National Highway Construction Set to Slow Amid Drop in New Project Awards in 2024-25
India’s ambitious National Highway construction programme is experiencing a slowdown as fewer projects are being awarded, creating challenges for meeting future construction targets. Although the road transport ministry is optimistic about surpassing its target of 10,400 km in highway construction for the current fiscal year, experts are concerned that the pace may slow down significantly in the coming years due to a reduction in the number of new projects being awarded in 2023-24 and the ongoing fiscal year.
The National Highways Authority of India (NHAI) has been able to construct around 7,000 km of highways so far in the 2024-25 fiscal year, and officials remain hopeful that the final tally will reach approximately 11,000 km by the end of March. However, sources from the Ministry of Road Transport and Highways (MoRTH) have expressed concerns over the coming years, as fewer projects have been awarded compared to previous years, primarily due to a decline in the bidding process. In the past, the government had aimed to construct upwards of 12,000 km of highways annually, with the number peaking at 12,731 km in FY 2021-22. However, the pace of awarding new projects has dramatically slowed. As of mid-January 2025, only around 4,100 km of projects had been awarded, which, while slightly higher than the previous year, still falls short of previous ambitious targets.
One of the main reasons behind the slowdown in project awards is the government’s stricter approach to land acquisition and project approvals. An inter-ministerial panel has now mandated that at least 80% to 90% of the land needed for a project must be acquired before bids are accepted. This move, although beneficial for ensuring smoother project execution, could further delay the process as land acquisition is often a time-consuming task, particularly for large-scale infrastructure projects. The ministry believes that by tightening land acquisition and obtaining all necessary statutory clearances upfront, the risks of cost overruns and project delays will be mitigated in the long run. While the current situation raises concerns, the Union Budget for 2025-26 offers a hopeful outlook for the sector. The road transport sector has received a 10% budgetary increase for FY 2025-26, with a significant portion allocated to developing and expanding National Highways. The budget has earmarked Rs 1,87,803 crore for highway development, an increase from the Rs 1,69,371 crore allocated for the current fiscal year. This allocation will support the continued development of strategic corridors, including expressways, greenfield access-controlled corridors, and connectivity projects in remote and Naxalite-affected regions.
Furthermore, the government’s new push for asset monetisation between 2025-2030 could generate up to Rs 10 lakh crore for the development of new highway projects, easing some of the financial pressures and potentially speeding up project initiation in the coming years. While government officials are hopeful of surpassing current targets, the general public and construction firms are expressing mixed emotions. There is a growing sense of frustration within the industry over the delay in project awards and land acquisition issues, which are seen as barriers to progress. Road transport experts acknowledge that while the ministry’s new policies could ultimately ensure better-quality and more reliable road infrastructure, the short-term slowdown may impact job creation and overall growth in the construction sector.
Citizens, particularly those in rural and underserved areas, continue to eagerly await the completion of key road projects that would improve connectivity and economic opportunities. The government’s promise to focus on border roads, tribal road connectivity, and multi-modal logistics parks offers hope to those who stand to benefit from improved infrastructure. While 2024-25 appears to be a challenging year for National Highway construction, the government’s focus on strategic planning, coupled with increased budgetary support, may eventually steer the sector back on track. However, with challenges like land acquisition and regulatory approvals remaining central to project timelines, it’s clear that a careful balancing act will be required to ensure that India’s ambitious highway network continues to grow at the pace necessary to support the nation’s economic expansion.
