The Union Cabinet on Wednesday gave its approval for a ₹1,526.21 crore project to widen and strengthen a 243-km stretch of National Highway 326 in Odisha. The project involves upgrading the existing two-lane road into a two-lane highway with paved shoulders under the Engineering, Procurement and Construction (EPC) mode.
The Cabinet Committee on Economic Affairs cleared the proposal for the NH-326 section between km 68.600 and km 311.700, passing through the districts of Gajapati, Rayagada and Koraput. The civil construction cost is estimated at ₹966.79 crore, and the project is slated for completion within 24 months from the appointed date of each package.
Connectivity and corridor improvements
The approved stretch forms part of the Mohana–Koraput section of NH-326, which currently suffers from narrow lanes, sharp curves and steep gradients. These limitations affect road safety and hinder the smooth movement of freight to ports and industrial hubs.
According to the government, the project will address these issues through geometric improvements, pavement strengthening and the removal of accident-prone spots. Once completed, the upgraded corridor will enable seamless movement of goods and passengers while lowering vehicle operating costs.
The project will enhance connectivity between Mohana and Koraput and integrate NH-326 with NH-26, NH-59 and NH-16. It will also improve access to key infrastructure such as Gopalpur port, Jeypore airport and multiple railway stations. The corridor serves important industrial and logistics centres, including manufacturing units, mining areas, as well as educational and healthcare institutions across southern Odisha.
Economic assessment and execution
The project’s economic internal rate of return has been assessed at 17.95 per cent, while the financial internal rate of return is estimated at -2.32 per cent. The government attributed the project’s economic feasibility to reduced travel time, lower vehicle operating costs and enhanced road safety.
Travel time between Mohana and Koraput is expected to reduce by approximately 2.5–3.0 hours, and the route length will be shortened by about 12.46 km following geometric corrections.
The work will be carried out under the EPC mode, with contractors required to follow standard construction and quality assurance norms. Project monitoring will be conducted using survey vehicles, drone mapping and the Project Monitoring Information System. The contract also includes a five-year defect liability period after completion.
The government added that the project will generate employment during both construction and maintenance phases and will strengthen intra-state and inter-state connectivity, including improved links with Andhra Pradesh through the southern end of NH-326.
