New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved the widening and strengthening of the existing 2-lane to 2-lane with paved shoulder in Odisha -- from "km 68.600 km to km 311.700 of NH-326" -- on an EPC (engineering, procurement, and construction) mode with Rs 1,526.21 crore outlay. 

The project lies in southern Odisha (Gajapati, Rayagada, and Koraput districts) and will significantly improve intra-state and inter-state connectivity by making vehicle movement faster and safer, stimulating industrial and tourism growth and improving access to services in aspirational and tribal areas.

The total capital cost for the project is Rs 1,526.21 crore, which includes a civil construction cost of Rs 966.79 crore, according to the Cabinet Committee on Economic Affairs (CCEA).

"The upgradation of NH-326 will make travel faster, safer, and more reliable, resulting in overall development of southern Odisha, particularly benefiting the districts of Gajapati, Rayagada, and Koraput," it noted.

Improved road connectivity will directly benefit local communities, industries, educational institutions, and tourism centres by enhancing access to markets, healthcare, and employment opportunities, thereby contributing to the region’s inclusive growth.

The section of Mohana–Koraput of the National Highway (NH-326) at present has sub-standard geometry (intermediate lane/2-lane, many deficient curves and steep gradients); the existing road alignment, carriageway width and geometric deficiencies constrain safe, efficient movement of heavy vehicles and reduce freight throughput to coastal ports and industrial centres.

The upgradation will provide improved connectivity from Mohana to Koraput 

According to the Cabinet, these constraints will be removed by upgrading the corridor to 2-lane with paved shoulders, with geometric corrections (curve realignments and gradient improvements), removal of black spots, and pavement strengthening, enabling safe and uninterrupted movement of goods and passengers and reducing vehicle operating costs.

The upgradation will provide direct and improved connectivity from Mohana–Koraput into major economic and logistics corridors — linking with NH-26, NH-59, NH-16 and the Raipur–Visakhapatnam corridor and improving last-mile access to Gopalpur port, Jeypore airport, and several railway stations.

The corridor connects important industrial and logistic nodes (JK Paper, Mega Food Park, NALCO, IMFA, Utkal Alumina, Vedanta, HAL) and education/tourism hubs (Central University of Odisha, Koraput Medical College, Taptapani, Rayagada), thereby facilitating faster freight movement, reducing travel time and enabling regional economic development.

The work is targeted to be completed in 24 months from the appointed date for each package, followed by a five-year defect liability/maintenance period (total contract engagement envisaged as 7 years — 2 years construction + 5 years DLP).