Construction of national highways likely to slow by 7-10% year-on-year in FY26: CareEdge Ratings
CareEdge Ratings in its latest report has said that construction of national highways (NH) is expected to slow by 7-10% year-on-year to 9,500-10,200 km in current financial year (FY26), due to delays in project awarding and execution challenges. It mentioned the National Highways is currently facing a period of slowdown, both in terms of project awarding and execution driven by delays in appointed dates, land acquisition hurdles, increasing project complexities, heightened competitive intensity and execution woes.
The national highways project awarding activity witnessed a 30% decline in FY24 and remained stagnant in 11MFY25 at 4,874 km vs. 4,872 km in 11MFY24. In FY26, it expects an increase in project awards by the Ministry of Road Transport and Highways (MoRTH) over FY25 levels, albeit lower than the historical highs of FY21-FY23. As of December 31, 2024, projects with a Bid Project Cost (BPC) exceeding Rs 40,000 crore have been awaiting their appointed dates for over a year since award, which, along with lower project awards and execution hurdles, is also expected to pull down the execution pace.
Execution hurdles can be attributed to prolonged timelines in receipt of appointed date, increased awards for greenfield expressways and highways complicating land acquisition issues, unavailability of hindrance-free Right of Way (RoW), a standard two-year construction period regardless of the project's complexity, and unprecedented monsoon during FY25, amongst others. To address a few of these bottlenecks, MoRTH issued revised guidelines to streamline pre-construction processes and reduce delays associated with appointed date issuances.
