+
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
Real Estate

MoHUA Sanctions 1.47 Lakh Additional Houses Under PMAY-U 2.0

In a major push towards the Government’s Housing for All mission, the Ministry of Housing and Urban Affairs (MoHUA) has approved 1,46,582 additional pucca houses under Pradhan Mantri Awas Yojana – Urban 2.0 (PMAY-U 2.0) for 14 States/UTs, bringing total sanctions under the revamped scheme to 8.56 lakh.The decision came during the fourth meeting of the Central Sanctioning and Monitoring Committee (CSMC), chaired by Srinivas Katikithala, Secretary, MoHUA, at the Ministry’s Kasturba Gandhi Marg office. Senior officials, State Principal Secretaries, and PMAY-U Mission Directors participated ..

Next Story
Real Estate

Piyush Goyal Inaugurates Expanded ISA Building at Intellectual Property Office

Union Minister of Commerce and Industry, Piyush Goyal, today inaugurated the newly expanded International Searching Authority (ISA) building at the Intellectual Property Office (IPO) in Dwarka, New Delhi, marking a major step forward in India’s intellectual property ecosystem.Addressing the gathering, Goyal highlighted that innovation has been central to India’s heritage for centuries, citing the engineering brilliance of the Konark Temple as a historic example. He emphasised that innovation is not just intellectual property but a symbol of sovereignty, and a key driver in India’s journe..

Next Story
Real Estate

SIEGER Boosts Automation in Mumbai Realty

SIEGER, a leading automation solutions provider, is expanding its advanced manufacturing capabilities to meet the surging demand for precision, high-speed automation in Mumbai’s rapidly growing real estate sector.Operating from a 21,000 m² advanced production hub in Coimbatore—part of a 40,000 m² integrated campus—SIEGER offers complete solutions from design and prototyping to manufacturing and deployment. The fully digitalised facility features CNC machining, QR-coded component tracking, conveyorized powder coating, and a Government of India–certified R&D centre, ensuring unmatc..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?