Highway Construction Set to Dip 10% in FY26 Amid Delays
India’s highway construction sector is projected to see a 7–10% year-on-year decline in financial year 2025–26, with estimates ranging between 9,500 to 10,200 km of completed road length, according to a report by CareEdge Ratings. The slowdown is attributed to persistent execution challenges and a sharp decline in project awarding activity, particularly in the last two years.
The Ministry of Road Transport and Highways (MoRTH) is facing hurdles across both execution and pre-construction stages, with delays in issuing appointed dates, hurdles in land acquisition, increasing project complexity, and execution bottlenecks cited as major reasons. These setbacks are expected to pull down the pace of construction to 30 km per day in FY26, compared to 34 km per day in FY24.
According to the report, the national highway sector has entered a period of subdued growth after witnessing strong momentum between FY21 and FY23. Project awarding activity dropped by 30% in FY24 and remained stagnant through the first eleven months of FY25. During this period, only 4,874 km of new projects were awarded, while 8,330 km were constructed. Industry observers note that increased competitive intensity, rising input costs, and prolonged policy clearances remain key concerns for road developers.
Despite these headwinds, CareEdge anticipates some recovery in project awards during FY26, though volumes are unlikely to match the highs recorded between FY21 and FY23. CareEdge’s analysis further highlights a significant pipeline delay: projects worth over ₹40,000 crore have been awaiting appointed dates for more than a year as of December 2024. These delays have disrupted timelines and increased costs for developers.
In response to mounting concerns, MoRTH has recently issued revised guidelines aimed at streamlining pre-construction processes and improving the timeline for issuing appointed dates. These reforms include stricter monitoring of land acquisition milestones and standardising documentation procedures. However, analysts caution that the impact of these reforms may not be immediate, and execution risks will continue to loom large in FY26.
Experts suggest that improving sectoral governance, expediting land acquisition, and deploying digital project monitoring tools could help revive momentum. Without these systemic fixes, the highway sector’s capacity to drive equitable and climate-resilient transport infrastructure may face further setbacks.
