India's Roads Sector Enters FY27 in Execution-Intensive Phase; Construction Pace Seen at 21 km/day: CareEdge Ratings
State governments expected to remain the primary driver of road capex; Stable outlook maintained
According to CareEdge Ratings, India’s roads sector entered FY27 at an inflection point, following a decade of significant network expansion and rising investment. The sector is now transitioning towards a more selective and execution-intensive phase. However, construction activity is expected to moderate further amid lower award inflows and ongoing execution challenges.
India’s overall road network expanded from about 52.30 lakh km in FY16 to 63.73 lakh km in FY26, while the National Highway network increased from 1.00 lakh km to 1.47 lakh km during the period. Four-laning and above NH stretches also increased from 25,854 km to 45,516 km. Over the same period, annual government and private road capex increased from Rs 0.94 lakh crore to Rs 2.62 lakh crore.
NH awarding activity has moderated from the peak of 12,731 km in FY22 to an estimated 7,000 km in FY26. Construction pace, which peaked at 36.8 km per day in FY21, has declined to 25 km per day in FY26 and is expected to moderate further to around 21 km per day in FY27, or approximately 7,750 km for the year, due to lower awards during FY25-FY26 and continued execution challenges.
State governments are emerging as the key driver of road sector investment. CareEdge Ratings expects state road capex to outpace central capex in FY27, reflecting greater focus on regional and intra-state connectivity even as NH award activity moderates. The shift also reflects a broader transition in the sector from rapid asset creation towards execution and completion of the existing project pipeline.
Their study of 375 NHAI HAM projects, with an aggregate Bid Project Cost of over Rs 4.16 lakh crore awarded between FY16 and FY26, highlights the growing maturity of the asset base. As of June 2026, 53% of the sample BPC, or over Rs 2.18 lakh crore, was operational. However, execution challenges remain, with 68% of the under-construction portfolio, aggregating over Rs 1.10 lakh crore, delayed by more than nine months.
“The Indian roads sector is transitioning from a phase of rapid expansion to one centred on execution quality, operationalisation and asset monetisation. While FY27 awarding activity is expected to benefit from the revised BOT-Toll framework and a stronger award pipeline, construction pace is likely to moderate amid lower award inflows and execution challenges. At the same time, state-led capex and the growing pool of operational HAM and toll assets provide resilience through greater cash-flow visibility. We expect these assets to support continued monetisation, although softer valuations could moderate transaction activity. Overall, the sector enters FY27 with a Stable outlook,” Rajashree Murkute, Senior Director at CareEdge Ratings.
The growing base of operational annuity- and toll-backed assets is also supporting cash-flow visibility, diversification and asset monetisation opportunities. However, softer valuation multiples and the limited availability of mature toll assets could moderate the pace of road-sector monetisation going forward.
With a strong operational asset base, continued state-led investment and the potential revival of NH awards, the roads sector is expected to retain its underlying resilience despite near-term execution headwinds. CareEdge Ratings, therefore, maintains a Stable outlook on the roads sector.
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