposite direction, accelerating to a growth rate of 10 percent to 12 percent in FY28, up from 7 percent to 9 percent this year.

Suprio Banerjee, Vice President and Co-Group Head of Corporate Ratings at ICRA, noted the changing dynamics of the sector. He stated that traffic growth on national highways is expected to moderate to 4.5 percent to 5.5 percent in 2026–27 from 6 percent in 2025–26, while toll rate increases are estimated at 3.4 percent to 4 percent, limiting toll collection growth in the current fiscal year. This divergence highlights a coming squeeze where fewer incremental vehicles join the network, but road users pay substantially more per journey.

The higher toll expenses are the result of wholesale inflation metrics from FY27 flowing into the following year's tariffs. Highway concession agreements utilize an inflation-indexation formula linking annual revisions to the Wholesale Price Index (WPI), though the specific benchmark varies based on when projects were awarded. ICRA projects that December 2026 WPI inflation will reach 8 percent to 8.5 percent, driven in part by the ongoing crisis in West Asia. This higher index is expected to translate directly into the 6.2 percent to 6.4 percent toll-rate increase for newer projects in FY28.

For older projects, tariff revisions are linked to the March WPI. With March 2027 inflation projected at 4.5 percent to 5.5 percent, toll rates on those specific stretches will increase accordingly. This structural lag ensures that road users continue to feel the financial impact of inflation well after it works through the formula.

The impending hikes carry significant implications for the freight and logistics sector. Commercial vehicles frequently cross multiple toll plazas on a single long-distance journey, magnifying the financial impact of tariff revisions across operations moving goods between factories, warehouses, ports, and markets. The ultimate impact on end consumers will depend heavily on the ability of transport and logistics providers to absorb or pass these elevated toll costs through to freight rates and consumer pricing.

"The projected divergence between slowing traffic growth and rising toll collections highlights a critical cost consideration for India's logistics and supply chain sectors. As toll expenses increase due to inflation-linked formulas, commercial freight operators will face compressed margins unless they successfully pass these recurring costs down the supply chain. For businesses relying heavily on road transport, proactive route planning and cost management will be essential to navigate these rising operational expenditures effectively." — Dr. Shishir Gupta, Founder & CEO, StartupLanes