It is imperative to pay heed to sustainability and safety when creating a 21st-century road network. India’s policy has encouraged the adoption of advanced technologies, the use of sustainable materials, and incorporated efforts to improve safety.
Last fiscal – financial year (FY) 2025 – saw a slowdown due to delays in project approvals, as election codes of conduct kicked in. There were also transition issues as the Ministry of Road Transport and Highways adopted a new build-operate-transfer (BOT) toll model, with underlying changes to the model concession agreement. While engineering, procurement and construction (EPC) continues and the hybrid annuity model (HAM) is expected to stay dominant in National Highways Authority of India (NHAI) awards, there will be a shift towards BOT toll models.
The lack of private capital in greenfield projects is a key concern. As public expenditure has risen, so has NHAI’s debt burden – hence the emphasis on reviving BOT. A great deal of thought has also gone into creating the National Monetisation Pipeline, which monetises operational road assets to generate revenue, reduce debt and reinvest in new projects.
Since FY 2019, road monetisation has raised Rs 1.4 trillion in revenue. The target is to monetise Rs 3.5 trillion over FY 2026 to FY 2030, with the target for FY 2026 set at Rs 300 billion. The change in focus to the BOT toll model and to monetisation will mean increasing reliance on InvIts to attract stable, long-term capital. InvITs contributed
Rs 183.4 billion in FY 2025 and must scale up to contribute even more in the future.
Construction could be low in FY 2026 compared to the last six years. While cancellations of some high-value tenders due to delays in clearances led to a slowdown in early FY 2026, awarding is expected to improve in the second half. NHAI has a pipeline of projects worth Rs 3.45 trillion with a total length of 6,376 km to be awarded in FY 2026.
Gross bank credit has grown at around 14 per cent. The new reserve bank of india (RBI) project finance guidelines, mandating 1 per cent provisioning of loan value during construction and 0.4 per cent in the operational phase, will raise credit costs. But the government is planning to set up a Rs 200 billion risk guarantee fund to cover policy and non-commercial risks, aiming to boost credit flow.
Apart from the national highway network, the Pradhan Mantri Gram Sadak Yojana is a big contributor to rural development. While projects are behind schedule, as of August 2025, 183,215 roads covering 783,727 km and 9,891 bridges have been completed, out of a sanctioned total of 838,611 km and 12,146 bridges respectively.
Waste, including industrial waste such as fly ash, steel slag and plastics, as well as urban solid waste, is being used as construction material for roads, along with geosynthetics. This serves several purposes, including reducing cost and disposing of pollutants. The use of precast components also speeds up processes and reduces pollution during construction.
The introduction of artificial intelligence (AI), machine learning, drones, automatic number plate recognition cameras, digital twins, etc., has brought about a sea change at every stage of the process. Digitalisation is now integral to design, planning and implementation, as well as for predictive repairs, operations and maintenance. AI-driven models promise to improve road safety a lot, going by results from pilot road safety projects.
The bidding intensity for EPC and HAM is high. There are five to seven key private players who tend to win the lion’s share of projects, but there is a much larger pool of players who win a few awards each. Slowdowns in awarding pose a challenge for small- and mid-sized firms, and there could be some consolidation as a result.
The build-out over the past decade has made a big difference to connectivity and contributed to economic activity. But the slowdown in the last 18 months has to be reversed and policy must continue to evolve in order to ensure that momentum is not lost, as there is still a great deal to be done.