Highway Construction May Slow To Five-Year Low In FY26
ROADS & HIGHWAYS

Highway Construction May Slow To Five-Year Low In FY26

India’s highway construction activity is projected to slow to a five-year low in FY2026, with rating agency ICRA estimating road execution at just 25–26 kilometres per day. The Ministry of Road Transport and Highways (MoRTH) is expected to complete only 9,000–9,500 kilometres of roads during the fiscal year — down from the earlier target of 9,500–10,000 kilometres.
The decline follows a weak execution trend in FY2025, which was disrupted by extended monsoon conditions and subdued project awards over the past two financial years. In FY2025, road construction fell by 14 per cent year-on-year, slipping to 10,660 kilometres from 12,349 kilometres in FY2024.
Project awarding has also been sluggish. MoRTH is estimated to have awarded only 8,000–8,500 kilometres of projects in FY2025 — well below the pace seen between FY2021 and FY2023. However, ICRA expects a slight improvement in FY2026, projecting awards to rise to 9,000–9,500 kilometres, helped by new ministerial directives.
The government has instructed implementing agencies to issue new tenders only after acquiring 90 per cent of the right-of-way (RoW), obtaining forest clearances, and finalising General Arrangement Drawings (GADs) for bridges. ICRA said this tightening of norms for Engineering, Procurement and Construction (EPC) and Hybrid Annuity Model (HAM) projects is a positive move for execution discipline.
However, the agency warned that competition among contractors remains intense amid shrinking order books, which could pressure profit margins. A sustained increase in project awards, it said, will be vital to restore pricing power and stabilise the industry.
On the revenue front, toll collections are expected to grow by 5–8 per cent in FY2026, supported by 3–4 per cent traffic growth and an annual toll rate escalation of 2.3–4.0 per cent.
Meanwhile, the National Highways Authority of India (NHAI) is preparing an aggressive asset monetisation plan to bolster funding. ICRA estimates the authority could raise Rs 350–400 billion in FY2026 through Toll-Operate-Transfer (TOT) bundles and its Infrastructure Investment Trust (InvIT).
This would take NHAI’s cumulative monetisation since inception to nearly Rs 1.3 trillion, representing about 81 per cent of the Centre’s Rs 1.6 trillion National Monetisation Pipeline (NMP) target for the highways sector.
Industry observers now await clarity on how quickly tendering activity will rebound and whether execution momentum can recover after the recent monsoon-induced slowdown. 

India’s highway construction activity is projected to slow to a five-year low in FY2026, with rating agency ICRA estimating road execution at just 25–26 kilometres per day. The Ministry of Road Transport and Highways (MoRTH) is expected to complete only 9,000–9,500 kilometres of roads during the fiscal year — down from the earlier target of 9,500–10,000 kilometres.The decline follows a weak execution trend in FY2025, which was disrupted by extended monsoon conditions and subdued project awards over the past two financial years. In FY2025, road construction fell by 14 per cent year-on-year, slipping to 10,660 kilometres from 12,349 kilometres in FY2024.Project awarding has also been sluggish. MoRTH is estimated to have awarded only 8,000–8,500 kilometres of projects in FY2025 — well below the pace seen between FY2021 and FY2023. However, ICRA expects a slight improvement in FY2026, projecting awards to rise to 9,000–9,500 kilometres, helped by new ministerial directives.The government has instructed implementing agencies to issue new tenders only after acquiring 90 per cent of the right-of-way (RoW), obtaining forest clearances, and finalising General Arrangement Drawings (GADs) for bridges. ICRA said this tightening of norms for Engineering, Procurement and Construction (EPC) and Hybrid Annuity Model (HAM) projects is a positive move for execution discipline.However, the agency warned that competition among contractors remains intense amid shrinking order books, which could pressure profit margins. A sustained increase in project awards, it said, will be vital to restore pricing power and stabilise the industry.On the revenue front, toll collections are expected to grow by 5–8 per cent in FY2026, supported by 3–4 per cent traffic growth and an annual toll rate escalation of 2.3–4.0 per cent.Meanwhile, the National Highways Authority of India (NHAI) is preparing an aggressive asset monetisation plan to bolster funding. ICRA estimates the authority could raise Rs 350–400 billion in FY2026 through Toll-Operate-Transfer (TOT) bundles and its Infrastructure Investment Trust (InvIT).This would take NHAI’s cumulative monetisation since inception to nearly Rs 1.3 trillion, representing about 81 per cent of the Centre’s Rs 1.6 trillion National Monetisation Pipeline (NMP) target for the highways sector.Industry observers now await clarity on how quickly tendering activity will rebound and whether execution momentum can recover after the recent monsoon-induced slowdown. 

Next Story
Infrastructure Urban

Coal Ministry Achieves Milestones under Special Campaign 5.0

The Ministry of Coal and its Public Sector Undertakings (PSUs) have achieved notable milestones under the Special Campaign 5.0, focusing on cleanliness, operational efficiency, and sustainability across the coal sector. During the implementation phase from 2–31 October 2025, over 1,205 sites were cleaned, covering 68,04,087 sq ft, nearing the target of 82,51,511 sq ft. Scrap disposal of 5,813 MT against a target of 8,678 MT generated Rs 228.7 million in revenue. In addition, 1,11,248 physical and 30,331 electronic files were reviewed, with 74,123 weeded out or closed. Key initiatives showc..

Next Story
Infrastructure Energy

Vesting Orders Issued for Three Coal Blocks under Commercial Auctions

The Ministry of Coal’s Nominated Authority has issued vesting orders for three coal blocks under commercial coal block auctions on 23 October 2025. The Coal Mine Development and Production Agreements (CMDPAs) for these mines were earlier signed on 21 August 2025. The three blocks include Rajgamar Dipside (Deavnara), Tangardihi North, and Mahuagarhi. Of these, two are partially explored while one is fully explored, with a combined peak rated capacity of around 1 MTPA and geological reserves of approximately 1,484.41 million tonnes. These mines are expected to generate annual revenue of abou..

Next Story
Infrastructure Urban

TEC, IIT-Hyderabad Partner to Boost 6G and Telecom Standards

The Telecommunication Engineering Centre (TEC), technical arm of the Department of Telecommunications (DoT), has signed a Memorandum of Understanding (MoU) with the Indian Institute of Technology Hyderabad (IIT Hyderabad) for joint research and technical collaboration in advanced telecom technologies and standardisation. The partnership focuses on developing India-specific standards and test frameworks for next-generation networks, including 6G, Artificial Intelligence (AI), and Non-Terrestrial Networks (NTNs). It also aims to enhance India’s participation in international standardisation f..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?