Green Deposits: Existing Framework and the Path Ahead

The use of green deposits in infrastructure banking and finance is a growing challenge, with a lack of awareness among individuals and institutions about its availability and benefits. Additionally, there is a need for more product offerings to be made available to investors and for the Indian government to commit to sustainable development. Green deposits can provide an avenue for investors to invest in these projects and help to promote sustainable development in India.


Infrastructure is the backbone of any economy. In India, the need for infrastructure development is necessary due to the country’s large population and fast-paced urbanization. However, infrastructure development projects require large amounts of capital, which is always challenging. This is where infrastructure banking and finance come into play. Infrastructure banking and finance refer to the financial services provided to fund large infrastructure projects. In this context, green deposits serve a crucial purpose as a new source of capital for sustainable infrastructure projects. 

SEBI Circular

The Business Responsibility and Sustainability Reporting (BRSR) framework released by the Securities Exchange Board of India (SEBI) through a circular dated May 10, 2021, is expected to promote responsible business practices and encourage companies to invest in sustainable initiatives. The framework seeks to boost the demand for green bonds in India, which can provide a new source of capital for infrastructure projects and promote sustainable infrastructure development. However, it only applies to certain companies, such as listed companies and certain unlisted companies that meet specific criteria. The BRSR framework was voluntary in nature, and companies were not required to comply with it till FY 2021-22. However, it is made mandatory from FY 2022-2023 and hence, would have a positive impact on the environment, society, and the economy in the long run. By promoting transparency and accountability, the framework would improve their overall performance.  Financing energy-efficient projects through green deposits under public-private partnerships (PPPs) is an effective way to promote sustainable development and reduce the negative impact of energy consumption on the environment.

Green deposits can be utilized to finance the construction of energy-efficient buildings, including the installation of energy-efficient lighting, heating, and cooling systems, and the use of sustainable building materials thereby contributing to sustainable development as also envisaged by the Indian Government through a few of its projects. For example, the Centre’s Smart Cities Mission aims to develop 100 smart cities across the country, with a focus on sustainable development and the use of green technologies. Under this mission, several cities have launched projects to develop energy-efficient buildings, including green buildings, with support from the government and private sector partners.

The Hyderabad Metro Rail Limited (HMRL) is a classic example where HMRL collaborated with a private sector developer (Larsen & Toubro) to construct energy-efficient buildings at the metro stations in Hyderabad. The project involved the installation of energy-efficient lighting systems, rainwater harvesting systems, and solar panels to generate electricity[1]. Green deposits were utilized to finance the project, with the government providing guarantees and incentives to attract private-sector investment.

RBI’s Framework on Green Deposits

In recent years, the Reserve Bank of India (RBI) has taken several steps to promote sustainable finance and energy. One such initiative is the introduction of the RBI’s framework on green deposits, which was issued in April 2023. This framework provides guidelines for banks to offer green deposits to investors, with the aim of promoting investment in environmentally sustainable projects.

The RBI framework provides a clear definition of what constitutes a green deposit. According to the framework, green deposits must be used to finance projects that positively impact the environment, such as renewable energy projects, energy efficiency projects, and projects related to sustainable water management[2]. This clarity helps investors in making informed decisions and ensures that funds raised through green deposits are used for environmentally sustainable purposes.

Further, it encourages banks to adopt best practices in environmental risk management. This includes conducting environmental due diligence on potential projects, monitoring and reporting on environmental risks associated with green deposits and integrating environmental risk considerations into the bank’s credit risk assessment process.

One of the limitations of the RBI’s framework on green deposits is that it does not provide any incentives for banks to offer green deposits. While the framework encourages banks to offer green deposits, there are no financial or regulatory incentives for doing so.


In order to make green deposits successful, some tax incentives can be offered to encourage individuals and businesses to invest in green deposits. Some examples of tax incentives that can be given for green deposits include tax deductions, tax deferrals, reduced capital gains tax rate and income tax rate, etc.

The RBI’s green deposit framework includes concessional treatment of liquidity coverage ratio (LCR) and priority sector lending (PSL) requirements for banks that mobilize green deposits, which could help reduce interest rates and capital gains. This can encourage investors to hold on to their investments for a longer period, which can be beneficial for green projects.

Carbon credits are a type of tradeable permit that allows the emission of a certain amount of greenhouse gases. They can be given to green deposits to incentivize investments in projects that reduce carbon emissions or sequester carbon from the atmosphere. Once the project has been certified, the credits can be issued based on the amount of carbon emissions sequestered. The investors may be granted a carbon credit per ton reduced if they invest in the project. Such credits could be sold or traded on the carbon market, providing an additional source of revenue to investors.

The National Clean Energy Fund (NCEF) and other schemes of the government could also be financed with the help of green deposits under public-private partnerships (PPP) in several ways, namely: –

  • Equity Investment

Green deposits can be used to provide equity investment in PPPs that are aimed at promoting clean energy and sustainable development. This type of investment can provide long-term financing for PPP projects and can help to attract additional private sector investment.

  • Debt Financing

Debt financing can be extended to PPP projects through green deposits. This can be done through loans or other financial instruments that offer lower interest rates and longer tenors than traditional commercial loans. This type of financing can help to reduce the cost of capital for PPP projects and make them more attractive to private sector investors.

  • Risk Mitigation

Green deposits may be utilised to provide risk mitigation instruments to PPP projects. For example, they can be used to provide guarantees or insurance products that protect investors from potential losses due to project delays, cost overruns, and other risks. These instruments can help to reduce the perceived risk of PPP projects and attract more private sector investment.

  • Green Bonds

Green bonds that are backed by PPP projects can be issued through green deposits, to be marketed to socially responsible investors. Such bonds can act as a long-term source of financing for such projects and the proceeds from these bonds could be used to finance clean energy infrastructure and other sustainable development initiatives.

  • Technical Assistance

Conferring technical assistance to PPP projects is possible with the help of green deposits and this includes support for project development, feasibility studies, and other activities that help to build the capacity of projects and attract private sector investment.

Therefore, these mechanisms can help to accelerate the development of clean energy infrastructure and support the transition towards a low-carbon economy, while also attracting private sector investment to support sustainable development initiatives in turn providing financial support and incentives for renewable energy and sustainable development projects. Companies could also choose to invest in such projects using their CSR funds, potentially indirectly incentivizing green deposits.


The RBI’s framework on green deposits is a positive step towards promoting sustainable finance and encouraging banks to adopt environmentally sustainable practices. The framework provides clear guidelines for banks to offer green deposits and encourages them to adopt best practices in environmental risk management. However, the lack of incentives for banks to offer green deposits may limit the framework’s effectiveness and the RBI may need to consider providing financial and regulatory incentives for the same.


[1] Anil Nair, Green Bonds for Sustainable Urban Transport in India

Available at

[2] Ravi Meena, Green Banking: As Initiative for Sustainable Development

Available at –

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Green deposits can be utilized to finance the construction of energy-efficient buildings, including the installation of energy-efficient lighting, heating, and cooling systems, and the use of sustainable building materials thereby contributing to sustainable development as also envisaged by the Indian Government through a few of its projects. For example, the Centre’s Smart Cities Mission aims to develop 100 smart cities across the country, with a focus on sustainable development and the use of green technologies. Under this mission, several cities have launched projects to develop energy-efficient buildings, including green buildings, with support from the government and private sector partners.


Impact of Budget on the Infrastructure Sector

The Budget 2023-24 facilitates infrastructure development by providing for the establishment of a finance secretariat and giving prominence to infrastructure projects and programmes.


During the budget announcement on February 1, 2023, the Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman highlighted that India’s per capita income has doubled in around nine years, and the country’s economy is expanding so rapidly that it is set to become the fifth largest in the world. The same is in line with the vision for Amrit Kaal, namely: –

  • Opportunities for citizens with a focus on youth
  • Growth and Job Creation
  • Strong and Stable Macro-Economic Environment

The term “Amrit Kaal” was coined by the honourable Prime Minister, Shri Narendra Modi for the first time on the occasion of India’s 75th Independence Day in 2021. The same was done while unveiling the country’s plans for the next 25 years. The purpose of Amrit Kaal was to improve and enhance the citizens’ quality of life and bridge the gap between rural and urban areas. It also sought to embrace emerging technologies while minimizing government interference in the lives of the citizens. With this vision, the Prime Minister stated, “While India has achieved quick progress, there should be a ‘saturation’ of development and 100 percent achievement, with every hamlet having roads, every family having a bank account, and every eligible person having health insurance, a card, and a gas connection”.

Budget Implications on the Infrastructure Sector

In the budget speech, the Finance Minister also stated that the Budget 2023-24 will adopt seven major principles and priorities that would serve as “Saptarishi” for the next quarter-century, which is expected to serve as a guide through the Amrit Kaal. The Finance Minister further specified that the Government’s aim for this Budget 2023-24 includes a technology-driven and knowledge-based economy, as well as strong public finances and a thriving financial sector.

