The contractors will be given an opportunity to rectify errors within 15 days of the first accident. The government will have the right to undertake maintenance and remedial work at the contractor’s cost if the contractor does not comply within 15 days; the contractor can also face termination.
If another accident occurs due to deficiencies within one year of the first accident or the date of completion of the remedial action based on the previous crash, and is within 500 metres of the location of the first accident, the contractor will be liable to pay ₹25 lakh for each fatality and ₹10 lakh for each grievous injury. Moreover, if a third accident occurs in another year due to deficiencies, the contractor will be liable to pay ₹50 lakh for each fatality and ₹25 lakh for each grievous injury.
The change is part of a new model contract agreement issued by the ministry for EPC projects, where the contractor builds the highway with milestone-linked payments but has limited future responsibility after a defect liability period.
According to the MoRTH, India recorded 177,175 deaths from road accidents in 2024, which is among the highest in the world. Despite several interventions, road deaths have only risen.
This is the first time such a clause has been inserted for any EPC work, an official said.
Facing several complaints over the quality of highway projects and to clearly fix accountability for such issues, the norms also reduce the scope of subcontracting for EPC projects to 30 per cent of the contract price from the earlier limit of 49 per cent. Primary developers usually assign or outsource part of the work to subcontractors.
This follows pushback from various quarters over the practice of subcontracting.
In August last year, Parliament’s Public Accounts Committee (PAC) called out the ministry over subcontracting in NH projects. “The Committee note that in the ministry’s own submissions, much of the road infrastructure is executed by subcontractors, who might not be accountable under the primary contract framework,” the PAC had said. It noted that this practice — particularly in EPC, Build Operate Transfer, and Hybrid Annuity Mode projects — had led to a diffusion of accountability, and there was limited leverage to enforce quality standards or timely delivery.
In March this year, the railways ministry, too, reduced the permissible subcontracting limit from 70 per cent to 40 per cent.
The new norms also establish tougher clearance criteria for selecting subcontractors. In addition, the government has also linked several pre-contract parameters to the contractor’s ratings.
For instance, the government has introduced a tier-system for performance securities. Rather than a standard fixed rate across all bidders, the percentage is now tied to the contractor’s (or lead member’s in the case of a joint venture) rating — for those rated 80 per cent or higher, the security is 3 per cent of contract price, while it is 4 per cent for those between 70-80 per cent, and 5 per cent for those below 70 per cent.
For the last tier of contractors, 50 per cent of the retention money will be locked till the end of the defect liability period.
