October 3, 2025: India’s road construction sector is poised for a significant slowdown, with daily execution expected to drop to a five-year low of 25–26 km per day, according to a report by Icra Ratings. This is a marked decline from the 37 km per day achieved in FY21 and follows a 14% year-on-year reduction in FY25, where 10,660 km of roads were completed compared with 12,349 km in FY24.
The slowdown is attributed to prolonged monsoon rains and delays in project awarding. Road Transport and Highways Ministry approvals in FY25 remained flat at 8,000–8,500 km, well below the contract lengths awarded between FY21 and FY23. The agency expects FY26 execution to fall further to 9,000–9,500 km, translating to the lowest daily construction rate in half a decade.
Icra anticipates project awards to rise to 9,000–9,500 km in FY26, following a ministry directive that new projects may only be awarded once 90% of the right-of-way is secured, alongside necessary forest clearances and bridge approvals. The revised forecast is slightly lower than the earlier estimate of 9,500–10,000 km, reflecting the impact of extended monsoon periods and a slowdown in project awarding over FY24 and FY25.
On the revenue front, toll collections are projected to grow 5–8% in FY26, supported by 3–4% traffic growth and annual toll rate increases of 2.3–4%. In a major push for asset monetisation, the National Highways Authority of India (NHAI) could raise Rs 35,000–40,000 crore in FY26 through toll-operate-transfer (TOT) bundles and infrastructure investment trusts, bringing cumulative monetisation to approximately Rs 1.3 trillion, or 81% of its Rs 1.6 trillion target.
The report also welcomed the recent tightening of bidding norms for hybrid annuity model (HAM) and EPC projects, noting that competition remains intense. Analysts stressed that a sustained pickup in project awards will be critical to easing pressure on contractors and supporting sector profitability.
Source: The Indian Express