The seven areas that the Budget 2023-24 primarily focuses on include:

  • Inclusive development
  • Reaching the last mile
  • Infrastructure and investment
  • Unleashing the capacity
  • Green growth
  • Youth Force
  • Financial sector

Under the ‘Saptrishi’ mantras, the Finance Minister outlined seven of the Union Budget’s top priorities for the year 2023, one of them being Infrastructure and Investments.

It is usually perceived that investments have a significant multiplier effect that enhances mobility, enables trade, development of employment opportunities, and increases the overall economic output. According to the Budget 2023-24, “Capital investment expenditure will climb by 33 percent to 10 lakh crore ($122 billion), or 3.3% of GDP, for the third consecutive year. This is about three times the expenditure in 2019-20”. This is likely to maintain financial stability and provide a buffer against global headwinds. This is also accompanied by a prolongation of the 50-year interest-free loan to state governments for another year, with a significantly increased expenditure of 1.3 lakh crore ($16 billion), to stimulate infrastructure investment and encourage state governments to take complementing policy initiatives.

To enhance opportunities for private infrastructure investment, the Budget 2023-24 envisages the creation of a new framework, the Infrastructure Finance Secretariat. The Infrastructure Finance Secretariat will aid all parties in their efforts to increase private investment in infrastructure, such as trains, highways, urban infrastructure, and power, which rely mostly on public funds. In addition, an expert committee will analyse the Harmonized Master List of Infrastructure to recommend the classification and finance system. The revitalization of fifty new airports, heliports, water aerodromes, and advanced landing fields is sought through the improvement of regional air connectivity. Further, one hundred essential transport infrastructure projects for last and first-mile connections for ports, coal, steel, fertiliser, and food grains industries have been identified to significantly boost India’s logistics sector.

These budget measures expand on the government’s National Infrastructure Pipeline (NIP) and other programmes, such as “Make in India” and the production-linked incentives (PLI) programme, to promote the expansion of the infrastructure industry.


The hike in capital expenditure by 33 percent to Rs. 10 lakh crore for infrastructure development for 2023-24 will certainly give a huge boost to the economy while increasing employment opportunities. There are positive strides in terms of the establishment of a finance secretariat that will in turn attract more private investment and the setting up of an expert committee will facilitate the appropriate classification of infrastructure and suitable financing framework. The Budget also takes infrastructure in Tier-2 and Tier-3 cities under its ambit by setting up an Urban Infrastructure Development Fund (UIDF) of Rs. 10,000 crore per year which will also promote innovation and reforms. The provisions created for metro and mass rapid transit system projects, sanitation, and urban housing look favourable for the growth of the country’s infrastructure. By reviving the infrastructure as well as facilitating infrastructure development in the future, the Budget significantly contributes to the economic growth and productivity of the country.

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The hike in capital expenditure by 33 percent to Rs 10 lakh crore for infrastructure development for 2023-24 will certainly give a huge boost to the economy while increasing employment opportunities. There are positive strides in terms of the establishment of a finance secretariat that will in turn attract more private investment and the setting up of an expert committee will facilitate the appropriate classification of infrastructure and suitable financing framework. The Budget also takes infrastructure in Tier-2 and Tier-3 cities under its ambit by setting up an Urban Infrastructure Development Fund (UIDF) of Rs 10,000 crore per year which will also promote innovation and reforms. The provisions created for metro and mass rapid transit system projects, sanitation, and urban housing look favourable for the growth of the country’s infrastructure. 


Financing Global Transition Through Green Bonds

Green bonds were first issued by the World Bank in 2008 to push for private sector participation in projects contributing to a better environment and mitigating the risks of climate change. The Intergovernmental Panel on Climate Change (IPCC), which includes more than 1,300 scientists from the United States and other countries, forecasts a temperature rise of 2.5 to 10 degrees Fahrenheit over the next century.

Hence, it was essential to have an alternative mode of financing that would attract investors and global institutions’ attention towards projects, specifically catering to environment friendly projects thereby also ensuring that governments globally achieve their commitments in the reduction of emissions of CO2 and greenhouse gases.

The Indian government, in particular, has introduced measures and brought out amendments to regulations to encourage the construction of renewable energy projects. However, the evolution and growth of environment focused projects is mostly dependent on the modes of financing available in the market. In this article, we shall review primarily the laws applicable to green financing.

Types of Green Bonds

Green bonds are regular bonds with the distinction that the money raised from the investors must only be used to finance projects that are environmentally friendly. More precisely, green bonds finance projects that are aimed at renewable energy infrastructure, energy-efficient buildings, clean transportation, and waste management.

There are primarily four types of green bonds, mainly distinguished based on the collateral or security being provided in the issuance of green bonds:[1]

  • Green ‘Use of Proceeds’ Revenue Bond: These types of green bonds are secured by the projects producing income.
  • Green ‘Use of Proceeds’ Bond: These types of bonds are secured by assets.
  • Green Securitized Bond: These types of green bonds are secured by large pools of assets.
  • Green Project Bond: These types of green bonds are secured by the balance sheet and assets of the project.


Green Bond Principles

The voluntary best practice guidelines called the Green Bond Principles (GBP) were established in 2014 by a consortium of global investment banks.[2]

The GBP accentuates the required transparency, accuracy and integrity of information that will be disclosed and reported by issuers to stakeholders. The GBP has four core components, which include:

  1. Proceeds must be used for green projects;
  2. Process adoption for project evaluation and selection;
  3. Maintaining transparency in the management of proceeds; and
  4. Reporting of information pertaining to the use of the proceeds.

The GBP is a framework devised with the goal of accentuating the role that global debt capital markets can play with respect to environmental and social sustainability.

In India, the Securities and Exchange Board of India (SEBI) notified a circular dated May 30, 2017, which provides for the Disclosure Requirements for Issuance and Listing of Green Debt Securities in India, and the definition of a green bond has been given under the circular, which is within the outline of the International Capital Market Association’s GBPs with certain deviations.

Evolution of  Green Bonds in India

India’s first green bond was issued in 2015 for renewable energy projects such as solar, wind, hydro, biomass and power by Yes Bank. In the same year, another leading banking institution, Exim Bank of India, issued a five-year, $500 million green bond, which is India’s first dollar-denominated green bond.

Subsequently, Axis Bank[3] launched India’s first internationally listed and certified green bond and raised $500 million to finance climate change projects and solutions around the globe and use the bond proceeds to promote green energy in urban and rural areas, transportation and what is called ‘green-blue infrastructure’ projects in India and abroad. KPMG provided third-party independent assurance as per the requirements of the GBP (established by the International Capital Market Association). [4]

Regulatory Framework Governing Green Bonds in India

In 2017, the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 (NCS) defined a “green debt security” (GDS) as debt securities used for funding project(s) or asset(s) falling under any of the following broad categories:

Renewable Energy, Clean Transportation, Sustainable Water Management Systems, Climate Change Adaptation, Energy Efficient and Green Buildings, Sustainable Waste Management, Sustainable Land Use, including Sustainable Forestry and Agriculture, Afforestation, Biodiversity Conservation; and any other categories specified by SEBI.

Issuance of listed green debt securities in India must be in compliance with all the following regulations:

  1. Chapter IX of the SEBI operational circular covers the issue and listing of Non-Convertible Securities (SEBI Operational Circular).
  2. The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations).
  3. The SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021.

However, there are no specific guidelines mentioned for unlisted green debt securities other than the general requirements for the issuance of unlisted green debt securities.

In the month of February 2022, Finance Minister Nirmala Sitharaman announced in her budget speech that India will issue sovereign green bonds to fund green projects. In FY23, the government will issue sovereign green bonds as part of its borrowing programme. The funds will be used to fund public-sector projects.

In addition to the above, on August 4, 2022, SEBI issued a consultation paper on Green and Blue Bonds as a mode of Sustainable Finance aiming to align with the updated GBP by ICMA and seek public comments on the proposed regulatory framework.

The Ministry of Finance rolled out the Sovereign Green Bonds framework (“Framework”) [5] that has been rated “Medium Green”, with a “Good” governance score by a Norway-based independent second opinion provider, the Center for International Climate Research (CICERO). The issuance of sovereign green bonds will help the Government of India with much needed capital and deploy funds from investors in public sector projects. The investors shall not bear any project related risks. The Government of India shall use the proceeds to finance/refinance projects falling under eligible green projects.

The Framework has provided a list of excluded projects, which include nuclear power generation, landfill projects, hydropower plants larger than 25 MW etc. Any expenditure relating to fossil fuels is excluded. The Green Finance Working Committee, constituted by the Ministry of Finance, will assist in the selection and evaluation of projects. The Framework’s publication will provide much-needed clarity and direction to the government’s initiatives aimed at transforming India into a green economy.

Benefits of Investment in Green Bonds

Green bond investments may lead to sustainable development and achieve the climate change goal, benefitting the environment in the future. Green Bonds will lead to increased funding for emerging sectors such as renewable energy since the Reserve Bank of India has included the renewable energy sector as part of its priority sectors. As a result, banks will have to dedicate a specific portion of their lending book to the priority sector. This will help the credit flow in this sector.

