India’s road construction sector saw a 12% year-on-year decline in execution during the first seven months of FY2026, amid subdued project awarding, according to a recent ICRA report. Road construction by the Ministry of Road Transport and Highways (MoRTH) stood at 3,468 km between April and October 2025, compared with 3,920 km in the same period last year.
For the full fiscal year, ICRA expects road execution to moderate to 9,000–9,500 km in FY2026, lower than the 10,660 km achieved in FY2025, which itself marked a 14% decline from FY2024 levels. The slowdown was more pronounced at the National Highways Authority of India (NHAI), where execution fell 16% to 5,614 km in FY2025.
Project awarding activity remains muted, impacting revenue visibility for construction companies. ICRA expects road awards of 8,500–9,000 km in FY2026, marginally higher than FY2025, but said a sharper pickup is needed to ease competitive intensity.
Despite near-term construction challenges, the outlook for the toll road sector remains stable. Vehicular traffic growth is projected at 4–5% in FY2026, with toll collections expected to rise 5–9%, supported by benign inflation and steady traffic. On monetisation, NHAI raised Rs 12,357 crore through Toll-Operate-Transfer bundles in 9M FY2026, with cumulative proceeds expected to reach Rs 1.3 lakh crore by FY2026-end. ICRA maintains a Stable outlook on the construction sector, projecting revenue growth of 8–10% in FY2027.
