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Building world-class infrastructure is a huge undertaking that no government budget, no matter how large, can take care of on its own. Prime Minister Narendra Modi unveiled PM Gati Shakti during his 75th Independence Day speech. The plan includes a planned investment of ₹100 lakh crore [1] on a digital interface that integrates different ministries for planning and executing infrastructure projects collaboratively.
Building roads, railways, ports, airports, and logistics corridors requires long-term planning and financing, and recently India has been seeing more and more financing being done through the bond market. A mix of Infrastructure Investment Trusts (InvITs), NHAI bonds, sustainability-linked bonds, and other infrastructure bonds has been working in the background of India’s growing infrastructure. This article breaks down the various financial instruments used and the different players involved to give you a complete picture of the financing behind this ambitious project.
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Why India Can’t Fund PM Gati Shakti Through Budgets Alone
PM Gati Shakti is not a standalone infrastructure investment program; rather, it provides an integrated planning and coordination framework for infrastructure projects. The National Infrastructure Pipeline (NIP), which was launched with a projected infrastructure investment of around ₹111 lakh crore for FY2020–25 [2] (about US$1.4 trillion), includes projects that are being aligned with the PM Gati Shakti framework. That’s an enormous amount, and India’s public finances will not be able to cover this by themselves.
The Central Government’s spending on infrastructure has increased from $12 billion in FY15 to $75 billion in FY25 [3], a 6.2x jump, with spending as a share of GDP tripling from 0.6% to 2%. Even after this massive increase, it is estimated that India will need to invest over $2.2 trillion in infrastructure to achieve the goal of a $7 trillion economy by 2030. It is in this gap that bond markets come to the rescue, allowing the government to “recycle” capital from completed infrastructure projects to new ones, instead of waiting for tax collections.
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Types of Bonds Financing PM Gati Shakti Projects
A few instruments do most of the work:
- InvIT bonds/units: Vehicles to raise capital from multiple investors to fund completed major infrastructure projects, allowing the original developer to use their capital for other purposes.
- NHAI infrastructure bonds: Bonds issued by the National Highways Authority of India, including tax-saving 54EC bonds and listed InvIT Bonds.
- Sustainability-linked bonds (SLBs): Bonds where the interest rate is tied to ESG performance targets, now gaining popularity among road InvITs.
- Bank-issued long-term infrastructure bonds: Raised by banks specifically to fund infra lending, often with regulatory incentives attached.
- Municipal and state-level bonds: Increasingly used for urban infrastructure components that feed into the Gati Shakti network.
For example, in March 2026, Indian Bank raised ₹5,000 crore [4] through 10-year infrastructure bonds at a coupon of 7.15%. Similarly, in December 2025, Bank of India raised ₹10,000 crore [5] through 10-year infrastructure bonds at 7.23% p.a.
How InvITs Are Financing PM Gati Shakti
InvITs deserve special attention because they’ve become the dominant monetization-and-refinancing route for Gati Shakti-aligned assets like highways and power transmission lines. Here’s a snapshot of where things stand:
| Metric | Figure | As Reported |
| Combined AUM of India’s REITs + InvITs | $93.9 billion | FY2025 |
| Projected InvIT market size | $258 billion | Projection to 2030 |
| Number of listed InvITs in India | 17 | Mid-2025 |
| NHIT (NHAI’s InvIT) — total raised across 4 rounds | ₹46,000+ crore | Cumulative, as of early 2026 |
| Vertis Infrastructure Trust — Sustainability-Linked Bond | ₹900 crore | 2025 |
| Cumulative monetisation via ToT + private InvITs | ₹1.52 lakh crore | As of FY2026 |
According to Knight Frank India, India’s InvIT market could reach $258 billion by 2030, implying a 3.5x growth. India is now the fourth-largest market for REITs and InvITs in Asia. Specific to highways, the National Highways Infra Trust (NHIT), established by NHAI in 2020, raised ₹18,380 crore in its fourth round, bringing total monetization to above ₹46,000 crore.
