India’s Road Projects to Gain Momentum in FY25
India is set to see a significant increase in road project awards in the fiscal year 2025, according to a report by Axis Securities. As of September 2024, there is a robust bidding pipeline worth Rs 1.1 trillion, primarily driven by hybrid annuity model (HAM) and engineering, procurement, and construction (EPC) projects. HAM projects make up 47% of the pipeline, while EPC projects account for 36%. These models are expected to dominate project awards, with a potential rise in build-operate-transfer (BOT)-Toll projects.
The acceleration in project awards is due to a shortfall in FY24, which will likely be compensated by increased activity in FY25. The National Highways Authority of India (NHAI) has a strong pipeline of tenders to support this growth. The Ministry of Road Transport and Highways (MoRTH) has introduced a policy to streamline the bidding process, allowing projects to proceed with a single reasonable bid to avoid delays.
While the outlook for FY25 is positive, any slowdown in project awards could affect growth in FY26. However, the sector is well-positioned with a diversified order book and a strong bidding pipeline, ensuring stability and growth opportunities.
Doubts Revealed
FY25 -: FY25 stands for the financial year 2025. In India, a financial year starts on April 1st and ends on March 31st of the next year. So, FY25 means the period from April 1, 2024, to March 31, 2025.
Axis Securities -: Axis Securities is a company in India that provides financial services like stock trading and investment advice. They often release reports and analyses about different sectors of the economy.
Rs 1.1 trillion -: Rs 1.1 trillion is a way to express a very large amount of money in Indian Rupees. One trillion is equal to one lakh crore, which is 1,00,000 crore rupees.
Hybrid Annuity Model (HAM) -: The Hybrid Annuity Model (HAM) is a way to finance road projects in India. It combines government support and private investment to build roads, where the government pays a part of the cost and the private company manages the project.
Engineering, Procurement, and Construction (EPC) -: EPC is a type of contract used in construction projects. It stands for Engineering, Procurement, and Construction, meaning the company is responsible for designing, buying materials, and building the project.
National Highways Authority of India (NHAI) -: The National Highways Authority of India (NHAI) is a government agency responsible for building and maintaining national highways in India. They ensure that roads are safe and efficient for travel.
Ministry of Road Transport and Highways -: The Ministry of Road Transport and Highways is a part of the Indian government. It is responsible for planning and implementing policies related to road transport and highways in the country.
