New Delhi [India]: India’s national highway construction is likely to record its slowest pace in six years in FY26, with estimates suggesting that total construction could fall below 10,000 km. According to Crisil Intelligence, highway construction may stand between 9,000–10,000 km in 2025–26, marking a continued decline from recent years.
Construction expected to dip below 10,000 km
The projection compares unfavourably with the estimated 10,500–11,500 km constructed in FY25, 12,349 km in FY24, 10,331 km in FY23, and 10,457 km in FY22. Data from the National Highways Authority of India (NHAI) also reflects this slowdown, with just 599 km of projects awarded so far this fiscal — far below the average of 4,500 km awarded annually.
Similarly, road construction stood at 1,781 km to date, compared to the usual pace of around 5,000 km for the same period in previous years.
Government focuses on quality and efficiency
A senior government official, speaking on condition of anonymity, attributed the slowdown to the ministry’s focus on streamlining processes and improving construction quality.
“There has been a slowdown in the first half of the current year as the ministry focuses on ensuring quality and timely completion. The sector is expected to pick up pace in the second half, though total construction may not match previous years,” the official said.
The NHAI contributes nearly 45–50% of total national highway construction in India, while the rest comes from agencies such as the National Highways & Infrastructure Development Corporation (NHIDCL), the Border Roads Organisation (BRO), and various State Public Works Departments (PWDs).
Decline linked to fewer project awards
Experts say the current dip stems largely from the reduction in project awards over the last two fiscal years, creating a ripple effect on construction activity.
“Slowdown in construction is on the back of reduced awarding activity over the past two fiscals, which will continue to impact output in FY26,” said Aniket Dani, Director, Crisil Intelligence.
He noted that most of the major highway projects were awarded under the Bharatmala Pariyojana (BMP) initiative between FY18 and FY24. The programme, however, has been hit by cost escalations due to rising land acquisition costs, leading to a strategic shift since FY25 towards completing ongoing projects rather than launching new ones.
Transition phase for the highway sector
According to Kuljit Singh, Partner and National Leader (Infrastructure) at EY India, FY25 marks a transition year for the sector as multiple policy changes are being implemented to rebalance stakeholder interests.
“Policy revamps such as annual pass introduction, reduced WPI toll indexation, the new BOT toll framework, lesser emphasis on hybrid annuity model (HAM) projects, and the transfer of highways to InvITs have collectively slowed the pace of both construction and awards,” Singh explained.
He added that while these adjustments have caused short-term disruptions, they are expected to provide long-term benefits once the frameworks stabilise.
Experts optimistic about long-term revival
Despite the near-term slowdown, industry experts remain optimistic about a rebound in highway development. With the government’s renewed focus on infrastructure as part of its Viksit Bharat 2047 vision, the sector could see stronger growth beyond FY26.
“If policy revamps are streamlined this year, they will provide greater policy certainty and boost investor confidence,” Singh said.
Dani echoed this view, pointing to a strong project pipeline and upcoming revisions to the Model Concession Agreement (MCA) as indicators of recovery. “The robust pipeline of projects for FY26, coupled with favourable MCA changes, provides an optimistic outlook for the road sector,” he added.