The Ministry of Road Transport and Highways has introduced stricter rules for companies bidding on highway construction projects in India. These changes are aimed at improving the quality of roads and ensuring projects are completed on time.
The new rules apply to two types of contracts — Hybrid Annuity Model (HAM) and Engineering, Procurement, and Construction (EPC). The updated guidelines now require companies to meet higher financial standards to qualify for bidding. This means only financially strong companies will be allowed to take on big road projects.
Here are the key changes:
- For HAM projects, companies now need to show financial strength of 20% of the estimated project cost, up from the earlier 15%.
- In a group bid (consortium), each member must now have 10% net worth, instead of 7.5%.
- For EPC projects, companies must have:
- 10% net worth, which is double the earlier requirement.
- An annual turnover of 20% of the estimated project cost.
These changes are meant to prevent small or financially weak contractors from taking up projects they can’t finish on time.
A government official said, “These stricter rules will help bring in large companies with strong financial backgrounds, who can deliver high-quality work without delays.”
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The government is planning to give out 124 new road projects in 2025-26, worth ₹3.5 lakh crore, with over 80 projects under HAM.
Another big change is in how projects are defined. From now on, railways, metro rail, and ports are no longer considered part of highway projects. These will now be classified as core sector projects.
Many road projects in the past were delayed. According to CareEdge Ratings, 55% of HAM projects between 2015 and 2024 were delayed by over 6 months. These delays were mostly because smaller contractors, allowed under earlier relaxed rules, didn’t have the money or resources to complete work on time.
Earlier this year, Transport Minister Nitin Gadkari told Parliament that 419 out of 952 ongoing road projects (about 44%) were running behind schedule due to financial issues and delays in getting permissions.
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Now, with these tighter rules, the government hopes to avoid such problems and ensure better, faster roads for everyone.