As far as commercial viability is concerned, green bonds typically have a lower interest rate than the loans offered by a commercial bank, which helps to reduce the cost for the issuer or promoter.

Challenges Pertaining to Green Bonds

  1. Green Bonds, especially in the Indian context, are still not very popular as there is a lack of structure and framework and uncertainty about the return on investment.
  2. There are no proper rating guidelines for green bonds or green projects to help investors make their investment decisions and to verify companies’ improvements, which directly impacts the development of the green bond market.
  3. The funds that have diversified investments in various sectors may not find investments in the green sector valuable compared to returns in other non-green projects. There have also been instances where, during the running of the Project, the issuer or promoters have faced queries from the authorities about whether the project falls under the green category or not.

Green Finance

India announced at the COP26 Climate Summit that it will increase its efforts to achieve the goal of net zero carbon emissions by 2070, including doubling its non-fossil energy capacity to 500 gigatonnes. [6] However, there has been growth in green financing in India over the last few years in both the public and private sectors.

It appears that the banks and financial institutions in India are not ready for the green transition as the experience in factoring climate change as a risk factor is not there when undertaking credit appraisals.[7] Even the bond market in India is still evolving, which is confirmed by the fact that green bonds have constituted only 0.7% of the overall bond issuance in India since 2018. More initiatives will be needed from a regulatory perspective to make green bond issuance more attractive by bringing measures that make investments in green bonds attractive as compared to other debt securities in India and in international markets.

Furthermore, as the world’s nations, including the developed world, look to India to lead the global transition, India should take the lead in attracting investments in green finance, which will not only benefit individual investors looking for safe instruments with attractive returns, but will also benefit the country in generating investment.

Leveraging a Healthy Green Bond Market in India

To build a healthy green bond market, one of the most important criteria is to achieve international norms, rules and regulations for green bonds along with a reasonable return on investment. Green financing, as an additional source of funding, must be used by companies and investors to establish projects that reduce the risk of climate change. There is an unprecedented demand for green energy globally, and investments through green financing will become inevitable in the long run.










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Photo by Towfiqu barbhuiya on Unsplash

Green bonds are regular bonds with the distinction that the money raised from the investors must only be used to finance projects that are environmentally friendly. More precisely, green bonds finance projects that are aimed at renewable energy infrastructure, energy-efficient buildings, clean transportation, and waste management.


Organizing the Unorganised: The Indian Construction Industry

The Indian construction industry has been a propellor of economic growth and foreign direct investment in India. It is expected to register a CAGR greater than 10% during 2022 – 2027, while also contributing approximately 13% to our country’s GDP by 2025. In acknowledgement of the sector’s significant contribution to the country’s development, the Indian government has also stepped up its support in form of policies such as establishing the National Bank for Financing Infrastructure and Development (NaBFID) which works towards funding construction and infrastructure projects in India. 

Unregulated Indian Construction Industry: Cause for Concerns

Following are some of the key factors that contribute to a general lack of optimization and chaos in the sector: 


One-Sided Construction Contract


Construction contracts have been defined by Indian Accounting Standard[1] as a contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use. It also includes agreements for real estate development to provide services together with construction materials in order to perform the contractual obligation to deliver the real estate to the buyer.” 

There are multiple parties involved in a construction contract, such as an employer, contractor, sub-contractor , vendor, project manager, independent engineer/s , Project Management Consultant (PMC) and others. Among these parties, employer, contractor, independent engineer/s and the PMC play a crucial role.

Numerous institutions, such as the International Federation of Consulting Engineers (“FIDIC”), the Institute of Civil Engineers (ICE), and the Association of Consultant Engineers (ACE) have drafted standard forms of construction contracts. However, common parlance witnessed across the industry is that they do not adhere to/do not want to adhere to such set standards. The employers and contractors draft the construction contracts which cater to their specific requirements. Further, numerous government organisations involved in the construction industry draft contracts that suit their specific needs, exposing a glaring lack of uniformity and fairness with respect to the terms and conditions of the contract.

Under the construction contracts, numerous unfair terms can be seen –

No-claim provision:

The provision stipulates that in circumstances of extension of time clauses under the contract, any claims of compensation made by the contractor towards the employer for causing disruption and delay leading to such extension are prohibited.

In the case of R.L Kalathia vs. The State of Gujrat (2011) 2 SCC 400 the Supreme Court observed that,

(i) Merely because the contractor has issued “No Due Certificate“, if there is an acceptable claim, the court cannot reject the same on the ground of issuance of “No Due Certificate“.

(ii) In as much as it is common that unless a discharge certificate is given in advance by the contractor, payment of bills is generally delayed, hence such a clause in the contract would not be an absolute bar to a contractor raising claims which are genuine at a later date even after submission of such a “No-claim Certificate“.

A similar observation was afforded by the Supreme Court in Union of India vs Master Construction Company (2011) SCC 12 349, wherein it was held that if the claimant successfully establishes that the “no claim certificate” had been obtained by fraud/ coercion, then the Court shall have to determine whether the contention is prima facie credible. If not, then it shall be not necessary to send it for arbitration.

The issue has been further clarified in the case of Payan Reena Saminathan vs Pana Lana Palanippa Civil Appeal No. 7970 of 2010, “the receipt given by the appellants and accepted by the respondent, and acted upon by both parties, proves conclusively that all the parties agreed to a settlement of all their existing disputes by the agreement formulated in the receipt. It is a clear example of what used to be well known as common law pleading as ” Accord and Satisfaction ” by substituted agreement. No matter what the respective rights of the parties were, they were abandoned in consideration of the acceptance of all of the new agreement. The consequence is that when such an accord and satisfaction takes place the prior rights of the parties are extinguished. They have in fact been exchanged for the new rights, and the new agreement becomes a new departure , and the rights of all the parties are fully represented by it.

Time bar clauses:

The provisions stipulate difficult time periods under which damages and relief enshrined under the contract can be claimed by the contractor towards the employer.

In the case of Muni Lal vs The Oriental Fire and General Insurance Company Limited (1996) 1 SCC 90, the Apex Court clearly held that, “ ….. It is true, as rightly pointed out by Shri Rakesh Khanna, that Section 28 of the Contract Act prohibits the prescription of a shorter limitation than the one prescribed in the Limitation Act. An agreement which provides that a suit should be brought for the breach of any of the terms of the agreement within a time period shorter than the period of limitation prescribed by law is void to that extent.

The Courts have, from time to time, reached to the conclusion that any agreement which seeks to curtail the period of limitation of a party to enforce their right, if shorter than as prescribed by law, then such an agreement shall stand void on account of Section 28 of the Indian Contracts Act.

One-sided arbitration clause:

The arbitration clause under these contracts is one-sided since it enables the employer to appoint the sole arbitrator and the panel of arbitrators without a say from the contractor. There is also no uniformity in deciding which arbitration forum/institution one should choose (like SIAC of Singapore ).

In the case of Emmsons International Ltd. Metal Distributors, the Delhi High Court held that when an arbitration clause is conceptualised to deprive the other party of local courts/tribunals or initiate arbitration, then it shall run in violation of section 28 of the Indian Contract Act, which establishes that agreements that restrain legal proceedings are illegal and cannot be enforceable.

However, in the case of Fuerst Day Lawson Ltd. v. Jindal Exports Ltd., (2001) 6 SCC 356, the Supreme Court upheld the validity of a one-sided arbitration clause that allowed only one party to initiate arbitration in the UK. The judgement has been interpreted as per the English laws, hence the validity of such agreements still lies in the grey area at present in India.

At present, it can only be concluded that one-sided arbitration agreements are not completely invalid in India unless and until their terms and conditions are prima facie against public policy. One such example is the appointment of a sole arbitrator by the employer which has been invalidated by the Supreme Court.

Non-payment of Award:

In the majority of contracts in the industry, the authority fails to honour the award passed by the arbitration tribunal and it takes years for the contractor to realise the award. But the contractor has to spend a huge amount of money towards conducting arbitration proceedings and realising the award.

Exclusion clauses:

Under such clauses, the employers evade their liability for the delays caused on their part and further exclude them from the damages caused due to the delays on their part.

Variation/Additional Works:

In some of the construction contracts, the variation/additional works have not been properly addressed, which has lead not only to a delay in the completion of the project but also to payment for these additional/variation works. There is no lack of formula to decide whether the particular work falls under variation/additional work till it is decided how the other project will proceed.

Negative scope of work:

Some of the earlier concession agreements do not provide the formula for arriving at the value of negative scope. In one of the concession agreements, the concessionaire has been asked to pay 80 % of the sums saved in respect of the negative scope of work, but the term “sum saved“ had not been defined under the concession agreement, which led to the dispute. However, this has been addressed in the subsequent concession agreement. But the dispute continues irrespective of the earlier concession agreement.

