The shift represents a significant upgrade from the current RFID-based FASTag system to a more advanced GPS-enabled solution, designed to streamline toll collection, reduce congestion and eliminate the need for physical toll plazas.

The new system will employ the global navigation satellite system (GNSS), which uses onboard units (OBUs) installed in vehicles to track movement and calculate toll charges based on the distance travelled.

India’s Ministry of Road Transport and Highways has stated that this modernisation effort is aligned with the country’s push towards digitalisation across its transport sector.

During initial trials, which covered a 1,000-km stretch of highways, the system proved effective in enabling seamless toll transactions and reducing delays caused by traditional toll booths.

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A key feature of the GNSS-based system is a 20km daily exemption for short-distance travellers, designed to reduce costs for local commuters.

“This initiative will lead to significant savings in time and money for road users,” said a Ministry official. “We expect smoother traffic flow and lower fuel consumption with the elimination of toll plazas.”

The new system is expected to bring considerable benefits to the logistics and transport sectors. It is estimated that the satellite-based tolling system could save approximately ₹20,000 crore (£1.94bn) annually in fuel and productivity losses, thanks to the reduction in traffic bottlenecks.

According to Nitin Gadkari, India’s minister for road transport and highways, the system is a game-changer for the country’s highway network. “This will bring in much-needed transparency and efficiency in toll collection and will ease travel for millions,” he said.

The National Highways Authority of India will oversee the rollout, with technical support from the Indian Space Research Organisation, ensuring the GPS technology is precise and reliable.

The system will coexist with FASTag during a transitional period, with dedicated lanes for vehicles equipped with GNSS technology, ensuring continuity during the rollout phase.

The Ministry is also exploring the possibility of offering toll concessions for vehicles compliant with Bharat Stage VI (BS-VI) emission standards to encourage the adoption of eco-friendly vehicles while improving road infrastructure nationally.

The Indian government has plans to extend GNSS coverage to approximately 2,000km of highways by mid-2025.