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National highway projects in India are facing cost increases of around 5-8% along with delays due to supply disruptions linked to the ongoing West Asia conflict. Key construction inputs such as bitumen, steel, cement and fuel have become costlier, with some prices rising up to 25%. Logistics challenges, higher freight and insurance costs are also affecting execution timelines. Developers are relying on contract clauses and alternative sourcing to manage the impact, while also seeking relief measures from authorities as the situation adds pressure to already delayed projects.
India's national highway projects are witnessing cost overruns and execution delays as supply chains remain affected due to the ongoing conflict in West Asia. Industry executives have indicated that overall project costs have increased by around 5-8%, while work on several stretches has slowed due to irregular supply of materials and rising logistics expenses. Advertisement
The increase in costs is largely driven by higher prices of key construction materials. Bitumen and fuel prices have risen sharply by about 20-25%, while steel and electrical components have seen an increase of around 15-18%. Cement prices have also firmed up in certain regions. Since bitumen and fuel form a significant portion of road construction costs, even a small increase has a direct impact on project budgets and viability.
Supply disruptions through important maritime routes have added to the problem. Contractors are facing delays in shipments, along with higher freight charges and insurance premiums. These factors are affecting the timely movement of raw materials to project sites, leading to intermittent slowdowns rather than complete halts in construction activity.
Developers have stated that the extent of impact varies depending on project location and contract type. Projects under engineering, procurement and construction (EPC) and hybrid annuity models are being managed through price escalation clauses wherever applicable. Companies are also trying to secure materials through alternative suppliers, enter into long-term agreements, and optimise inventory to avoid further disruption.
At the same time, developers have approached authorities, including the National Highways Authority of India, seeking relief measures. They have requested that the current situation be treated as a force majeure event, which could allow timeline extensions, waiver of penalties and partial compensation for increased costs. Officials are reviewing these requests, although no broad decision has been confirmed yet.
India's dependence on imported bitumen, especially from West Asia, has further exposed the sector to global disruptions. While domestic refineries are being explored as alternative sources, industry players noted that scaling up supply quickly remains a challenge.
This situation comes when the highway sector is already dealing with structural issues. A significant number of projects have been running behind schedule due to delays in land acquisition, environmental clearances and utility shifting. The current cost pressures and supply constraints are adding another layer of complexity to project execution.
Despite these challenges, construction activity has not stopped, but the pace has become uneven across regions. Contractors are continuing work wherever materials are available, while closely monitoring price trends and supply conditions.
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