At a glance
- For a long time, India’s PPP frameworks transferred operational risk to private players without providing adequate revenue certainty.
- New and emerging PPP structures like hybrid annuity models, viability gap funding, revenue pooling and payment guarantees are managing to distribute construction, demand and operational risks more equitably.
- Reviving private interest and participation in infrastructure creation will depend on frameworks that attract patient capital by offering predictable cash flows, enforceable contracts and assured downside protection.
India’s infrastructure problem: Planning vs. execution
Without fair risk allocation and operational certainty, large-scale infrastructure projects risk stalling under the weight of implementation stress and delayed clearances. 'Visualised using AI'
India’s need for infrastructure development is growing by leaps and bounds but capital in India is focused on low-risk formats, like engineering, procurement, and construction (EPC) contracts, and asset recycling. The deficit is not due to any lack of ambition or capital. It is primarily a result of how risk has been structured in public-private partnership (PPP) frameworks. Traditionally, this has meant following practices that ignored operational risks and eroded the bankability of projects, affecting investor confidence.
The solution is not more capital. It is a fundamentally different approach to pricing, allocating and protecting risk within PPP frameworks. Attracting patient capital to infrastructure requires building differentiated risk estimation models, inflation-linked revenue mechanisms, and credible downside protection into the PPP structure itself. Through this, long-term investors see not just an opportunity, but a structure designed to protect them through the cycles that test it.
PPP frameworks can be redesigned as bankable capital market instruments, and not administrative contracts to bring in sizeable private investment, while expediting infrastructure delivery with better discipline. PPPs can emerge as reliable and durable investment pathways, to bridge India’s infrastructure deficit and transform the achievement of public objectives, without burdening the exchequer.
Private investment into infrastructure in India falls short of expectations, in spite of programmes like PM GatiShakti and the National Infrastructure Pipeline (NIP) that increase project visibility, encourage cooperation and enable timely execution. Traditional PPP investment asked private investors to own all the risk and control none of it. Regulatory compliance, land acquisition, operational delivery sat with the public sector. The consequences of getting them wrong sat with the investor. That asymmetry is why private capital left.
India's infrastructure deficit presents a massive financial opportunity, but bridging the gap requires navigating evolving PPP models and addressing substantial annual investment shortfalls.
Sources: Fund raising by REITs and InvITs, National Infrastructure Pipeline: Invest in Infrastructure Projects in India | IIG, Infrastructure Financing: The Way Forward - CII Blog (as of 28 April 2026)
To encourage better private participation in large-scale PPP projects, there’s a need to assess risks better before allocating them fairly, and mitigate the uncertainties in operations, execution as well as revenue generation when inviting investor interest into public projects.
Regulated by the Securities and Exchange Board of India (SEBI), structured financial instruments like REITs and InvITs are increasingly vital for mobilising patient capital and offering transparent investment avenues for public infrastructure.
Source: SEBI | Fund raising by REITs and InvITs
PPP models that improve project bankability
Developing strategic infrastructure, such as national ports, requires specialised revenue pooling and minimum revenue guarantee models to attract patient capital. 'Visualised using AI'
New risk/revenue models in PPP are being designed, especially with large infrastructure like roads, ports and metros, to align better and account for project delays, issues with bankability, and uneven risk allocation.
From a decision-making perspective, infrastructure revenue models can be evaluated based on the type of risk they address for investors and project developers. Let us look at some revenue models that make investment into infrastructure attractive:
1. Models that balance construction and capital risk
These models define the core relationship between the public and private sectors, determining how the project is built and paid for over time.
Hybrid Annuity Model (HAM):