In Executive Engineer vs Gangaram Chhapolia (1984)3 SCC 627, the Apex Court observed that “ The general rule that the grammatical and ordinary sense of the contract is to be adhered to unless such adherence would lead to such manifest absurdity or such repugnance or inconsistency, applies also to building and construction contracts. The meaning and intention of the parties have to be gathered from the language used. “

The Supreme Court’s decision in S. Harcharan Sinoh vs Union of India 1990 SCC (4) 647 observed that the validity of the additional work shall depend upon the reasonability and limits placed on the quantity of such work which the aggrieved party is required to execute. For this purpose, consideration can be placed on the prevalent industry practices, correspondence between the relevant stakeholders and authorities.


Delays in Payments

According to a report released by the Ministry of Statistics and Programme Implementation in March 2022, 425 projects out of 1579 projects have reported cost overruns of approximately 4.83 Lakh Crores and 664 projects have been delayed. According to the report, “The total original cost of implementation of the 1,579 projects was Rs 21,95,196.72 crore and their anticipated completion cost is likely to be Rs 26,78,365.62 crore, which reflects overall cost overruns of Rs 4,83,168.90 crore (22.01 per cent of the original cost).

Delayed payments plague the construction industry worldwide. Such delays happen at every stage of the construction project, including progress payments, milestone payments, return of retention money, performance guarantee fees, etc, resulting in cost and time overruns of the project, increased disputes, cash flow issues and bankruptcy.

The cash flow in the construction project plays a pertinent role for the contractor[2] since it allows efficient and timely payment to all the labourers and other stakeholders in the project. Section 55 of the Indian Contract Act provides that when one party to the contract promises to fulfil the terms and conditions of the agreement on or before the specified time but fails to do so, the other party is entitled to claim damages for the loss suffered by them. Further, Section 73 of the Indian Contract Act envisages that the party who has suffered damages because of the inability of the other party to fulfil the necessary obligations is entitled to be duly compensated.

So, if there is a delay in payments by the employer, the employee or contractor can recover the money under these provisions. It is necessary that the contractor should record all the delays in the payment incurred by the employer during the course of the construction so that it would be easier to prove the actual loss when claiming the damages.

Section 73 and 74 provide for compensations relating to breach of contracts. Section 73 lays down the route to recover actual damages resulting from the loss or damage caused by the breach of the contract. Section 74 provides for the recovery of money stipulated as payments in the contract due to a breach. Delay in payments may be anticipated by the parties while drawing up the contract and relevant provisions for such delay may be included at the time of entering the contract. In such situations, delay in payments shall be considered a contractual breach and the same can be recovered by the parties under Section 74. In case of any uncertainty in calculating the amount of loss suffered, the aggrieved party shall prove the loss suffered and the Court shall decide the compensation.


Construction laws: An International Perspective

The rising pertinence of the construction industry has been noted by numerous countries and in response, they have established efficient legislations to govern the sector. Such legislations have efficiently addressed the issues of delays in payments and unfair terms in construction contracts.


United Kingdom

The United Kingdom, after Sir Michael Latham’s report titled “Constructing the Team.”, rolled out the UK’s construction laws by enacting “Housing Grant, Regeneration and Construction Law (HGCRA) 1996”. The Act drew commendations from the construction industry due to its efficient features-

  1. The Act classified construction contracts under a separate category of contracts.
  2. It mandates provisions for time-bound payment schedules under all construction contracts.
  3. Enlists contractors and sub-contractors with the ability to claim interest, suspended performance and even terminate contracts if the employer delays or fails to pay. 
  4. Conditional payment clauses have been prohibited under construction contracts.
  5. The act establishes “default periods of payment” which are to be followed in circumstances where it is not specified under the construction contract.

All construction in the United Kingdom is governed by the Building Act of 1984 and the Building Regulations of 2010, which provide for building regulations, situations which call for exemptions from such regulations, regulations relating to documentation, monitoring of construction work, and other provisions relating to drainage, yards, passages and others.

The Scheme for Construction Contracts (England and Wales) Regulations 1998, contain provisions relating to adjudication (notice of adjudication, appointment of adjudicator, powers of the adjudicator) and payments (dates of payment, notice of amount to be paid).

The Health and Safety at Work Act 1974 establishes the duties of employers towards their employees and the general public, the duties of employees at work and other such regulations.

The Construction (Design and Management) Regulations 2015 is a subset of the Health and Safety aspect which applies exclusively to the construction sector. It includes the duty of the client towards managing the project and the duties of the designers, contractors and other stakeholders with relation to health and safety. This legislation establishes the general requirements at the construction site including the fresh air, lighting, stability of structures, excavations, explosions etc.

The Control of Substances Hazardous to Health Regulations 2002 lays down the duties of employers to provide safety measures relating to hazardous substances at work.



Singapore is another example of a country that has efficiently regulated its construction industry. [3]The Singapore Building and Construction Industry Security of Payment Act 2004 comprehensively addresses the issue of delayed payments under Section 8, wherein the payment is to be made to the contractor within 14 days. Further, the Act, under Section 9, bans conditional clauses of “pay when paid” under construction contracts. Singapore has also established a successful institution like SICA to address the disputes/difference in the contract within stipulated time. Most of the industries in Asia agree to redress their disputes through SICA, and it works well.


Other Countries

Further, countries such as New Zealand and Western Australia have drafted the Construction Contract Act 2002 and Construction Contract Act 2004 under which the payment to the contractor should be within the time period of 20 days and 10 days. Such legislation further bans conditional payment clauses under construction contracts.



A central construction legislation which addresses all the abovementioned issues is the key to unlocking the full potential of the sector in India. Further, the setting up of a regulatory authority, for instance like TRAI or IRDEA, to identify opportunities for growth, streamline dispute resolution, etc. is also the need of the hour. 

India’s lack of specific regulations for the construction industry brings forth numerous problems for the stakeholders. To start with, the average time period to resolve construction disputes is around 7-8 years. [4]The majority of such disputes revolve around delayed payment and unfair terms under construction contracts. Therefore, apart from implementing a central law, it is also prudent to acknowledge that documentation and other paper work should also be standardised across the sector as per industry best practices.

Countries such as the United Kingdom have witnessed an increased rate of productivity in the sector after implementing construction laws. The UK’s construction industry witnessed a 30% rise in production, and the rates for construction disputes also drastically dropped.[5]

Enough evidence is present before the Indian legislators to take cogent steps towards drafting a specific legislation for the Indian construction industry. It’s time to break ground!







Photo by: Shivendu Shukla on Unsplash

India’s lack of specific regulations for construction industry brings forth numerous troubles for the stakeholders. To start with, the average time period to resolve construction disputes is around 7-8 years. The majority of such disputes revolve around delayed payment and unfair terms under construction contracts. Therefore, apart from implementing a central law, it is also prudent to acknowledge that documentation and other paperwork should also be standardized across the sector as per the industry best practices. 


Revised Guidelines and Standards for Charging Infrastructure for Electric Vehicles: An Analysis

To promote e-mobility in India, the Ministry of Power, on 14th January 2022, introduced the revised consolidated Guidelines & Standards for Charging Infrastructure for Electric Vehicles (hereinafter, the Guidelines).[1] The Guidelines play a pertinent role in facilitating the e-mobility transition in India by increasing the affordability, accessibility, and reliability of the charging infrastructure. These guidelines are comprehensive as they deal with issues ranging from public charging stations to the tariff for the supply of electricity.[2] This article aims to study the provisions under the recent Guidelines, analyse the same, and delve into the suggestions for their effective implementation.

Exploring the Contours of the Electric Vehicle Infrastructure Guidelines


The Guidelines allow individuals to charge the Electric Vehicles (hereinafter, “EV”) at their residences and places of work with the help of their existing electricity connections.[3]  A private entity is free to set up a public charging station till the time it complies with the standards and protocols laid down by the Ministry of Power, Bureau of Energy Efficiency and Central Electricity Authority (CEA) from time to time.

The government, through the new Guidelines, aims to establish a grid of 3x3km for the EVs.[4] On the highways, a charging station would be available within every twenty-five kilometres. These charging stations would be present on both sides of the highways. To facilitate this goal, the government may resort to the installation of public charging stations at the existing outlets of the oil marketing companies.[5] It is interesting to note that the Guidelines also target heavy-duty EVs such as trucks and buses. A separate list of compliances, such as the requirement of at least two chargers of a minimum 100 kW (with 200-1000 V) each, has been specified for the long-distance and heavy-duty EVs.[6]

Under the Guidelines, the public charging stations can apply for electricity connection and the distribution licensee would provide the same as per the timelines provided under the Electricity (Rights of the Consumers) Rules, 2020.[7]  The public charging stations set up in metro cities would be able to have connectivity within the seven days of applying.[8] The deadline extends to 15 days in the case of other municipal areas and 30 days in rural areas. The Guidelines also present the option of procuring power from any power generating company through open access.

