Highway Projects to Accelerate in Second Half, Toll Revenue Growth Steady: CareEdge

Rapid Summary

• Highway tendering activity in India remained subdued in the first half (H1) of FY26 due to Union Budget cycles, approval delays, and new bidding norms introduced by the Ministry of Road Transport and Highways (MoRTH).
• Revised norms aim to prioritize strong players and curb aggressive bidding but have reduced eligible participants.
• A important ramp-up is expected in the second half (H2), with over 125 projects identified for awarding, following a typical H1-H2 ratio split of 30:70.
• Execution bottlenecks such as land acquisition delays have led to a projected slowdown in construction growth by 7-10%.
• Toll road traffic is estimated to grow at 7-9%, driven by freight movement, logistics demand, and increased coal mining volumes.
• The annual FASTag pass has enhanced transparency and global investor participation but may impact passenger vehicle-heavy corridors temporarily; compensation provisions exist for toll operators under change-in-law rules.

!highway tendering slowed in H1 FY26

Indian Opinion Analysis

The muted highway tendering activity during H1 FY26 reflects structural adjustments stemming from both fiscal cycles like Union Budget timing and policy changes focusing on market stability. While these measures might temporarily limit participation, they seem designed to enhance competition fairness and attract financially robust players into infrastructure growth.

the expectation of ramped-up activity in H2 aligns with sectoral trends that typically see higher momentum later in the year. However,persistent execution challenges-especially land acquisition delays-continue to overshadow construction progress despite robust project identification numbers.

The projected growth in toll road traffic signals ongoing industrial demand across logistics sectors like freight mobility and coal mining-a key metric tied closely with India’s economic throughput. Meanwhile, FASTag’s role as a catalyst for transparency signifies growing confidence among global investors through mechanisms such as InvITs, though minor disruptions for passenger vehicle corridors could emerge.

With stronger policies driving accountability paired with infrastructural hurdles moderating growth rates slightly, India’s highway sector faces a balanced outlook combining cautious optimism with operational pragmatism.

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