National Highways construction pace to decline by 7-10% to 9,500km-10,200km in FY26 : CareEdge Ratings
According to CareEdge Ratings, it expects National Highways Construction pace to slow down by 7-10% in FY26 on a y-o-y basis over FY25 to around 9,500-10,200 Km, reaching 26-28 Km/day, primarily due to slower project awarding coupled with heightened execution challenges.
The NH project awarding activity witnessed a 30% decline in FY24 and remained stagnant in 11MFY25 at 4,874 km vs. 4,872 km in 11MFY24. Though in FY26, CareEdge Ratings 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.
In line with CareEdge Ratings earlier expectation (“Work in Slow Progress: National Highways Execution to Decline by 7-10% in FY25”), the execution pace witnessed an 8% decline during 11MFY25 compared to 11MFY24 and is envisaged to remain at 30 Km/day during FY25 as against 34 Km/day in FY24.
“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. Looking ahead, CareEdge Ratings expects National Highways Construction pace to further slow down by 7-10% in FY26 over FY25 to around 9,500-10,200 km, reaching 26-28 Km/day,” said Maulesh Desai, Director, CareEdge Ratings.
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 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. These reforms, as outlined in CareEdge Ratings’ recent report “MoRTH’s New NH Guidelines: Balancing Progress with Pitfalls”, are expected to ease project execution to some extent, subject to timely and coordinated action by all stakeholders.
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