New Delhi: India’s highway sector is under pressure due to muted central road award activity over the past two years, resulting in heightened competition and persistent project execution challenges, India Ratings and Research (Ind-Ra) said on Monday.
While increased state-level awards have provided some relief, the rating agency warned that revenue growth and margins are likely to remain subdued. The shift in awarding activity has changed sector dynamics, with states now playing a larger role in driving project flows.
“The muted central award activity has altered the sector’s dynamics, pushing states into the driver’s seat. While this ensures continuity, it also introduces complexities around execution and financing,” said Krishan Binani, Director, Corporate Ratings at Ind-Ra. The agency expects a higher share of build-operate-transfer projects at both central and state levels, which will require greater private capital participation.
For the overall engineering, procurement and construction (EPC) sector, Ind-Ra projects modest year-on-year revenue growth of 6–8 per cent in FY26, largely reflecting flat-to-negative growth in the highways segment after a sharp revenue decline in FY25.