Major boost to Atmanirbhar Bharat, easier entry for local companies in road projects

The annual turnover requirement has been reduced to 15% of the estimated project cost from 20%. The capital cost of prior projects executed has been reduced to 75% of the estimated project cost. The ministry has also brought down the size of eligi...

New Delhi: India is set to make it easier for local companies, especially new entrants, to bid for road projects as the government gives a big push towards Atmanirbhar Bharat Abhiyan.

Major changes in the eligibility criteria for projects built on the engineering, procurement and construction (EPC) mode, including easing of financial and technical criteria, are under way, senior government officials aware of the matter said.

“Government of India has maintained for quite some time that financial and technical criteria of infrastructure projects should not be forbidding,” a senior official at the ministry of road transport and highways told ET. “It is being implemented now.”


The annual turnover requirement has been reduced to 15% of the estimated project cost from 20%. The capital cost of prior projects executed has been reduced to 75% of the estimated project cost.

“Earlier, the financial capacity criteria was in the 1:1 ratio and that made very few contractors eligible for the projects,” the official said. “So many of these projects would languish because of lack of competition.”

The changes, approved by road transport and highways minister Nitin Gadkari, will be unveiled in a day or two, the official said.
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The ministry has also brought down the size of eligible projects for ascertaining technical experience from 10% to 5% of the project cost. For example, if a company had total experience of executing projects worth ₹500 crore, only projects of more than ₹50 crore were counted. With the proposed changes, this threshold has been reduced to ₹25 crore.

With the proposed relaxations, the bidding capacity of smaller companies in EPC projects is expected to increase by almost 50%, a second official said.

“This is about Atmanirbhar Bharat,” the official said, requesting anonymity. “These changes will ensure that more Indian companies are able to participate in road projects.”

The ministry relaxed the eligibility criteria for build-operate-transfer (BOT) and hybrid annuity mode (HAM) projects last week.
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For HAM projects, the net worth condition has been lowered to 15% of the project from 25%. For BOT and HAM projects, a wider range of sectors in which there is prior experience will be acceptable, making companies that have executed works in hospitals, hotels, smart cities, warehouses and oil and gas eligible to bid for road contracts.

For tunnel construction of up to 200 metres, the ministry has scrapped the need for prior experience. Similarly, prior experience is not needed for a company to be eligible to build a bridge up to 60 metres long.
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Easier Entry for Local Cos in Road Projects

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