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• ICRA projects MoRTH road execution at 9,500-10,000 km in FY2025-26 and 9,000-9,500 km in FY2026-27.
• Construction activity has moderated from 10,660 km in FY2024-25 due to slower project awards and shrinking order books.
• Road awards in FY2025-26 are expected at 7,250-7,750 km, broadly unchanged from the previous year.
• Extended monsoon disruptions have further affected execution activity across highway projects.
• Toll collection growth is estimated at 7-9% in FY2025-26, supported by improved traffic growth.
Road execution under the Ministry of Road Transport and Highways is expected to decline over the next two financial years as slowing project awards and shrinking order books begin to affect construction activity across the highways sector, according to a report released by ICRA. Advertisement
The ratings agency stated that MoRTH road execution is likely to moderate to 9,500-10,000 km in FY2025-26 and further to 9,000-9,500 km in FY2026-27, compared with 10,660 km completed in FY2024-25. ICRA attributed the projected slowdown to lower project awarding activity over the past three years and delays linked to prolonged monsoon conditions across several regions.
According to the report, road awards during FY2025-26 are expected to remain in the range of 7,250-7,750 km, broadly in line with 7,538 km awarded in FY2024-25 but significantly lower than award levels recorded between FY2020-21 and FY2022-23. Data cited by ICRA showed that road awards during the first eight months of FY2025-26 stood at 1,951 km, reflecting a 24% decline from 2,558 km awarded during the corresponding period of the previous year.
Road execution under MoRTH during the first eight months of FY2025-26 declined by 3% year-on-year to 4,612 km from 4,761 km in the same period of FY2024-25 owing to reduced order inflows. ICRA stated that several projects are currently under bidding stages, although award decisions are yet to be finalised.
Suprio Banerjee, Co-Group Head, Corporate Ratings at ICRA, stated that shrinking order books and weather-related disruptions were affecting execution momentum across the sector. He indicated that the government’s increasing focus on expressways and high-speed corridors could support relatively better growth in lane-km expansion despite moderation in overall construction volumes.
The report also noted that competitive intensity in engineering, procurement and construction projects awarded by the National Highways Authority of India and MoRTH has remained elevated despite the reinstatement of earnest money deposit requirements and additional performance security norms. ICRA stated that around 71% of EPC projects awarded over the past three years were secured at discounts exceeding 20% below base prices due to intense bidding competition and limited project availability.
A similar trend has emerged in hybrid annuity model projects, where bidding discounts widened to 16% in FY2024-25 and 21% during the first 10 months of FY2025-26.
ICRA further projected toll collection growth of 7-9% during FY2025-26, supported by traffic growth of 4-5% compared with 2.5% in FY2024-25. However, the agency stated that toll revenue growth in FY2026-27 could moderate to 6-8% due to softer inflation-linked toll rate increases linked to Wholesale Price Index trends.
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