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The National Highways Builders Federation (NHBF) has urged the Union government to provide a standardised escalation support of 17-18% for ongoing national highway projects, citing significant increases in fuel, materials and logistics costs. In its submission to the Ministry of Road Transport and Highways, the industry body stated that these cost escalations were unforeseen at the time of bidding and have disrupted the financial balance of contracts across EPC, BOT and hybrid annuity projects. NHBF has also requested deadline extensions of three to six months, waiver of penalties and protection of cash flows, particularly for annuity-based projects. The demand is positioned as an interim measure to maintain project continuity and prevent disruptions in highway construction activity.
The National Highways Builders Federation (NHBF) has sought government intervention to address financial stress in ongoing highway projects, requesting a 17-18% escalation support along with deadline extensions, as rising input costs continue to impact project viability across India's road sector. Advertisement
The industry body, representing highway developers and contractors, submitted its recommendations to the Ministry of Road Transport and Highways in recent days, highlighting that cumulative increases in fuel prices, construction materials and logistics costs have significantly altered the cost structure of projects awarded earlier. According to NHBF, these increases were neither anticipated nor accounted for during the bidding stage, thereby disturbing the financial equilibrium of contracts.
The federation stated that the overall escalation in project costs has reached approximately 17-18% across engineering, procurement and construction (EPC), build-operate-transfer (BOT) and hybrid annuity model (HAM) projects. It added that existing escalation provisions in contracts, which are typically linked to wholesale price indices or standard benchmarks, have not adequately captured the impact of recent geopolitical disruptions, fuel price volatility and changes in input pricing mechanisms.
To address the situation, NHBF has proposed that the additional support could be provided through model-specific mechanisms, including lump-sum compensation, index-linked adjustments or enhanced annuity payments. These measures, according to the federation, would help restore financial viability and ensure that contractors are able to sustain project execution without compromising timelines or quality.
In addition to financial support, the federation has requested a blanket extension of three to six months for project milestones and completion deadlines, without the imposition of penalties or liquidated damages. It has also sought waivers for existing penalties and safeguards for cash flows, particularly in hybrid annuity projects where developers rely on predictable payment structures.
NHBF has characterised the current situation as akin to a force majeure-like economic disruption, driven by external factors such as global supply chain instability and rising commodity prices. These developments have placed contractors under financial pressure, raising concerns over the continuity of work on several ongoing highway projects.
The request comes at a time when the highway sector is witnessing cost pressures linked to increased prices of bitumen, steel and fuel, alongside logistical challenges affecting project timelines. Industry stakeholders have indicated that without timely intervention, these factors could lead to delays, renegotiations or financial strain on contractors executing large-scale infrastructure projects.
The government is yet to formally respond to the proposal. However, the outcome of this request is expected to have implications for project execution across national highways, particularly as the sector continues to manage cost volatility while maintaining construction targets and contractual commitments.
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