Over the years, the narrative of India’s roads and highways sector has been defined by scale and speed. This has been reflected in accelerated project awards, record high daily construction, growth in access-controlled expressways that reshaped interstate connectivity, and high capex under flagship programmes such as the Bharatmala Pariyojana (BMP) and the Pradhan Mantri Gram Sadak Yojana (PMGSY).
That said, in recent years, on-ground realities such as moderated project awards, aggressive bidding pressures and the operational demands of the network are compelling a recalibration of priorities towards strategic efficiency. The emphasis is now shifting to how efficiently newer road assets can be financed, maintained, monetised and integrated into a broader logistics network, while ensuring the existing ones remain productive, resilient and sustainable throughout their life cycle.
Annual performance scorecard: A pause, rather than a retreat
In terms of project awards and construction, the past year has been something of a mixed bag. As a priority sector, road development has traditionally instilled confidence among stakeholders, encouraging them to set ambitious yet meaningful targets in the national interest. To this end, for 2025-26, despite the subdued project award environment, the Ministry of Road Transport and Highways (MoRTH) targeted the award and construction of 10,000 km.
Against this, the first nine months of 2025-26 saw project awards of only 2,257 km. This is a sharp decline from 2024-25, when 7,538 km was awarded, and a massive slide from the peak of 12,731 km in 2021-22. The reasons range from procedural delays and challenges in transitioning to the build-operate-transfer (BOT) toll model to stricter requirements relating to land availability. The conversion of state highways into national highways has further limited the availability of new projects.
The pace of construction has also been slow. After hitting a high of 13,327 km in 2020-21, annual construction remained steady at 10,000 km-12,500 km over the subsequent years, closing 2024-25 at 10,660 km (against a target of 10,421 km). The first nine months of 2025-26 saw 4,989 km constructed (against the annual target of 10,000 km).
In 2025-26, the momentum for engineering, procurement and construction (EPC) projects remained steady with a share of around 37 per cent in project awards by the National Highways Authority of India (NHAI). Bidding intensity maintained an average of 15-16 bidders in the first quarter (Q1) of 2026-27, as compared to 11-12 bidders in Q4 2025-26, and 20-21 bidders in Q3 2025-26. Despite the recent lull in project awards, intense competition for EPC contracts has remained a constant, even during periods of relative market normalcy. These trends point to a fragile equilibrium in the EPC landscape, underscoring the need to restore steadier award momentum so that healthy competition can coexist.
Turning to the hybrid annuity model, it not only held its ground but decisively dominated NHAI project awards, accounting for around 65 per cent of total activity. While bidding intensity fluctuated across 2025-26, it reflected robust underlying market appetite, peaking at 24-25 bidders per project in Q3 2025-26, moderating to 10-11 in Q4 2025-26 and rebounding to 16-17 in Q1 2026-27.
Additionally, no projects have been awarded in the BOT (toll) mode despite NHAI’s plans to award around 12 BOT projects during the year.
As for the future pipeline, no more projects are being taken under BMP Phase I, and approvals have not been granted for Phase II. Phase I was marred by time and cost overruns, with high input prices and land acquisition costs rendering a twofold rise in capex to Rs 10.95 trillion from the originally envisaged Rs 5.35 trillion.
Sector-driven policy adjustments create a fertile ground for future expansion
The road sector has seen a steady evolution in policy priorities. To support project execution, the centre has continued to extend financial support via significant budgetary allocations. For 2026-27, the budgetary allocation to the sector stands at a massive Rs 3.1 trillion. Meanwhile, the sector is expanding beyond sole dependence on government funding to a more diversified financing model, leveraging cess revenues, foreign capital and asset monetisation proceeds. In January 2026, gross bank credit to the sector rose to Rs 3.3 trillion.
As the asset base expands, the policy priority is also being placed on maintenance, construction quality and engineering standards. To address some of the contractor concerns around aggressive bidding and project quality, MoRTH has strengthened additional performance security requirements, extended the defect liability period and introduced performance-based ratings for concessionaires. Concurrently, several measures are aimed at addressing execution challenges before they translate into delays and cost overruns. Timelines for key pre-construction activities have been aligned with project approval and award processes. The model concession agreement for BOT projects has also been revised to equitably share risk and rewards with concessionaires and boost private participation.
