National Highway 326 upgradation: Union cabinet approves Rs 1526 crore to boost connectivity in southern Odisha.
Photo Credit: The Suncity News.
New Delhi, 31, 2025: The Union Cabinet, chaired by Prime Minister Narendra Modi, approved the conversion of the existing 2-lane section of National Highway 326 from km 68.6 to km 311.7 in Odisha into a 2-lane highway with paved shoulders on Wednesday.
The project will be executed under the NH(O) scheme on Engineering Procurement and Construction (EPC) mode.
The total capital cost of the project is Rs 1,526.21 crore, which includes Rs 966.79 crore toward civil construction.
The upgradation of National Highway 326 is expected to make travel faster, safer, and more reliable, significantly contributing to the development of southern Odisha, particularly the districts of Gajapati, Rayagada, and Koraput.
Improved road connectivity will enhance access to markets, healthcare facilities, educational institutions, tourist destinations, and employment opportunities, supporting inclusive regional growth.
Addressing existing National Highway 326 deficiencies:
The Mohana-Koraput section of National Highway 326 currently suffers from poor road conditions, including intermediate two-lane stretches, sharp curves, steep gradients, and geometric deficiencies.
These issues hinder the safe and efficient movement of heavy vehicles and negatively impact freight transport to coastal ports and industrial hubs.
The approved project will address these challenges through upgradation to a two-lane highway with paved shoulders, geometric improvements, including curve realignment and gradient correction, elimination of accident-prone black spots and strengthening of existing roadway.
These measures will ensure smooth and uninterrupted movement of goods and passengers while reducing vehicle operating costs.
Improve access to economic and logistic hubs:
Once upgraded, National Highway 326 will provide improved connectivity to major highways and corridors, including NH 26, NH 59, NH 16, and the Raipur-Vishakhapatnam corridor.
It will enhance access to key infrastructure such as Gopalpur port, Jeypore Airport, and multiple railway stations.
The corridor connects major industrial and logistics hubs, including JK Paper, Mega Food Park, NALCO, IMFA, Utkal Alumina, Vedanta, and HAL, as well as important educational and tourism centres such as Odisha Central University, Korapur Medical College, Taptapani, and Tayagada.
The project is expected to reduce travel time, accelerate freight movement, and stimulate regional economic activity.
Economic and social impact:
The National Highway 326 project will significantly improve intra-state and inter-state connectivity, especially in aspirational and tribal regions of southern Odisha.
It is also expected to promote industrial growth and tourism development.
According to economic analysis, the project has an Economic Internal Rate of Return (EIRR) of 17.95 percent (Base case), while the financial internal rate of return is 2.32 percent, reflecting substantial social and non-market benefits.
EOM.