To provide for advanced remote or online booking of charging slots, it is necessary for the public charging station to have a tie-up with at least a single network service provider. This would allow the EV owners to have the requisite information pertaining to various aspects such as a number of the installed and available chargers, location, and applicable service charges. While acknowledging that few public charging stations would be set up for internal use of an entity, the Guidelines additionally mention that no network service provider tie-ups are needed in that instance.

One of the key features of these Guidelines is that they provide for the single part tariff for the electric supply to the public charging stations, which would not extend the average cost of the supply until March 31st, 2025.[9] A separate meeting arrangement would be provided for the public charging stations, as opposed to the domestic charging, so as to ensure that the consumption is recorded and billed in line with the applicable tariffs. To further reduce the cost, the government has provided electricity at concessional rates along with the subsidies to set up the Public Charging Stations. Moreover, the state governments would be fixing the ceiling of service charges, which are to be levied on these charging stations.[10]  The Guidelines, inter alia, provide that the DISCOMs may leverage on the funding from the Revamped Distribution Sector Scheme for the augmentation of the general upstream network, which is necessitated due to the upcoming charging infrastructure. It specifies that the “cost of such works carried out by DISCOMs with the financial assistance from the Government of India under the revamped scheme should not be charged from the consumers for the Public Charging Stations for EVs.”[11]

The recent guidelines play an instrumental role in ensuring the process of charging is made affordable for EV users. The public charging stations would be set up on a revenue-sharing basis at the fixed rate of Rs 1/kWh.[12] More and more public charging systems would be set up by using the land available with the government and private entities.

It is pertinent to note that a phased manner would be followed with respect to the rolling out process. Phase I, which ranges from the first to third year, would target all the megacities having a population of over four million. In this phase, all the existing expressways and important highways linked with the above megacities would also be included. Thereafter, under the second phase (which would range from the third to the fifth year) would cover certain big cities, state capitals, and headquarters of the Union territories.[13]

Moreover, these Guidelines are made technology agnostic because they provide for prevailing international charging standards available in the market as well as new Indian charging standards.

The Bureau of Energy Efficiency would be the central nodal agency for the rollout of the EV public charging infrastructure.[14] Moreover, every state government can have its own nodal agency for the purposes of setting up the requisite infrastructure.


Requisites of Electric Vehicle Charging Stations


The Guidelines can be perceived as a massive step forward to promote the adoption of EVs in India by increasing accessibility and affordability. They should be lauded for introducing a reliable economically viable and coordinated system to regulate the charging of such vehicles. They further tend to address the long-existing lacunae, which persisted with respect to the applicable tariffs.

In India, one of the reasons as to why the adoption of EVs has been quite staggered is because, according to the data with the Ministry of Road Transport and Highways (“MORTH”), for 9,47,876 registered cars, only 1028 public charging stations are there.[15] This was observed by the Bureau of Energy Efficiency. Therefore, from the above figure, it could be clearly observed that the country does not have the necessary infrastructure to cater to the growing demand for EVs. These guidelines have identified the existing problem and provided appropriate solutions for the same. As discussed above, apart from the installation of an adequate number of public charging stations, the individual consumers will also have the option of charging the EVs at their homes or places of work. The Guidelines state that under private charging, the batteries of the privately owned cars are charged through the domestic charging points and the billing is done via the home or domestic metering.  On the other hand, for charging outside the home premises, the power needs to be billed and payment needs to be collected. Moreover, the power drawn from these chargers is regulated from time to time.

The provision of private charging, in addition to public charging, would overall result in consumer welfare as now the private users do not have to rely completely on the government for the charging process. They can bridge the implementation gap by setting up their own charging stations. Further, the government has also been taking the right steps to bring down the price of electric vehicles by providing subsidies. At present, the price of the majority of Electric two-wheelers and three-wheelers are almost equivalent to their petrol counterparts.[16]

India has set the target of meeting 30% EV sales penetration for private cars, 70% for commercial vehicles, 80% for two and three-wheelers, and 40% for buses by 2030.[17] However, earlier this goal seemed unachievable due to the high costs associated with EVs and lack of the required infrastructure for public charging stations. The new Guidelines strive to make certain that the country is back on the track to meet the above-mentioned objective. This has been possible due to the subsidies that have been provided by the government. It is predicted that the sale of the total electric vehicles in India would reach approximately 10 lakh units. This number is equal to the units sold collectively in the last fifteen years.[18] Apart from this, the government has introduced a portal called e-Amrit to make India a more conducive place for the manufacture and adoption of EVs.[19]

Furthermore, the Guidelines aim to strike a balance between accessibility and safety. By allowing private entities to set up charging stations, the government has not only made the charging of EVs more feasible for individuals but has also reduced its burden of being the sole provider of the charging stations.  Annexure 3 lay down a list of requirements to ensure that the safety protocols have been followed[20]

Instrumental Role Played by EV Charging Infrastructure


The Guidelines would play an instrumental role in transforming and shaping the future of the use of EVs in India. They have efficiently recognized the existing issues and have formulated promising ways for addressing the same. Not only would they help in promoting energy security, but would also help in the reduction of emissions that are harmful to the environment which is a major concern at the global level. This would enable the country to take a step forward in the direction of its concern to save the environment and sustainable development.

However, the success of these Guidelines entirely depends on their effective implementation. Therefore, both central and state governments shall play a crucial role in its success in introducing a user-friendly EV policy. It is suggested that the Central Government or the Central Nodal Agency should keep a check on the performance of all the States with regards to the Guidelines. It should ensure that the development is taking place in a continuous and coordinated manner. Moreover, since the private individuals and entities for public use are free to set up their own charging stations, measures should be taken to ensure that the safety standards are strictly being met.






















Image Credits: Image by Photo by Michael Marais on Unsplash

The success of these Guidelines entirely depends on their effective implementation. Therefore, both central and state governments shall play a crucial role in its success in introducing a user-friendly EV policy. It is suggested that the Central Government or the Central Nodal Agency should keep a check on the performance of all the States with regards to the Guidelines. It should ensure that the development is taking place in a continuous and coordinated manner.


Critical Challenges in the Logistics Sector and a Way Forward

The Indian logistics sector has been on a path of steady and robust growth for the past few years, owing to the rising retail and manufacturing ecosystem in the country. According to the notification[1] of the Ministry of Finance, logistics infrastructure includes “Multimodal Logistics Park comprising Inland Container Depot (ICD) with minimum investment of Rs 50 crore and minimum area of 10 acre“. The importance of the logistics industry is not only paramount to maintain the economic ecosystem of the country, but also balance the national and international trade.

Introduction to the Logistics Sector

In practicality, the industry has broadened to include transportation and warehousing, protective packaging, material handling, order processing, marketing, customer service, distribution, value-added services, payment collection, packaging, documentation, customer brokerage facilities, kitting, repair management and reconfiguration and also reverse logistics. Ergo, all activities in the logistics supply chain.

Illustration I: Basic Logistics Supply Chain Process


The Importance of the Logistics Sector and the Role of Logistics Lawyers


As per the data published by Indian Investment Grid[2], an initiative of the Ministry of Commerce and Industry, the Indian logistics sector was valued at USD 160 billion in 2019, and by the end of 2022, it is expected to be valued at USD 215 Billion.. As per the World Bank’s Logistics Performance Index, India’s rank has escalated from 54 in 2014 to 44 in 2018. .

Further, in 2021 India’s logistics sector was valued at $160 billion that employed over 22 million people directly. It is expected to grow at a CAGR of 10 per cent to $215 billion by 2022.[3] Consequently, the logistics industry provides an overall positive scope and opportunity to the Indian economy as well as India’s infrastructure sector.

Since the logistics industry is vast, the role of logistics lawyers and infrastructure lawyers too is dynamic in nature. It ranges from carrying out due diligence, feasibility studies, regulatory approvals, drafting important project and transaction documents, contract management, risk management, regulatory-commercial-financial advice to dispute resolution and handling and advising in litigation.


Challenges in the Logistics Sector


One of the foremost challenges that the logistics sector faces today arise due to poor infrastructure. Physical infrastructure impacts transportation which facilitates logistics. The country faces challenges in port and roadways infrastructure which directly impacts the transportation of goods. Fuel costs and policy changes directly impact the logistics sector, since the higher the costs of fuel, the higher are the transportation and freight costs which would directly impact the logistic companies and businesses to stay afloat. The economic and socio-political changes in policy would also result in inflation of prices, and in turn, affect costs and disrupt the supply chain. Although the logistics industry has shifted to a more technological friendly environment over the past few years, the industry still faces challenges in safeguarding the documentation, which would be paramount in substantiating claims at the time of arbitrations and litigations. Lack of accurate data at the time of documentation along with several manual processes further aggravate this problem.

The ongoing pandemic has led to several policy changes such as perpetual and partial lockdowns which have directly affected the workers and the labourers of the nation, resulting in delay and/or stoppage of work. This is one of the causes of time overruns and an important cause of disruption in the supply chain. Furthermore, other challenges in the logistic sector involve several compliances that need to be followed in a timely manner, along with maintaining import and export licensing. Other legal issues involve insurance policies, bank guarantees and traversing through taxation compliances and implications.

