India’s road construction industry stands at a crucial juncture. Rising fuel prices, escalating material costs, aggressive bidding practices, and stretched contractor finances are creating mounting pressure across the infrastructure ecosystem. Yet, according to Abhijit Som, Managing Director, Dynapac India, these challenges could also become a catalyst for transformation—if the industry chooses innovation over conventional thinking.

Som outlined how the sector must move beyond short-term reactions and instead focus on structural reforms, technological adoption, and collaborative policymaking to ensure sustainable growth in road infrastructure development.

India has witnessed strong momentum in infrastructure activity over the past few years, particularly in road construction. However, Som warned that any slowdown now could ripple across the entire value chain—from government agencies and contractors to equipment manufacturers and suppliers.

One of the biggest concerns is the rising cost of crude oil and bitumen. While the government has so far absorbed part of the fuel price burden, Som believes the full impact will eventually be felt across the economy. Contractors are already facing higher input costs, particularly for bitumen, and although certain compensation mechanisms are being discussed, prolonged inflationary pressure could disrupt project execution timelines and profitability.

According to Som, even a 5 to 8 per cent escalation in project costs can significantly erode contractor margins. Such stress often leads to disputes, stalled projects, and legal complications—situations that ultimately hurt the entire ecosystem.

“If the current volatility continues beyond the next few months, the second half of the year could become extremely challenging for the industry,” he observed.

A major concern highlighted by Som was the prevailing L1 (lowest bidder) model in infrastructure contracts. He argued that excessive underbidding has become unsustainable and often disconnects project pricing from execution realities.

Rather than focusing solely on how low a contractor can bid, Som believes the industry should ask a more important question: How is the cost being reduced?

He pointed to international practices, particularly in Germany, where contractors are encouraged to submit “alternative bids” backed by innovative construction methodologies. In such cases, contractors proposing lower costs must clearly demonstrate how technology, design changes, or improved execution methods will achieve savings without compromising quality.

This, he said, creates a more productive environment for innovation.

“For instance, there are ways to reduce material consumption through thinner pavement layers, alternative paving methods, or optimised designs. If these approaches genuinely reduce costs, they should be encouraged and mainstreamed,” Som explained.

Som believes India’s road construction practices remain largely standardised despite the availability of several alternative technologies globally.

Today, many projects still follow conventional pavement structures with standard DBM and top-layer configurations. However, international markets are increasingly adopting thinner overlays, modified pavement compositions, and cement-treated sub-layers to improve efficiency and reduce material consumption.

According to Som, India has already experimented with many such technologies through pilot projects and testing initiatives. The challenge lies in translating these isolated successes into mainstream execution practices.

“We have solutions available, but they are not becoming part of the mainstream road-building process,” he said.

He suggested that policymakers and road authorities could gradually introduce technical advisories, recommendation papers, and optional methodologies within bidding frameworks. This would allow contractors and agencies to experiment with newer technologies while maintaining project quality standards.

Another issue affecting project execution is the concentration of multiple contracts among financially stretched contractors.

Som noted that when companies without adequate financial strength secure several large projects simultaneously, execution quality suffers. Cash-flow constraints delay mobilisation, slow project progress, and increase pressure on equipment suppliers and subcontractors.

The result, he said, is a “traffic jam” of projects where contracts are awarded, but progress remains slow.

This creates a cascading impact across the ecosystem, affecting suppliers, OEMs, financiers, and ultimately the pace of national infrastructure development.

Som stressed the need for a broader and financially stronger contractor base that can execute projects efficiently and sustainably.

Despite the challenges, Som remains optimistic about the industry’s willingness to evolve. He emphasised the importance of bringing together policymakers, contractors, consultants, and equipment manufacturers onto a common platform to drive meaningful reform.

He highlighted the growing role of industry bodies in facilitating these discussions. According to him, OEM associations now represent a strong collective voice capable of engaging constructively with the government on policy reforms and technology adoption.

“Reforms cannot come from one company alone. They need to emerge from a broader ecosystem where all stakeholders contribute to creating practical, long-term solutions,” he noted.

Som also pointed to the creation of strategic industry panels focused on engagement with road authorities and policymakers. These platforms, he believes, can help shape reforms in bidding practices, contract structures, financing models, and technology deployment.

Interestingly, Som drew parallels between the current situation and the Covid-19 pandemic. During the pandemic, industries initially feared large-scale disruption, but many organisations ultimately discovered new levels of operational efficiency.

Factories continued operating efficiently despite reduced workforce movement, remote coordination, and logistical limitations. This demonstrated that industries can adapt quickly when forced to rethink traditional methods.

For Som, the current crisis presents a similar opportunity.

“These challenges are pushing us to look at newer ways of working rather than continuing with the same methods we used yesterday,” he said.

Som believes India’s road construction industry now has an opportunity to make a significant leap forward by embracing innovation, technology-driven execution, and collaborative policymaking.

Instead of focusing only on aggressive price competition, the sector must prioritise smarter construction methodologies, sustainable contract structures, and efficient execution models.

If industry stakeholders can align around these goals, the current pressures may ultimately become the trigger for long-term transformation in India’s infrastructure development journey.