India's road-building pace slowed sharply in the fiscal year ended March 2026, with national highway awards falling to their weakest level in seven years and construction activity sliding to a level not seen since FY17, according to a new analysis from Nuvama Institutional Equities.
The National Highways Authority of India (NHAI), the country's main highway-building agency, awarded contracts for 3,124 km of road projects worth roughly Rs 42,300 crore in FY26. That's up from 2,170 km (worth Rs 47,000 crore) in FY25, but still ahead of the 1,300 km (worth Rs 35,000 crore) awarded in FY24. All three years pale next to FY23, when NHAI handed out contracts for 6,300 km worth nearly Rs 1,30,000 crore, a reminder of how much the pipeline has thinned since the post-pandemic construction boom. In FY22, the award value stood even higher at Rs 1,50,000 crore.
When state-level road awards from the Ministry of Road Transport and Highways (MoRTH) are added, the picture doesn't improve: combined NHAI-plus-MoRTH awards in FY26 were 7,000 km (down from 7,538 km in FY25), a 7% year-over-year fall, which is much lower than the 12,000-plus km awarded in FY22–23. Overall road construction also declined 12% year over year in FY26, following a 14% year-over-year fall in FY25.
Land acquisition delays continue to lag behind the pace of project approvals, the report points out.
Why it matters for the supply chain
For the commercial vehicle and construction equipment manufacturing ecosystem, which builds highways and, by extension, drives demand, the slowdown is structural, not cyclical.
As per the report, the listed developers' share of NHAI's awarded projects has been shrinking for nearly a decade: from roughly 61% in FY16–18, to 31% in FY19–21, to just 25% over FY22–25. That share held flat at 25% in FY26, showing no sign of recovery as smaller, unlisted players continue to win a larger slice of available work.
Spending steady, but priorities shifting
NHAI's overall capital expenditure held roughly flat at Rs 2,40,000 crore in FY26, but the agency's own construction output still fell about 5% to 5,313 km, suggesting money is being allocated differently rather than simply running dry. India's commercial vehicle and construction equipment industry will be watching whether that trend continues: media reports cited in the note peg the FY27 overall construction target at 10,000 km, flat versus the prior year, signaling no near-term acceleration.
One reason for the shift: deleveraging. NHAI raised about Rs 28,300 crore through asset monetization in FY26 (similar to Rs 28,700 crore in FY25, but down from Rs 41,100 crore in FY24), narrowly missing its Rs 30,000 crore target. The agency plans to raise Rs 30,000–35,000 crore in FY27. Critically, a large share of that capital is funding debt repayment rather than new construction. NHAI's debt-to-equity ratio fell to 0.17x by the end of FY26, down from 0.26x a year earlier, as the agency works toward its stated goal of becoming debt-free by FY30.
For an industry accustomed to NHAI acting as a steady source of new contract flow, the move toward balance-sheet repair over expansion is a meaningful change in posture.
The outlook for the CV and CE industry
With NHAI's awards disappointing post-FY23, road developers have struggled amid falling revenue visibility. A muted increase in budgetary outlay for roads in FY27 and the focus on debt reduction at NHAI (instead of capex) imply that a pickup in road awards is unlikely in the near term. In this backdrop, Nuvama argues that road developers must work on segmental diversification since their ability to win adequate road orders at desired margins is now under question. "We remain cautious on the roads space," the report concludes.