Highway construction and project awards hit seven-year low in FY26 amid stricter bidding norms

India’s highway sector witnessed a notable slowdown in the financial year 2025–26, with both construction activity and fresh project awards dropping to their lowest levels in seven years. According to official data, overall highway construction remained below 10,000 kilometres for the first time since 2019–20, while only around 7,000 kilometres of new works were awarded during the fiscal.

The decline comes at a time when road development agencies are adopting a more cautious and disciplined approach before floating tenders. Officials indicated that stricter preconditions, particularly land availability, forest and environmental clearances, and utility shifting approvals, have become central to the bidding process. This move is aimed at reducing project delays and avoiding cost escalations that have historically affected the sector.

Industry experts believe this “self-restraint” strategy reflects a structural shift in how highway projects are planned and executed. Instead of aggressively expanding the national highway network through incremental additions, the focus is now increasingly on developing high-value economic corridors and access-controlled expressways that can improve logistics efficiency and support industrial growth.

Despite the broader slowdown, the National Highways Authority of India (NHAI) reported that it constructed 5,313 kilometres of national highways in FY26, surpassing its annual target of 4,640 kilometres by around 15 per cent. However, the sharp decline in new project awards is raising concerns among infrastructure developers and contractors.

With fewer projects entering the market, competition has intensified significantly. Industry insiders noted that contractors are quoting bids as much as 42 per cent below estimated project costs to secure work. This aggressive pricing trend could impact profitability and execution quality in the coming years.

The slowdown in project awards is expected to have a ripple effect on the infrastructure ecosystem over the next two to three years, particularly for EPC contractors, material suppliers, and construction equipment companies. The sector will now closely watch whether fresh investments in economic corridors and expressways revive growth momentum in FY27.