India's highway construction and road building sector is facing significant challenges due to the ongoing conflict in West Asia, particularly the US-Iran war. According to a report by CareEdge, the rate of national highway construction has decreased from 33.83 km per day in 2023-24 to 23.74 km per day in 2025-26, with expectations of further decline to 21-22 km per day this fiscal year. The slowdown is primarily attributed to a shortage of bitumen, a crucial material for road surfacing, with contractors reporting they are only receiving about 25% of their required supply. This shortage has led to a 20-30% increase in bitumen prices, which have risen from approximately ₹40,000 per tonne to nearly ₹65,000. The overall impact on highway project economics is estimated to be as high as 8%, affecting mid-sized contractors on fixed-price contracts the most. To mitigate these issues, the Ministry of Road Transport and Highways (MoRTH) has introduced an emergency cost escalation compensation mechanism, allowing contractors to receive monthly payments and shortening the price adjustment cycle from three months to one month. This move aims to ease liquidity pressures amid rising costs and supply chain disruptions.