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India's highway construction and project award activity declined to a seven-year low in FY2025-26, reflecting a shift in execution strategy and a slowdown in the project pipeline. According to official data cited in the past week, total highway construction dropped below 10,000 km for the first time since 2019-20, while new project awards were limited to around 7,000 km. Authorities attributed the slowdown to stricter requirements around land acquisition, environmental and statutory clearances before project bidding. The approach is aimed at reducing delays and cost overruns that have affected earlier projects. While execution activity by agencies such as the National Highways Authority of India remained stable, the reduced flow of new contracts has begun to impact contractors and developers, leading to intensified bidding competition and potential pressure on future order books.
Highway construction and the awarding of new road projects in India fell to their lowest levels in seven years during FY2025-26, according to official data reviewed in the past week, as government agencies adopted stricter preconditions for project execution across the country. Advertisement
Total highway construction during the financial year dropped below 10,000 km, marking the first such decline since 2019-20, while project awards were limited to approximately 7,000 km. The reduction reflects a calibrated approach by authorities, who have tightened norms around land acquisition and statutory approvals prior to awarding contracts.
Officials indicated that road agencies are now ensuring that a substantial portion of land acquisition is completed and that environmental, forest and utility clearances are in place before projects are put out to bid. This marks a departure from earlier practices where projects were often awarded before these prerequisites were secured, leading to delays during execution.
The revised approach is intended to address persistent issues of project delays and cost escalation. Officials stated that awarding projects without adequate preparedness had resulted in stalled developments and rising costs, prompting agencies to exercise restraint in issuing new contracts.
In parallel, the government has shifted its focus towards the development of economic corridors and access-controlled expressways, rather than incremental expansion of existing highway stretches. This strategic prioritisation has also contributed to a moderation in the pace of project awards during the year.
Despite the broader slowdown in new awards, execution by key agencies remained relatively steady. The National Highways Authority of India reported construction of 5,313 km during the year, exceeding its target of 4,640 km by around 15 per cent.
However, the decline in fresh project awards has begun to affect the wider infrastructure ecosystem. Industry participants indicated that a reduced pipeline of projects has intensified competition among contractors, with firms increasingly bidding aggressively to secure available work. In some cases, bids have been quoted significantly below estimated project costs, reflecting pressure on order inflows.
Developers and contractors suggested that the implications of lower project awards may become more visible over the next few years, particularly in terms of order book replenishment and execution capacity. A sustained slowdown in new project allocation could impact the sector's growth trajectory, even as ongoing projects continue to progress under improved execution frameworks.
The current shift in policy and execution strategy indicates a greater emphasis on project readiness and delivery efficiency, even if it results in a temporary moderation in construction and award activity across the national highway sector.
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