New Delhi, March 30 (NationPress) The revenue of India’s construction sector is projected to increase by 6-8 percent in the fiscal year 2026-27, following two challenging years, according to a recent report released on Monday.

In the fiscal year 2025-26, construction revenue growth is anticipated to remain subdued at 2 to 4 percent, primarily due to the mounting challenges faced by road contractors, as highlighted in the ICRA report.

The decline in order volumes for road contractors, coupled with limited project approvals from the Ministry of Road Transport and Highways, has contributed to this sluggish growth.

Additionally, a slowdown in construction associated with the Jal Jeevan Mission has further exacerbated the situation.

Contractors focused on road construction may experience strains on their credit profiles due to decreasing profit margins and limited revenue prospects. In contrast, companies with diversified portfolios are likely to benefit from ongoing investments in sectors such as power, urban infrastructure, and water (both drinking and sanitation), leading the ratings agency to maintain a 'stable' outlook for the construction industry.

Engineering, procurement, and construction (EPC) companies engaged in urban infrastructure, mining, power, and irrigation projects have been experiencing robust growth, with an expected revenue increase of 8-10 percent in 2026-27.

Order inflows for 2025-26 were supported by higher contract awards in mining and water sectors, while the recovery in road project approvals is expected to be gradual. The ratings agency anticipates a significant turnaround beginning in 2026-27.

Enhanced budgetary capital expenditure and improved execution are projected to facilitate this recovery, with order inflows expected to grow by approximately 10 percent in 2026-27, driven by a resurgence in road sector awards and Jal Jeevan Mission projects, which have now extended their timelines to December 2028, accompanied by increased funding.

However, EPC firms operating in West Asia may face challenges in maintaining execution momentum due to ongoing geopolitical issues, according to Suprio Banerjee, Co-group Head of Corporate Ratings at ICRA.

The ratings agency predicts that the operating profitability for construction companies will remain between 10.3-10.8 percent in 2025-26 and 10.1-10.6 percent in 2026-27, primarily due to pressures on bitumen prices.

The price of this crude oil derivative has increased amidst geopolitical tensions in West Asia and fierce competition within the industry.