Some of the challenges faced by the logistics sector are displayed below:

Illustration II: Challenges in the Logistics Infrastructure Industry in India

A vast majority of India’s trade is facilitated by the shipping industry. Furthermore, it is also known that the Government intends to encourage public-private partnerships in the shipping sector and help the local shipping industry with financing ship acquisitions [4]. Therefore, the shipping logistics sector has a promising outlook in the Indian economic ecosystem in the coming future

Commercial disputes in shipping logistics are adjudicated under civil courts with pecuniary jurisdiction and high courts with admiralty jurisdiction. Furthermore, there are established special commercial courts under the Commercial Courts Act, 2015 which deal with subject matters of commercial logistics disputes ranging from admiralty and maritime disputes,  issues related to the sale of goods, and those related to import-export, carriage of goods etc. However, prior to approaching the courts, mediation is mandated. Procedurally, along with the pre-institution mediation and settlement, the Commercial Courts Act, 2015 brings along a firm and time-bound approach into the maritime and logistics legal procedures. In the case of M/s SCG Contracts India Pvt. Ltd v. K.S. Chamankar Infrastructure Pvt. Ltd. & Ors[5], the importance of the timely process was asserted wherein the Supreme Court held that interim applications for rejection of statement of claims or plaint will not pause the 120-day deadline process. Certain challenges in litigations and disputes also relate to jurisdiction, cause of action and limitation barred suits.

The Indian Carriage of Goods by Sea Act, 1925 applies to outward cargo i.e., ships carrying cargo from India to foreign ports. The Multimodal Transportation of Goods Act, 1993 applies to multimodal transportation of cargo from one place in India to a place outside India using more than two means of transport. For cargo claims, the Indian Bills of Lading Act, 1856 is applicable. The Specific Relief Act, of 1963 deals with the specific performance of contracts from an equitable remedy standpoint. Other contractual obligations, disputes and damages arising out of breach of contract would be dealt with by the Indian Contract Act, 1872.

As per a report released by RedCore, the Indian Road Logistics market is said to reach about 330 billion by the year 2025[6]. The Ministry of Road Transport and Highways (“MORTH”) and the National Highways Authority of India (“NHAI”) are entrusted with the task of formulating and administering policies on road transport and freight. Whereas, the Carriage by Road Act, 2007 provides for the regulation of common carriers of goods by road. The Carriage by Road Rules, 2011, stipulates conditions for the grant of registration which applicants must comply with. Some of the challenges that the road transport sector faces are lack of road infrastructure, poor network connectivity and unorganized players with high levels of competition.


Case Study: The Ever Given, the Cargo Ship Stuck in the Suez


It is known that in the year 2020, more than 50 ships per day on average passed through the 190-km-long waterway of the Suez Canal, which accounted for around 12% of international trade. One of the ships during the time was ‘The Ever Given’. It is estimated that about 90 % of the world’s trade is transported by sea. Ever Given was stuck in the Suez Canal for a period of 6 days. It is estimated that more than $9 billion worth of goods pass through the 190 km waterway each day, amounting to around $400 million per hour. Therefore 6 days of the Ever Given being stuck in the Suez Canal caused cascading havoc to global trade and the logistics supply chain. 

Another instance of how the Ever Given stuck in the Suez affected the global logistics supply chain is the hindrance of trade between Asian and European nations in the following year. It is a known fact that waterways are one of the important mediums for transportation and trade between Asia and Europe. Cotton is regularly supplied from India to Europe by the Suez Canal, similar to the movement of petroleum along the Suez from the Middle East. This directly impacted the supply chain as it resulted in problems with warehousing.


A Way Forward for the Logistics Sector


As it is noted by the above case study, not having sufficient means of warehousing results in a higher possibility of facing challenges resulting in the disruption of the logistics supply chain. Force Majeure events such as the pandemic have unveiled the need for more warehouses to combat this situation. Furthermore, the GST regime of the Indian Government in recent years has brought about a positive impact to the logistics industry by enabling quicker transportation due to the uniform rate of taxes in all states of India and unhindered transit of goods by the abolition of entry levies. The need of the hour is to develop adequate warehousing infrastructure in the fringe areas of major metropolitan trade hubs of the country and in high commerce corridors. To combat other legal challenges, it is suggested that there should be an organized inventory of all logistics and supply chain documentation for the purpose of claim substantiation which will be necessary at the time of arbitrations and bilateral disputes. Furthermore, moving forward to a technology-driven documentation approach would highly impact the logistic sector by avoiding transit delays and untimely deliveries caused due to improper documentation.



[1] Ministry of Finance, Department of Economic Affairs, Notification.No.13/1/2017-INF dated 26th April 2021

[2] Invest in logistics sector in India, National Infrastructure Pipeline, India Investment Grid, (last visited Nov 25, 2021


[4]  [4]

[5] M/s SCG Contracts India Pvt. Ltd v. K.S. Chamankar Infrastructure Pvt. Ltd. & Ors. C.A. No. 1638 of 2019



Image Credits: Image by fancycrave1 from Pixabay 

The need of the hour is to develop adequate warehousing infrastructure in the fringe areas of major metropolitan trade hubs of the country and in high commerce corridors. To combat other legal challenges, it is suggested that there should be an organized inventory of all logistics and supply chain documentation for the purpose of claim substantiation which will be necessary at the time of arbitrations and bilateral disputes. 


Budget 2022: Ushering a Golden Era in the Indian Infrastructure Landscape

This Budget seeks to lay the foundation and give a blueprint to steer the economy over the AmritKaal of the next 25 years – from India at 75 to India at 100. It continues to build on the vision drawn in the Budget of 2021-22. Its fundamental tenets, which included transparency of financial statement and fiscal position, reflect the government’s intent, strengths, and challenges. This continues to guide us. – Smt. Nirmala Sitaraman

The Union Budget of 2022-2023 that estimates India’s economic growth at 9.2% amidst the Omicron wave entered with a strong statement into the AmritKaal, that ushers India@100 with its goal at a macroeconomic level growth. It focusses to promote public and private investments, development backed by technology, digital economy, fintech, energy and climate action. Building on the Budget of 2021-2022, this Budget of 2022-2023 acknowledges strengthening of health infrastructure, Productivity Linked Incentive for achieving the vision of AtmaNirbhar Bharat, commencement of activities of the National Bank for Financing Infrastructure and Development (NaBFID) and National Asset Reconstruction Company and continues to provide a blueprint for India@100 along with a multi-modal approach guided by PM GatiShakti.

PM GatiShakti

Propelled by seven engines, namely, Roads, Railways, Airports, Ports, Mass Transport, Waterways, and Logistics Infrastructure and supported by Energy Transmission, IT Communication, Bulk Water & Sewerage, Social Infrastructure, Clean Energy and Public Private Partnership (PPP), PM GatiShakti is aimed to steer sustainable development, economic transformation, seamless multimodal connectivity and logistics efficiency comprising the State Government infrastructure and National Infrastructure Pipeline.  

Roads: Expansion of National Highways network by 25,000 km in 2022-23 along with mobilization of 20,000 crore

Seamless Multimodal Movement and Logistics: Unified Logistics Interface Platform (ULIP) for data exchange to improve the logistics scenario in India by adopting a unified and integrated view of the Indian logistics value chain. Further boost has been facilitated through implementation of Multimodal Logistics Parks at four locations through PPP mode.

Railways: Introduction of 400 new Vande Bharat trains, 100 PM Gati Shakti cargo terminals in the next three years, bringing 2,000 km of network under the indigenous world class technology Kavach, along with redevelopment and modernization of the stations, integration of Postal and Railways networks, aiding local business and supply chain through ‘One Station-One Product’ concept are a few measures to ensure next generation of energy efficient trains, better passenger experience and seamless movement.

Connectivity: Multimodal connectivity between mass urban transport and railway stations is envisaged. Innovative solutions such as National Ropeways Development Programme on PPP mode has found a place in the Budget wherein 8 ropeway projects for a length of 60 km will be awarded.

Inclusive Development

Financing startups for agriculture and rural enterprise through a fund with blended capital raised under the co-investment model, facilitated through NABARD has been provided. River linking projects and finalization of Detailed Project Report for linking of 5 rivers has also been contemplated.

Extension of Emergency Credit Line Guarantee Scheme up to March 2023 and expansion of its guarantee cover by 50,000 crores to total cover of 5 lakh crores in order to aid the MSME sector with additional credit has been put forward. 

Infusion of funds in the Credit Guarantee Trust for Micro and Small Enterprises scheme and an outlay of 6,000 crore in the Raising and Accelerating MSME Performance (RAMP) programme shall assist in additional credit, employment opportunities and infusing competitiveness, efficiency and resilience in the MSME sector. Allocation of 48,000 crores for affordable housing covering 80 lakh houses along with reduction of time required for approvals related to land and construction is a step to ensure housing for all.

