NHAI Awards Remain Weak Amid Stagnant Budget
Road project awards are unlikely to see a meaningful recovery in FY27, as the National Highways Authority of India (NHAI) has received no increase in its capital expenditure budget, according to a report by Nuvama. The report highlights that road awards have been sluggish for several years, with NHAI missing its FY26 target of awarding approximately 4,500 km of highway projects.
Factors Behind the Slowdown
Nuvama attributes the slowdown to delays in project approvals and appraisals, coupled with limited private sector interest in Build-Operate-Transfer (BOT) projects. The report states, "Delays in project appraisal and approval along with reluctance on part of the private sector to take up BOT projects had caused the NHAI to miss its full-year awarding target of Rs 4,500km for FY26." Additionally, the award value in FY25 stood at Rs 470 billion (compared to Rs 350 billion in FY24), significantly lower than Rs 1.5 trillion in FY22 and Rs 1.3 trillion in FY23.
FY27 Budget and Outlook
The report notes that the FY27 road sector capex budget is Rs 2.9 billion, an 8% year-on-year increase compared to FY26 BE/RE, after being flat for two consecutive years. With no increase in NHAI's capital expenditure, a meaningful recovery in road awards appears unlikely. In June 2026, NHAI awarded only about 5 km of road projects, compared to 102 km in May 2026 and 13 km in June 2025. Road construction in June 2026 dropped 32% year-on-year to 274 km. In the first two months of FY27, road construction totaled around 638 km, down 34% from the same period last year.
Impact on Construction Activity
Nuvama also notes that muted road awards in recent years have weighed on construction activity. NHAI's road construction in FY25 had already declined by around 15% year-on-year. The share of listed developers in NHAI project awards has steadily declined, falling from about 61% during FY16-FY18 to around 31% in FY19-FY21 and further to nearly 25% during FY22-FY26.
