MoRTH’s Stricter Rules Expected to Ease Road Project Pressure: Icra
ROADS & HIGHWAYS

MoRTH’s Stricter Rules Expected to Ease Road Project Pressure: Icra

Rating agency Icra anticipates that the Ministry of Road Transport & Highways (MoRTH) will tighten bidding norms by introducing a requirement for additional performance security (APS), aiming to reduce competitive pressure in Central Government road projects.

Earlier, the relaxed bidding guidelines had led to fierce competition in central government road tenders, with many contracts awarded at steep discounts—around a median of 25 per cent between January 2024 and March 2025. However, the new policy could place financial stress on small and mid-sized contractors, especially those with limited bank guarantee (BG) capacities.

Back in August 2022, the Ministry had mandated APS for projects awarded at significantly lower than the base price, but this was capped at 3 per cent of the total project cost. According to the latest circular, this 3 per cent cap has now been removed.

Ashish Modani, Group Head, Corporate Ratings, Icra, said, “The hike in performance security requirement is a positive step towards execution discipline, which will deter speculative bidding and promote realistic pricing. The policy, though, in the near term, is expected to put some strain on the credit profiles of small and mid-sized contractors, particularly those with limited-sized BG limits."

Modani further explained that the need for cash margins to secure additional BGs will increase working capital demands, which may affect bidding capacity, revenue growth, and coverage ratios due to higher financing costs. However, he noted that in the medium term, the policy will encourage participation from serious, well-capitalised bidders, leading to improved performance and better quality in road construction.

News source: Business World


Rating agency Icra anticipates that the Ministry of Road Transport & Highways (MoRTH) will tighten bidding norms by introducing a requirement for additional performance security (APS), aiming to reduce competitive pressure in Central Government road projects.Earlier, the relaxed bidding guidelines had led to fierce competition in central government road tenders, with many contracts awarded at steep discounts—around a median of 25 per cent between January 2024 and March 2025. However, the new policy could place financial stress on small and mid-sized contractors, especially those with limited bank guarantee (BG) capacities.Back in August 2022, the Ministry had mandated APS for projects awarded at significantly lower than the base price, but this was capped at 3 per cent of the total project cost. According to the latest circular, this 3 per cent cap has now been removed.Ashish Modani, Group Head, Corporate Ratings, Icra, said, “The hike in performance security requirement is a positive step towards execution discipline, which will deter speculative bidding and promote realistic pricing. The policy, though, in the near term, is expected to put some strain on the credit profiles of small and mid-sized contractors, particularly those with limited-sized BG limits.Modani further explained that the need for cash margins to secure additional BGs will increase working capital demands, which may affect bidding capacity, revenue growth, and coverage ratios due to higher financing costs. However, he noted that in the medium term, the policy will encourage participation from serious, well-capitalised bidders, leading to improved performance and better quality in road construction.News source: Business World

Next Story
Infrastructure Transport

Tata, Airbus to Build India’s First Private Helicopter Line

In a landmark development for India’s aerospace sector, Tata Advanced Systems Limited (TASL) and Airbus will establish the country’s first private-sector helicopter assembly line in Vemagal, Karnataka. The facility will manufacture the Airbus H125 and H125M, marking a significant milestone in India’s push for self-reliance in aviation and defence manufacturing. The new Final Assembly Line (FAL) will produce the H125, the world’s best-selling single-engine helicopter, known for its versatility and performance in extreme environments. The first ‘Made in India’ H125 is expected to ro..

Next Story
Infrastructure Urban

NeGD to Support Bharat Taxi in Building Cooperative Ride Platform

In a significant move for India’s digital and mobility transformation, the National e-Governance Division (NeGD) of the Digital India Corporation, under the Ministry of Electronics and Information Technology (MeitY), has entered into an advisory partnership with Sahakar Taxi Cooperative Limited, the company behind Bharat Taxi — a first-of-its-kind, cooperative-led national ride-hailing platform. A Memorandum of Understanding (MoU) has been signed between NeGD and Sahakar Taxi to provide strategic advisory and technical support covering key areas such as platform integration, cybersecurity..

Next Story
Technology

MeitY Hosts Pre-Summit for India–AI Impact Summit 2026

The Ministry of Electronics and Information Technology (MeitY), Government of India, hosted a series of Pre-Summit events for the upcoming India–AI Impact Summit 2026 at the India Mobile Congress (IMC) 2025 in New Delhi. These sessions mark a key milestone ahead of the main summit, scheduled for 19–20 February 2026 at Bharat Mandapam, New Delhi. Delivering the inaugural address, S. Krishnan, Secretary, MeitY, highlighted India’s innovative and frugal approach to AI development. “We have adopted innovative means by learning from others’ experiences to build projects and products that..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?