SRINAGAR: India’s highway construction agencies, including the National Highways Authority of India (NHAI), are grappling with a growing challenge as road contractors increasingly quote aggressively low bids, sometimes up to nearly 50 per cent below the estimated project cost, triggering concerns over execution quality and long-term sustainability of highway projects, The Times of India reported.
The trend has placed the road transport ministry and executing agencies in a difficult position. In a recent instance, the ministry cancelled a tender for a highway project in Manipur after the lowest bidder quoted 47 per cent below the estimated cost. The contractor challenged the decision in the Gauhati High Court, which has since granted an interim stay, further complicating matters for authorities.
A senior contractor said that this is happening in Jammu and Kashmir as well. “We are not in a position to compete,” one senior road-linked contractor said. “Most of the contracts are being given at costs much lower than the agencies specify. In most of the cases, the contracts are being bagged by non natives who later sublet the project to the locals at very low cost. This is creating a serious crisis with the quality of work.”
Officials told The Times of India that the case underlines the dilemma facing highway agencies. “Contractors argue that their bids are based on detailed assessments and efficiencies, but such steep undercutting raises serious questions about quality and financial viability,” a senior official was quoted as having said.
Data since April 2023 indicate that intense competition has fuelled the trend. With fewer highway projects being offered, each tender now attracts between seven and 19 bidders, significantly increasing pressure on contractors to quote lower prices to secure work.
Industry insiders point out that while the number of highway contractors has risen sharply over the past seven to eight years, driven by an earlier surge in projects and relaxed qualification norms, the volume of new works available for bidding has declined. As a result, many firms are bidding aggressively to keep their manpower and machinery engaged.
“This is not a healthy sign for the sector,” another official noted, while talking to the newspaper. “Contractors are under financial stress and are quoting low simply to survive. Since construction contracts are awarded on the L1 basis, rejecting the lowest bid is not straightforward. Ultimately, this trend risks compromising the quality of highways.”
Recent project data illustrate the extent of the issue. In Madhya Pradesh, the four-laning of the Rahatgarh–Berkhedi stretch was awarded at Rs 324 crore, about 48.4 per cent lower than NHAI’s estimated cost of Rs 627 crore. In Maharashtra, augmentation work on the Pune–Satara section in urban Pune was bid out at Rs 321 crore, nearly 46 per cent below the authority’s estimate.
Similarly, a four-laning project from Dareota to Kalar Bala in Himachal Pradesh was tendered this year at Rs 435 crore, against an estimated project cost of Rs 734 crore, around 41 per cent lower.
Officials warn that if the trend continues unchecked, it could hurt not only contractors but also the long-term durability and safety of national highways, forcing the government to re-examine bidding norms and project assessment mechanisms to balance competition with quality assurance.
