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Road Execution by MoRTH to Moderate to 9,000-9,500 km in FY2026-27
For years, India’s highway narrative has been one of never-ending speed and record-breaking achievements. However, the most recent data suggests that the ‘motorway’ of progress is encountering a temporary speed bump. According to recent reports from the rating agency ICRA, the sector is cooling, with national highway construction expected to slow to a more moderate pace.
The numbers convey a specific story. After reaching high gears in previous fiscal years, road execution by the Ministry of Road Transport and Highways (MoRTH) is expected to slow to 9,000-9,500 km in FY2026-27. This follows an estimated 9,500-10,000 km for the current fiscal year, which represents a departure from the peak performance levels we have become accustomed to.
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The Awarding Engine Slows Down
What is causing the deceleration? According to ICRA, the main cause is not a lack of intent, but a sustained slowdown in project awarding. Over the last three years, the number of new projects awarded to developers has decreased significantly. Because there is typically a six to nine-month lag between awarding a contract and breaking ground, yesterday’s “award drought” is becoming tomorrow’s “execution slowdown”.
For FY2025-26, project awards are expected to remain between 7,250 and 7,750 kilometres. While this is roughly comparable to the previous year’s 7,538 km, it is far from the aggressive awarding seen between FY2021 and FY2023. This narrower pipeline of new contracts has naturally resulted in a smaller order book for many of the country’s leading road developers.
Weather and Policy Hurdles
Beyond the paperwork, nature and policy have also played a role. The early onset of the monsoon, combined with an extended rainy season in various states, physically hampered construction schedules. On the policy front, stricter prerequisites—such as requiring 90% of land to be acquired before awarding—have improved long-term project health while slowing the immediate pace of rollout.
The Ministry’s focus has shifted to clearing backlogs and completing projects that were approved but remained in the “pending” phase. While this cleanup is necessary for structural integrity, it has diverted attention away from beginning massive new stretches of bitumen.
Intensifying Bidding Wars
With fewer projects coming to market, competition among developers has reached a fever pitch. According to ICRA, bidding intensity remains extremely high for both Engineering, Procurement, and Construction (EPC) and Hybrid Annuity Model (HAM) projects.
In fact, in recent years, approximately 71% of EPC projects were awarded with discounts of more than 20% off the base price. This aggressive bidding reflects a “survival of the fittest” environment in which developers are eager to shore up their depleted order books, even if it means eroding profits.
The Silver Lining: Lanes and Tolls
Despite the overall moderation in total kilometres, there is a technical silver lining. The government is increasingly prioritising high-speed corridors and motorways. These projects have more lanes per km than traditional highways. Therefore, while the linear length may appear lower, the actual “lane-km” expansion remains robust, contributing more significantly to logistics efficiency than the basic numbers suggest.
Furthermore, the operational side of the road sector is still a bright spot. Toll collections are expected to remain healthy, growing by 6-8% in FY2026-27. While rate hikes are expected to be modest due to low inflation, traffic volume continues to increase, fuelled by a strong economy and widespread adoption of FASTag.
The Road Ahead for Developers
The private sector is likely to experience subdued revenue growth over the next 12 to 15 months. As the sector transitions to a “range-bound” awarding environment, the emphasis will shift to execution efficiency and asset monetisation. The National Highways Authority of India (NHAI) continues to use models such as Toll-Operate-Transfer (TOT) and Infrastructure Investment Trusts (InvITs) to unlock capital, providing the needed liquidity to keep the engine running until the awarding cycle picks up again.
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