Dual shift towards digitalisation and sustainability
Sustainability is increasingly becoming a part of mainstream road development, with mandates covering the use of inert material from urban solid waste and plastic waste, as well as precast concrete for non-critical components. The PMGSY alone has sanctioned over 172,700 km of green technology road works, translating into estimated savings of 38.57 million litres of fuel and over 0.1 million tonnes of CO2 through cold-mix construction alone.
On the digitalisation side, NHAI is leaning into predictive maintenance, expanding drone usage and issuing tenders for network survey vehicle coverage across 20,933 km in 23 states. Artificial intelligence (AI)-enabled dashcams are being rolled out across roughly 40,000 km, running weekly monitoring surveys. Additionally, the adoption of performance-based and short-term maintenance contracts has proven vital. The rural side has seen a quieter but equally impactful digital revolution. The PMGSY has built its own digital stack, the Quality First App, which enforces a four-stage “stage passing” protocol for roads and a five-stage one for bridges. AI flags anomalies across 100 design and cost parameters, and eMARG automates maintenance billing and outcome-based performance scoring. States are now following suit. Uttar Pradesh runs nine integrated portals covering billing, contractor bid capacity assessment and geofenced quality checks, while Himachal Pradesh is building an integrated works and accounts system with the Centre for Development of Advanced Computing.
With respect to tolling, FASTag now accounts for over 98 per cent of toll transactions. The FASTag Annual Pass has found steady uptake among private vehicle owners. In terms of barrier-free tolling, the government has settled on the multi-lane free flow system.
Capitalising on the monetisation wave
Asset monetisation remains the sector’s brightest spot. Road assets mobilised over Rs 1.5 trillion under National Monetisation Pipeline Phase I. Drawing on its success, the government has more than doubled the target to Rs 4.42 trillion under Phase II. For 2026-27, India is planning to monetise 28 national highways, spanning over 1,800 km. This will include two BOT (toll) and seven EPC projects.
Cumulatively, projects worth over Rs 530 billion have been awarded under the toll-operate-transfer (TOT) model, with TOT-18 in Odisha awarded to IRB Infrastructure in January 2026. Road infrastructure investment trust (InvIT) assets under management have grown by an estimated 37 per cent, from Rs 2.4 trillion in March 2025 to around Rs 3.27 trillion by March 2026. Another standout development was Cube Highways Trust’s conversion from a privately placed to a publicly listed InvIT. Vertis Infrastructure Trust has signalled similar intent, and the Securities and Exchange Board of India’s consultation paper on easing private-to-public InvIT conversion norms are expected to smooth the path for others.
A race to the bottom
For some time now, a crowded market has been chasing a limited pipeline of opportunities, resulting in aggressive bidding and thereby putting financial sustainability and long-term project execution in jeopardy. In their eagerness to secure projects, many players have been submitting deeply discounted bids, triggering financial strain and leaving several projects unable to reach financial closure.
MoRTH and state executing agencies have been under severe pressure to balance speed, fairness and fiscal prudence. Recent policy interventions such as the additional performance security (APS) policy aim to rein in the reckless bidding behaviour. However, given the current scenario, APS’s real impact will be known only once awarding volumes normalise.
The road to resilience
The sector’s focus initially was on building at scale via construction programmes and ambitious annual targets. With much of this network now in place, construction priority is evolving towards high-speed, access-controlled corridors, in line with the Viksit Bharat 2047 vision.
MoRTH is aiming for Rs 15 trillion worth of construction over the next two years, and NHAI has identified 124 projects spanning 6,376 km for award in 2025-26 at an estimated cost of Rs 3.45 trillion. The development intent is clear. However, whether the pipeline translates into on-ground awards at the pace required hinges on proactive action.
The government, on its part, is now recalibrating its approach based on the lessons learnt over the past few years. Earlier, to accelerate road development, it had lowered the eligibility criteria, resulting in increased competition, which further led to project delays, cost overruns and a decline in construction quality. Now, the government is reintroducing tighter policy measures. While these moves mark a step in the right direction, they also underscore the need for strong on-ground implementation and adherence.
Delivering on the Viksit Bharat 2047 road map will require MoRTH to hold three commitments simultaneously rather than sequentially: reviving the award pipeline to previous levels, synchronising pre-construction clearances with appointed-date declarations, and translating the revamped BOT model concession agreement into actual awards. The sector’s future will be shaped as much by what happens after construction as by what happens during it. The past year has already signalled such a shift, with a renewed focus on quality construction and policy measures aimed at enabling robust future growth. With these reforms, the sector is set to maintain its operational efficiency in the years ahead.
Harman Mangat
