The Union government has revised its highway bidding framework, now mandating land, environmental, forest and wildlife clearances before tender invitations, a strategic shift designed to accelerate project delivery and reduce contractual delays. In a circular issued on 6 May 2025, the Ministry of Road Transport and Highways (MoRTH) directed that alignment approval must trigger the start of all statutory clearance processes, and no bids can be invited unless these are complete.
Project right‑of‑way notifications must extend to 90 per cent of the total land before issuing bid invitations, reversing the previous norm under which only 90 per cent land acquisition was needed to solicit bids. MoRTH has also fixed a 60‑day deadline post‑alignment finalisation to initiate land acquisition under Section 3A of the National Highways Act, 1956, ensuring early notification of intent. Before the Letter of Award is issued, over 90 per cent possession must be achieved, including compensation payments through Section 3G. The tightening of pre‑bid conditions also extends to clearances from agencies like Indian Railways or the Inland Waterways Authority of India, and ensures that design and utility shifting estimates are set before bidding begins.
MoRTH plans to put roughly 9,000 km of national highway works on tender in FY26. The earlier approach—where land and approvals were secured post‑award—often triggered delays in execution and led to cost escalations. According to the parliamentary standing committee, roughly 683 projects initiated since 2014 have suffered time overruns, with 55 per cent behind schedule as of December 2024. These delays frequently stemmed from incomplete land acquisition or pending clearances, creating room for legal disputes and contractor claims. The previous norm—inviting bids before full clearances—also induced speculative tendering. Rating agency ICRA noted that many central highway contracts were awarded at steep discounts of around 25 per cent, encouraging financially unviable bids. MoRTH’s new requirement for additional performance security (APS) seeks to deter under‑bidding by scaling penalties proportionally to bid discounts and eliminating the earlier 3 per cent cap.
Analysts from ICRA and other consultancies say these reforms should enhance project execution discipline and boost quality. ICRA’s Modani warns that small and mid‑sized contractors may face greater working‑capital constraints due to higher bank guarantee needs, though the policy may benefit larger, financially robust firms over time. This policy shift aligns with MoRTH’s iterative refinement of the flagship Bharatmala programme, where adherence to quality and timelines has been challenged by erratic contractor performance and inconsistent enforcement. Infrastructure stakeholders say timely clearances free contractors to mobilise and reduce uncertainty-driven cost escalations. However, detractors caution about potential delays in project rollout if clearances themselves face bureaucratic bottlenecks. Land‑owner opposition remains a perennial challenge in several states .
From a sustainability standpoint, synchronising clearances upfront provides an opportunity for integrated planning. With environmental assessments done pre‑bid, highways could be designed to embed mitigation measures automatically—such as wildlife crossings, pollution controls and green corridors—thus advancing India’s goal of low‑carbon, resilient cities. As MoRTH prepares to award 9,000 km of national highways, these pre‑emptive rule changes signal a move from reactive contracts to coordinated execution. Whether the reforms translate into better outcomes depends heavily on inter-agency collaboration, the timeliness of regulatory approvals, and the resilience of contractors and communities to these more disciplined structures. With the stage set for large‑scale bidding from June 2025, the coming year will test whether India’s road infrastructure can shed historical risks of delays and cost overruns — and evolve into a predictable backbone for equitable, sustainable urban and rural connectivity.
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