India’s road sector is facing a slowdown in project awards and construction even as the country’s road network and spending have expanded sharply over the past decade, pointing to growing execution challenges and a weaker pipeline entering FY27.
The road network grew from about 52.30 lakh km in FY16 to 63.73 lakh km in FY26, while the National Highway network expanded from 1.00 lakh km to 1.47 lakh km, according to a CareEdge Ratings report released on Friday. Annual road capital expenditure by the government and private sector rose from ₹0.94 lakh crore to ₹2.62 lakh crore over the same period.
Despite the higher spending, the pace of new highway awards and construction has weakened significantly.
Highway awards plunge from peak
National Highway project awards have fallen from a peak of 12,731 km in FY22 to an estimated 7,000 km in FY26, according to CareEdge. The slowdown in awards is now feeding into construction activity.
Road construction fell from a peak of 36.8 km per day in FY21 to around 25 km per day in FY26. CareEdge expects the pace to decline further to about 21 km per day in FY27, implying roughly 7,750 km of construction during the year.
Rajashree Murkute, senior director at CareEdge Ratings, said the revised Build-Operate-Transfer (BOT) Toll policy and a stronger award pipeline could support new project awards in FY27. However, construction is expected to remain under pressure because of fewer awards in recent years and continuing execution challenges.
Spending rises as execution comes under pressure
The sector is entering FY27 after a decade of heavy investment and network expansion, but the focus is now shifting from creating new assets to completing projects already in the pipeline.
State governments are expected to overtake the Centre in road-sector capital expenditure in FY27, as investment increasingly shifts towards regional and intra-state connectivity while National Highway awards moderate.
The growing stock of operational Hybrid Annuity Model and toll assets could provide more predictable cash flows. However, the weaker award pipeline and declining construction pace highlight the challenge of sustaining the sector’s earlier growth momentum.