An interesting new trend is the Raajmarg Infra Investment Trust, a public InvIT formed by NHAI, which filed its draft offer document with SEBI in January 2026. This will be the first time a public NHAI-backed InvIT will enable broader retail participation in road-asset monetization.
On the sustainability front, Vertis Infrastructure Trust raised ₹900 crore via the issuance of Sustainability-Linked Bonds, the largest such issue by any InvIT in India to date, with IFC investing ₹450 crore in it through a 10-year tranche with a fixed rate of 7.40%. The proceeds of this bond were used for the purchase of a Toll-Operate-Transfer (TOT) highway corridor in Telangana, spanning roughly 252 km. This is a great example of the direct funding of a Gati Shakti-aligned road asset through bonds.
How Budget 2026-27 Strengthens PM Gati Shakti Funding
The Union Budget for 2026–27 added further momentum with an increase in public capex to ₹12.2 lakh crore, compared to ₹11.2 lakh crore last year, and the creation of a new Infrastructure Risk Guarantee Fund. This fund is designed to offer partial guarantees to lenders, effectively reducing the risk of default for private developers and stabilizing project financing, thus allowing infrastructure entities to issue bonds at lower costs, as guaranteed downside protection typically reduces the risk premium that investors demand.
PM Gati Shakti Bonds: Risks and Returns for Investors
For finance professionals and serious investors, the message is clear: PM Gati Shakti is moving beyond the budgetary allocations, and the success of the program will be more dependent on how successfully it can raise infrastructure financing from the capital markets. While infrastructure bonds and InvITs offer stable cash flows, they are not risk-free: BOT concessions have a 15- to 30-year finite period, after which the asset reverts to NHAI and has no value for unit holders. Bonds and InvITs are sensitive to changes in market interest rates, which also affect the pricing of these long-duration investments.
Final Take: PM Gati Shakti’s Financing Future Runs Through Bond Markets
PM Gati Shakti was always meant to be more than a coordination exercise; it is India’s bet that better-planned infrastructure, financed smartly, can unlock real economic growth. What’s become clear over the last couple of years is that bonds and InvITs aren’t a side story to this plan; they’re increasingly central to it.
As NHAI, banks, and infrastructure trusts keep tapping the debt market, and as the government backs this with tools like the Infrastructure Risk Guarantee Fund, the financing model is shifting from “government pays for everything” to “government de-risks, markets fund the rest.” For investors, that means more instruments to track. For the economy, it means a better shot at closing that $2.2 trillion infrastructure gap by 2030. Either way, keeping an eye on this bond ecosystem is no longer optional if you’re serious about understanding where India’s infrastructure story is headed next.
PM Gati Shakti Frequently Asked Questions
It’s India’s national master plan, launched in October 2021, to coordinate infrastructure planning across ministries and speed up execution of roads, railways, ports, and other connectivity projects.
Through a mix of government budget allocations, InvITs, NHAI bonds, sustainability-linked bonds, bank-issued infrastructure bonds, and private/institutional capital.
An Infrastructure Investment Trust is a SEBI-regulated vehicle that pools investor money into income-generating infrastructure assets like toll roads or power lines, similar in structure to a mutual fund.
Generally yes. Being government-backed, they carry lower default risk than most corporate bonds, though interest rate and liquidity risks still apply.
It is a Budget 2026-27 initiative that offers partial guarantees to lenders financing infrastructure projects, aimed at reducing default risk and improving investor confidence.
Sources
- https://static.pib.gov.in/WriteReadData/specificdocs/documents/2021/oct/doc2021102511.pdf
- https://www.pib.gov.in/PressReleaseIframePage.aspx?LID=1&PRID=1793805&RegID=3&lang=2®=48&utm
- https://www.ibef.org/news/rs-22-45-890-crore-us-258-billion-market-by-2028-infrastructure-investment-trust-invit-are-becoming-india-s-hottest-asset-class
- https://economictimes.indiatimes.com/markets/bonds/indian-bank-raises-rs-5000-cr-through-infra-bonds/articleshow/129748481.cms
- https://bankofindia.bank.in/documents/20121/25744421/InfraBondAllotment.pdf/e25979fa-6072-23ff-6fb5-f53c05a6c068?t=1767355072132
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