Project awarding activity by the Ministry of Road Transport and Highways (MoRTH) is expected to regain momentum, climbing to 8,000–8,500 kilometers in FY27 up from around 7,000 km in the last financial year, according to a report released Monday by rating agency ICRA.
Road awards by the MoRTH declined to around 7,000 km in 2025-26 from 7,538 km awarded in 2024-25, amid the Ministry’s focus on addressing land acquisition issues and environmental clearances prior to awarding projects. However, given the increase in budgetary allocation, the project awarding activity of MoRTH is likely to improve.
Road execution by the MoRTH is expected to remain range bound at 9,000-9,500 km in 2026-27, compared to 9,380 km in 2025-26, owing to slowdown in project awarding over the past three years. Additionally, the sharp increase in bitumen prices and disruptions in its availability amid the ongoing West Asian crisis have adversely impacted road execution in April-June of this financial year.
MoRTH has, however, set a target of 10,000 km of highway construction in 2026-27.
Engineering, procurement and construction (EPC) has remained the preferred awarding route for the Ministry over the past few years, accounting for 65-70% of the total awards, while hybrid annuity mode (HAM) projects accounted for 25-30%.
ICRA estimates the share of HAM projects at 24-26% in 2026-27, as projects above Rs. 500 crore are likely to be awarded in the HAM/Toll mode. While EPC is likely to remain the favoured route for road awards by MoRTH, the Ministry is gradually shifting its focus to BOT (Toll) road projects to boost their share in overall awards.
“The Ministry’s move to revive the BOT (Toll) road projects through the revised model concession agreement is a welcome step and is expected to support increased private sector participation in the roads sector. However, the extent to which it translates into a meaningful revival in construction activity remains to be seen,” Co-Group Head, Corporate Ratings, ICRA Suprio Banerjee said.
The surge in highway expansion coincides with a projected rebound in toll revenues, which are expected to grow by 10–12% in FY28 after a brief moderation to 7–9% in FY27.
The revenue acceleration in FY28 will be heavily driven by higher Wholesale Price Index (WPI)-linked toll revisions, triggered by supply chain disruptions and West Asia conflict risks pushing baseline inflation higher.
ICRA projects WPI inflation at 8.0–8.5 per cent for December 2026 and 4.5–5.5 per cent for March 2027. Under highway concession frameworks, these metrics dictate annual tariff increases