The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a major upgrade of National Highway 326 (NH-326) in Odisha, a project intended to improve road safety and boost freight movement in southern Odisha. The work covers the stretch from Km 68.600 to Km 311.700 and will be executed under the National Highways (Original) programme on an Engineering, Procurement and Construction (EPC) basis.
The total capital cost of the project is Rs 1,526.21 crore, including Rs 966.79 crore for civil construction. Work is scheduled to be completed within 24 months from the appointed date for each package, followed by a five-year defect liability and maintenance period. Contractors will be required to adopt established construction and quality assurance technologies.
NH-326 upgrade Odisha will cut travel time and improve safety
The upgrade will convert the existing two-lane highway into a two-lane road with paved shoulders, and will deliver geometric corrections, pavement strengthening and gradient improvements. The Mohana–Koraput section currently suffers from sub-standard geometry, deficient curves, steep gradients and a constrained carriageway width, conditions that hinder the movement of heavy vehicles and restrict freight flows to coastal ports and industrial centres.
Economic appraisal of the scheme estimates an Economic Internal Rate of Return (EIRR) of 17.95 per cent. The Financial Internal Rate of Return (FIRR) is negative, a reflection of social and non-market benefits rather than direct financial returns. Key gains cited include a projected travel-time saving of roughly 2.5 to 3 hours and a distance reduction of about 12.46 km between Mohana and Koraput after geometric improvements.
The upgraded corridor will strengthen links with major routes such as NH-26, NH-59 and NH-16, and the Raipur–Visakhapatnam corridor. It will also improve last-mile access to infrastructure including Gopalpur port, Jeypore airport and nearby railway stations, aiding faster movement of goods and passengers across the region.
NH-326 serves several industrial units and institutions, among them JK Paper, NALCO, IMFA, Utkal Alumina, Vedanta and HAL, as well as the Central University of Odisha and Koraput Medical College. The highway also provides access to tourist destinations in the area. Improved road conditions are expected to support industrial activity, tourism and access to education and healthcare in tribal and backward districts including Gajapati, Rayagada and Koraput.
Project implementation will be accompanied by robust monitoring and quality control. Authorities will use Network Survey Vehicles, drone-based mapping and the Project Monitoring Information System, with on-ground supervision by an appointed Authority Engineer. These measures aim to ensure adherence to specifications and prompt rectification of defects during the maintenance period.
Beyond transport benefits, the project is expected to create both direct and indirect employment opportunities during construction and maintenance phases, and to stimulate local industries that supply construction and logistics services. The government has framed the scheme as an investment in regional connectivity and socio-economic development, particularly for tribal communities and areas identified as backward.
With central approval secured and funding endorsed, the NH-326 upgrade will now move to procurement and contracting stages. The project’s combination of safety measures, travel-time savings and enhanced freight capacity positions it as an important infrastructure intervention for southern Odisha.
Key Takeaways:
- Union Cabinet approves Rs 1,526.21 crore upgrade of NH-326 between Km 68.600 and Km 311.700 in Odisha.
- Project will widen the highway to two lanes with paved shoulders and address sub-standard geometry, steep gradients and accident-prone spots.
- Expected to cut travel time by up to 2.5–3 hours, enhance freight links to ports and industrial centres, and generate local employment.
- Implementation on EPC mode with drone mapping, Network Survey Vehicles and a five-year defect liability period for quality assurance.