Under the Prime Minister’s Development Initiative for North-East, PM-DevINE, scheme, an initial allocation of 1,500 crore has been presented for funding infrastructure and social development projects such as roads and ropeways. The Budget also proposes construction of village infrastructure, tourist centres, road connectivity and provisioning of decentralized renewable energy.

Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition, and Climate Action

Bosting ease of doing business, expanding the scope of single window portal for all green clearances, urban development especially of 2 and 3 tier cities, modernization of building byelaws, implementation of Town Planning Schemes (TPS), and Transit Oriented Development (TOD) are a few other measures proposed by the Budget. 

In order to promote clean and sustainable mobility emphasis on clean tech and governance solutions, special mobility zones with zero fossil-fuel policy, and EV vehicles is given.

Impetus has been given to government procurement by introducing reforms such as use of transparent quality criteria, payment of 75 per cent of running bills within 10 days, settlement  through conciliation, end-to-end online e-Bill System, and use of surety bonds instead of bank guarantee. 

The Budget has also used PPP as the mode for laying optical fibre in all villages to enable access to affordable broadband and mobile service especially since 5G mobile services shall be rolled out. 

Amendments to the Insolvency and Bankruptcy Code to enhance the efficacy of the resolution process and introducing a new legislation to replace the Special Economic Zones Act in to ensure optimal usage of available infrastructure and competitiveness is of the exports are a few suggested legislative reforms. 

Allocation of 19,500 crore in the Solar sector, introducing four pilot projects for coal gasification and conversion of coal into required chemicals, transition to circular economy and carbon neutral economy are steps in the direction of combating climate change.

Financing of Investments

Promotion of green infrastructure through issue of sovereign Green Bonds, setting up of International Arbitration Centre in the GIFT City, inclusion of 107 Data Centres and Energy Storage Systems within the umbrella of Infrastructure, promotion of thematic funds for blended finance with 20% Government share are a few measures introduced by the Budget to embolden its objective of financing of investments. The financial viability of the Infrastructure projects has by adopting global best practices, innovative ways of financing, and balanced risk allocation has been proposed.

CapEx Coupled with Infrastructure Spearheads Budget 2022

The Budget ensures capacity building for Infrastructure projects. It aims to provide seamless connectivity, logistics synergy and convenience for the commuters along with reducing congestion and promoting tourism. The Budget promotes innovative ways of financing, reduces logistics cost and time and aims to improve international competitiveness.

Along with its proposed reforms and allocation of funds, it can be said that the Infrastructure coupled with capital expenditure will be spearheading the Budget. We hope to see contracts awarded to EPC Contractors and PPP Projects for rail development. Expansion of expressway through EPC/PPP model will undoubtably usher concession to private players and EPC Contractors. Overall, the Infrastructure development through PPP mode has been propagated by the Budget right from village infrastructure, urban planning, projects in the Northeast region to Solar projects and green infrastructure projects.

Moreover, reforms in legislation and policies such as the procurement policy is a stride towards economic development and building the nation. Finally the Budget also provides for issuance of Surety Bond to the Developers/Contractors in the place of Performance Bank Guarantee (PBG) which will ease the financial burden of the Concessionaire/Developer/Contractors in obtaining the said PBG from the Banks by depositing of 100% Margin Money.

Image Credits: Photo by Ivan Bandura on Unsplash

Building on the Budget of 2021-2022, this Budget of 2022-2023 acknowledges strengthening of health infrastructure, Productivity Linked Incentive for achieving the vision of AtmaNirbhar Bharat, commencement of activities of the National Bank for Financing Infrastructure and Development (NaBFID) and National Asset Reconstruction Company and continues to provide a blueprint for India@100 along with a multi-modal approach guided by PM GatiShakti.


Public Procurement Reforms: Light at the End of the Tunnel

The imperatives of a growing and liberalized economy impel objectivity and transparency in the decision-making process. A substantial amount is spent by the Government in procuring several goods and services in order to discharge the duties and responsibilities of the assigned work. This drives the need for uniform, systematic, efficient, and cost-effective solutions in accordance with the applicable rules and regulations. The need of the hour propelled the release of guidelines for reforms in public procurement and project management, General Instructions on Procurement and Project Management, by the Ministry of Finance (hereinafter referred to as the “Procurement Guidelines”). 

Incorporating innovative rules to facilitate faster, efficient, and transparent execution of projects remains the predominant objective of the Procurement Guidelines. The Procurement Guidelines attempt to empower executing agencies to make prompt and efficient decisions in accordance with public interest, probity, and fairness. Since the challenge lies in executing the projects within the stipulated time and cost without compromising on the quality, the role of these Procurement Guidelines is paramount


Overview of the Procurement and Project Management Guidelines


The Procurement Guidelines stipulate a presentation of the findings of the project feasibility study or the preliminary project report to the designated competent authority to provide an assessment of the overall situation and risk mitigation methods. These discussions may also become a part of the Detailed Project Report (DPR) wherein the field units of the public authority shall be a part of the DPR preparation process. The involvement of field units of the public authority is essential in the endeavour for appropriate solutions since these field units are custodians of legacy data of a particular geographical region.

The Procurement Guidelines provide that the availability of minimum necessary encumbrance free land should be ensured before awarding the contract. Ascertaining the same will be done on a case-to-case basis or based on the general guidelines issued by the concerned authority. The Procurement Guidelines prescribe expedition of the process for obtaining statutory and other clearances and monitoring of the progress in obtaining clearances by the public authority. Avoidance of delay in execution of work and deviation in quantities of items of work is prevented by ensuring the availability of approved architectural and structural drawings prior to the invitation of tenders. A pre-notice inviting tender conference is proposed to obtain industry inputs. The empanelment of contractors in a fair, equitable and online manner for specific goods and services that are required regularly is also prescribed.

Several reforms have been set forth in the tender document which is salient in governing the relationship between the parties. The need for clarity in clauses that do not give scope for multiple interpretations has been proposed with emphasis on provisions pertaining to milestones, approvals, price variation, quality assurance plan, technical eligibility, and financial eligibility criteria. The contractors shall receive payment at every stage in proportion to the quantum of work done. The Procurement Guidelines have initiated payment of interest in case of delayed payments of bills submitted by the contractor backed by an online system for monitoring to identify and avoid unwarranted delays. Moreover, the efficiency of procurement is enhanced by making online tendering a default method for bidding projects.

Technology backed solutions have been proposed for periodic review of the projects. Use of project management systems for recording delays on a real-time basis, capturing the progress, quality of work, site records and photographs including geotagging have been proposed. The need to clearly define the role of Project Management in the contract has been stressed upon.

In cases of a single bid in the tender, certain conditions have been stipulated to prevent the cost of rebidding and banish the notion of rebidding being a safe course of action since rebidding leads to further costs and delays. As far as the procurement was advertised with sufficient time to submit the bids, qualification criteria were not unduly restrictive and reasonable prices in comparison to market values have been quoted, single bids are considered valid.

A graded authority structure has been proposed to grant an extension of time. Framing of methods such as single or limited tenders for part completed contracts wherein 20% of the work has been billed by the contractor who has abandoned the project has been introduced. This will reduce the inconveniences, loss of amenities, time and cost due to half-completed work. The Procurement Guidelines mandate EPC contracts to mention broad technical specifications with the freedom to the contractor to optimize the design. The incorporation of conditions in the tender documents for procurement of consultancy services and fixed budget-based selection has also been presented.

Quality cum Cost Based Selection (QCBS) for procurement of works and non-consultancy services where the value of procurement does not exceed Rs. 10 crores and has been declared as a Quality Oriented Procurement, is set forth as an alternative method of procurement. In the case of QCBS, the maximum weightage given to non-financial parameters should not exceed 30%. Weightage for timely completion of similar projects in the past may also be considered in the tender documents along with fulfilment of mandatory criteria for evaluation of bid and joint ventures may be allowed subject to adequate safeguards.

Acknowledging the adverse implications of litigation on timelines and overall project cost in form of heavy damages or additional interest cost, the Procurement Guidelines demand a critical review of the award by a special board or committee. This board or committee should consider legal merits, probability of success, costs and must be satisfied that an appeal is likely to be more beneficial. An appeal should be recommended only upon application of mind on the facts and circumstances of the case and analyzing the chances of success. The Procurement Guidelines stipulate compliance to Rule 227A of the General Financial Rules, 2017 (GFRs) according to which the Department/Ministry that has challenged the arbitral award has to pay 75% of the arbitral award including interest to the contractor or concessionaire against a bank guarantee. The payment should be made into the designated escrow account. Personal accountability shall arise in case of non-compliance to Rule 227A of GFRs to the extent of additional interest in the event the final court order is not in favour of the procuring entity.


