Highway Project Awards Slow After Bharatmala Push, But Sector May Regain Momentum By FY27: Report
India’s roads and highways sector may be experiencing a temporary lull in new project awards, but long-term growth prospects remain strong as a fresh wave of infrastructure projects is expected to revive activity over the next few years, according to a report by SBI Capital Markets.
The report notes that the pace of highway construction and project awards has moderated since the record highs seen during FY22 and FY23.
A key reason has been the slowdown in tendering under the government’s Bharatmala Pariyojana Phase I, particularly from late 2023 onwards.
Out of more than 26,000 km of road projects awarded earlier under the programme, roughly 4,500 km are still under construction.
With fewer fresh tenders being issued, competition among developers for available projects has intensified, affecting bidding dynamics and reducing premiums.
The slowdown has also been linked to stricter eligibility criteria for infrastructure developers and persistent land acquisition challenges in certain states. Together, these factors have slowed the pace of new awards during FY25 and FY26.
However, the report indicates that construction activity has not completely stalled. Capital expenditure by the Ministry of Road Transport and Highways has remained steady through the first ten months of FY26.
Consumption patterns for key construction materials such as bitumen, cement and steel also suggest that road-building work continues at a significant scale.
Bitumen consumption in 2025 has remained close to a five-year high, signalling sustained construction activity across highway projects despite fewer new contracts being awarded.
Looking ahead, analysts expect momentum to return as several major expressways approach completion.
More than 650 km of expressways are scheduled to be commissioned over the next year, which could stimulate both traffic growth and construction demand.
The report also highlights a renewed push to increase private sector participation in highway development.
Government plans could see projects worth nearly Rs 1 lakh crore opened to private developers by FY27, potentially boosting order books for infrastructure companies.
Meanwhile, toll revenues across India’s highway network continue to rise, supported by increasing traffic volumes and the widespread adoption of FASTag.
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