India’s Roads Sector Enters Execution-Focused Phase in FY27, States Emerge as Key Driver: Report

India’s overall road network expanded from about 52.30 lakh kms in FY16 to 63.73 lakh kms in FY26, while the National Highway network increased from 1.00 lakh kms to 1.47 lakh kms during the period, a report showed on Friday. Four-laning and above NH stretches also increased from 25,854 kms to 45,516 kms. Over the same period, annual government and private road capex increased from Rs 0.94 lakh crore to Rs 2.62 lakh crore, CareEdge Ratings said in a report. India’s roads sector entered FY27 at an inflection point, following a decade of significant network expansion and rising investment.

The sector is now transitioning towards a more selective and execution-intensive phase. However, construction activity is expected to moderate further amid lower award inflows and ongoing execution challenges, the report added. “The Indian roads sector is transitioning from a phase of rapid expansion to one centred on execution quality, operationalisation and asset monetisation. While FY27 awarding activity is expected to benefit from the revised BOT-Toll framework and a stronger award pipeline, construction pace is likely to moderate amid lower award inflows and execution challenges,” said Rajashree Murkute, senior director at CareEdge Ratings.

At the same time, state-led capex and the growing pool of operational HAM and toll assets provide resilience through greater cash-flow visibility. NH awarding activity has moderated from the peak of 12,731 kms in FY22 to an estimated 7,000 kms in FY26. Construction pace, which peaked at 36.8 km per day in FY21, has declined to 25 km per day in FY26 and is expected to moderate further to around 21 km per day in FY27, or approximately 7,750 km for the year, due to lower awards during FY25-FY26 and continued execution challenges, the report noted.

State governments are emerging as the key driver of road sector investment. CareEdge Ratings expects state road capex to outpace central capex in FY27, reflecting greater focus on regional and intra-state connectivity even as NH award activity moderates. The shift also reflects a broader transition in the sector from rapid asset creation towards execution and completion of the existing project pipeline.

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