+
Surety bonds for highway contractors in the offing
ROADS & HIGHWAYS

Surety bonds for highway contractors in the offing

The Ministry of Road Transport and Highways will launch surety bonds, the maiden insurance product by general insurance companies for highway contractors, on December 19, Union Minister Nitin Gadkari said last week.

The announcement comes two years after the ministry had requested the Insurance Regulatory and Developmental Authority of India (IRDAI) to explore the feasibility of such bonds.

“On December 19, our ministry is launching India's first-ever surety bond insurance product ... that is going to give a good relief to the contractors,” Gadkari said addressing the Confederation of Indian Industry’s Global Economic Policy Summit. Surety bonds are guarantees of payment issued by insurers, but different from bank guarantees in that a sizable chunk of the project funds of contractors does not get frozen. The Centre had first pushed the idea as the liquidity position of the infrastructure sector, which is capital-intensive, became acute during the Covid-19 crisis.

“The surety bonds will help in boosting liquidity in the infrastructure sector by freeing the contractors' working capital stuck in bank guarantees. Contractors can utilise these funds for growth of their business,” Gadkari said.

So far, the regulatory framework did not allow underwriting of bonds related to performance securities and bid securities as they did not come under the ambit of conventional insurance products.

The pace of construction of highways has fallen this fiscal year, and Gadkari has admitted that the Centre may only be able to meet last year’s construction targets in FY23.

See also:
Bharatmala project: Extension of Hyderabad's RRR
Dimapur-Kohima Road four-laning to be completed soon


The Ministry of Road Transport and Highways will launch surety bonds, the maiden insurance product by general insurance companies for highway contractors, on December 19, Union Minister Nitin Gadkari said last week. The announcement comes two years after the ministry had requested the Insurance Regulatory and Developmental Authority of India (IRDAI) to explore the feasibility of such bonds. “On December 19, our ministry is launching India's first-ever surety bond insurance product ... that is going to give a good relief to the contractors,” Gadkari said addressing the Confederation of Indian Industry’s Global Economic Policy Summit. Surety bonds are guarantees of payment issued by insurers, but different from bank guarantees in that a sizable chunk of the project funds of contractors does not get frozen. The Centre had first pushed the idea as the liquidity position of the infrastructure sector, which is capital-intensive, became acute during the Covid-19 crisis. “The surety bonds will help in boosting liquidity in the infrastructure sector by freeing the contractors' working capital stuck in bank guarantees. Contractors can utilise these funds for growth of their business,” Gadkari said. So far, the regulatory framework did not allow underwriting of bonds related to performance securities and bid securities as they did not come under the ambit of conventional insurance products. The pace of construction of highways has fallen this fiscal year, and Gadkari has admitted that the Centre may only be able to meet last year’s construction targets in FY23. See also: Bharatmala project: Extension of Hyderabad's RRRDimapur-Kohima Road four-laning to be completed soon

Next Story
Infrastructure Urban

India to Invest Rs 600 Billion to Upgrade 1,000 ITIs

As part of its drive to modernise vocational training, the Ministry of Skill Development and Entrepreneurship (MSDE), in collaboration with Gujarat’s Labour and Employment Department, held a State-Level Workshop at the NAMTECH Campus within IIT-Gandhinagar to discuss the National Scheme for ITI Upgradation.The consultation brought together key stakeholders from industry and the training ecosystem to align expectations and support implementation of the scheme, which aims to transform 1,000 Industrial Training Institutes (ITIs) across India using a hub-and-spoke model. The total outlay stands ..

Next Story
Infrastructure Urban

India Unveils Rs 600 Billion Maritime Finance Push

The Ministry of Ports, Shipping & Waterways (MoPSW) hosted the Maritime Financing Summit 2025 in New Delhi, bringing together over 250 stakeholders including policymakers, industry leaders, global investors, and financial institutions. The summit, held under the ambit of Maritime Amrit Kaal Vision (MAKV) 2047, focused on transforming India into a leading maritime power with strengthened financial, infrastructural, and technological capabilities.Union Minister Sarbananda Sonowal emphasised India's strategic progress, noting that average port turnaround times have dropped from four days to u..

Next Story
Infrastructure Urban

Govt Allocates Rs 500 Million To Boost Community Radio

The Central Government, through its ‘Supporting Community Radio Movement in India’ scheme, has allocated Rs 500 million to strengthen the community radio ecosystem across the country. The initiative aims to assist both newly established and long-operational Community Radio Stations (CRSs), ensuring their relevance to local educational, social, cultural, and developmental needs.According to the policy published by the Ministry of Information and Broadcasting, CRSs may be set up by not-for-profit organisations with at least three years of demonstrated community service. These stations are ex..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?