A Step in the Right Direction

Transparency should trickle down into public procurement in order to facilitate competition, fairness and elimination of arbitrariness in the system. The Procurement Guidelines stipulate several appreciative reforms. The release of payment to the contractor in commensuration of the completed work will provide liquidity to the cash-strapped contractors. Review of work at various stages of contracts leads to an assessment of delay in execution of work by the concerned stakeholder and serves as a record in case of a dispute. Right of way for projects remains a major concern since minimum necessary encumbrance free land shall be determined on a case-to-case basis or general guidelines which may lead to further delays owing to peculiarities or absence of guidelines. Despite conditions being laid down to deal with situations of a single bid, the same may not promote a competitive bid. Alternative solutions such as the Swiss Challenge method may be used in order to prevent monopoly. It is pertinent to note that the L1 approach as the chief criterion to award the project has been eliminated thereby emphasizing the quality of work. While releasing 75% of the award for projects stuck in disputes is a welcome step, a proper mechanism to realize the advantages of the same must be established without which the contractor would be burdened with poorly negotiated bank guarantees and be required to open an escrow account in case of EPC projects. Nevertheless, a robust system instils confidence in the prospective tenderers to formulate competitive tenders. Undoubtedly, the concentrated efforts are a step in the direction of economic development, removal of unwarranted roadblocks and addressing the plaguing problems in public projects.P

Image Credits: Photo by Ivan Bandura on Unsplash

Transparency should trickle down into public procurement in order to facilitate competition, fairness and elimination of arbitrariness in the system. The Guidelines stipulate several appreciative reforms. The release of payment to the contractor in commensuration of the completed work will provide liquidity to the cash-strapped contractors. Review of work at various stages of contracts leads to an assessment of delay in execution of work by the concerned stakeholder and serves as a record in case of dispute.


Government Incentives for Infrastructure Development

India is emerging to become a global leader in investing in world-class infrastructure projects, in view of concrete plans set out in the 2021 Budget. With unwavering growth in the Indian stock market witnessed by indexes touching unprecedented highs, the Indian infrastructure sector is filled with signs of optimism as the country reels out from the effects of the pandemic. Current trends suggest a boost in infrastructure spending that shall also facilitate infusion of overseas capita for investments in other sectors and an availability of credit for infrastructure projects.

The government’s National Infrastructure Plan for 2019 to 2025 has already supported more than 9000 projects having a total project cost surpassing USD 1949 billion.[1] The National Infrastructure Pipeline is a live database of infrastructure projects and provides attractive investment opportunities in projects worth more than INR 100 crores in sectors including Transport, Logistics, Energy, Water and Sanitation, Communication, Social and Commercial Infrastructure.[2]


Apart from this, opportunities are available through the government’s ‘India Investment Grid’ (IIG) for investing in stressed assets to allow the purchase of viable stressed assets which have the potential for being turned around.[3] IIG also facilitates Corporate Social Responsibility opportunities for businesses to invest in infrastructure building in the education, healthcare sectors and for poverty alleviation as part of their CSR spending.[4]

These investment opportunities are coupled with a bold move towards introducing National Bank for Financing Infrastructure and Development Act, 2021. The long-overdue initiative establishes a government-owned Development Finance Institution (DFI) for extending long-term affordable debt financing to infrastructure projects. The DFI is set to receive initial funding from the government and is projected to have a lending capability of a minimum of INR 5 trillion by 2024-25. The appointment of the veteran banker, Mr. K V Kamath as the chairperson of the newly set up INR 20,000 crore DFI- National Bank for Financing Infrastructure and Development, falls in alignment with the developmental and financial objectives of DFI.

The INR 40, 000 crore National Investment and Infrastructure Fund (NIIF) anchored by the Government of India in 2015 is also gaining momentum through its funds namely, Master Fund, Fund of Funds and Strategic Opportunities Fund each with a designated purpose.


Impetus has been given to the domestic manufacturing ecosystem through the Atmanirbhar Bharat initiative, especially to Micro, Small and Medium Enterprises (MSMEs) aiming to facilitate local manufacturing. As a further boost to the initiative, the government intends to achieve a turnover of US$ 25 billion including export of US$ 5 billion in aerospace and defense goods and services by 2025[5]. An increase in the capital expenditure will augment the procurement of weapons, aircraft, warships, and other military hardware. Posing as a lucrative market for defense companies, India gives orders worth US$ 100 billion a year for defense procurement.[6] Therefore, the Finance Ministry has permitted Foreign Direct Investment (FDI) in the defense for sector up to 74 percent under the automatic route leading to access of modern technology, strategic partnerships between foreign manufactures and defense equipment manufacturers in India. It also promotes active utilization of the Technology of Funds scheme that supports MSMEs in catering to the requirements of technological development in the defense sector.  


With a capital infusion of INR 1,000 crores to Solar Energy Corporation of India, there is a likely surge in large-scale solar installations, grid-connected projects, solar plants, and solar parks along with a phased manufacturing plan for solar cells, solar panels, and domestic production of solar inverters and solar lanterns.


The Government of India has also earmarked areas including highways, railways, power grids, and airports to monetize public infrastructure for financing new public projects. Statutory authorities have already begun setting up infrastructure investment trusts (InvIT) which will hold the public infrastructure assets for national as well as international institutional investors. Another avenue under consideration for obtaining public investment into infrastructure projects is issuance of tax-efficient zero-coupon bonds by infrastructure debt funds.


Major tenders worth more than INR 20 billion are expected to be issued in the coming financial year for public-private partnership in the management and operations of ports.


The logistics sector serves national trade, international trade, MSMEs, and start-ups. The launch of INR 100 crore Gati Shakti National Master Plan for Multi-Modal Connectivity has heralded new possibilities. This digital platform will incorporate the infrastructure schemes of various Ministries and State Governments like Bharatmala, Sagarmala, inland waterways, dry/land ports, UDAN etc; Economic Zones like textile clusters, pharmaceutical clusters, defense corridors, electronic parks, industrial corridors, fishing clusters, Agri zones will be covered to improve connectivity and make Indian businesses more competitive[7]. The National Logistics Policy is expected to promote seamless movement of goods through a focus on digitization, process re-engineering, multi-modal transport, EXIM trade, etc.[8] It is designed to streamline rules and address supply-side constraints, leading to lower logistics costs, the boost of trade, enhancement of Logistics Performance Index and greater competitiveness for Indian products worldwide.


In the power sector, apart from an INR 3 trillion outlay planned over the coming five years for revamping the power distribution scheme by providing distribution companies with financial assistance for developing a smart-metering infrastructure, the government is also in the advanced stages of launching a National Hydrogen Mission which may provide an opportunity for corporations in the power sector to engage in the export of green hydrogen and green ammonia while also meeting the domestic demand.


These dynamic initiatives clubbed with the use of India’s IT capabilities by creating monitoring mechanisms such as a dashboard to track the progress of publicly monetized infrastructure projects have created attractive opportunities for infrastructure companies to mobilize their assets into the establishment of new development projects.


Fox Mandal’s Infrastructure, Project Finance, and Energy Teams deliver unmatched expert services in wide-ranging areas of public infrastructure, inclusive of but not limited to ; transaction assistance for infrastructure projects, services of review, compliance, submitting tender documents, structuring and reviewing concession agreements, incorporation of Special Purpose Vehicles (SPVs), procuring relevant licenses and approvals, regulatory clearance facilitation, dispute resolution, strategy planning, and infrastructure contract bidding management.


As a commendation for the services rendered by Fox Mandal, the Firm featured in 2021 Legal 500 Rankings for its Projects & Energy Practice vertical.  




[2] and








Image Credits: 

Photo by David Rodrigo on Unsplash

These dynamic initiatives clubbed with the use of India’s IT capabilities by creating monitoring mechanisms such as a dashboard to track the progress of publicly monetized infrastructure projects have created attractive opportunities for infrastructure companies to mobilize their assets into the establishment of new development projects.


Anatomy of Risks in PPP Projects in India and How to Mitigate Them?

The infrastructure space has always been a capital-intensive sector. Particularly for a developing country such as India, the unique financing and project implementation models that Public-Private Partnerships (“PPP”) represent is considerable for enabling the construction of large-scale public infrastructure projects with significant long-term economic value and ensuring necessary infrastructure development is undertaken in the country.

However, considering the long timelines, involvement of multiple stakeholders, and significant capital expenditure in infrastructure projects, there are significant risks associated with them that are likely to emerge at any phase of the project. So far, in India, PPP seems to be the only viable model for the implementation of public infrastructure projects in an otherwise cash-strapped economy.

In this article, we will briefly discuss the broad phases of any PPP project, associated risks and the suggested risk mitigation measures.

Phases of a PPP Project

The broad phases of a PPP project are as below:

Phases of PPP ProjectEach of these phases is critical for ensuring the long-term success of viable PPP projects. In brief, the following activities are undertaken in each of these phases.

  1. Phase 1 (PPP Bidding Phase): Subsequent to the requisite feasibility studies by the government, the potential PPP project is given the go-ahead, commencing the bidding phase. As a first step to the bidding process, the authority issues an Expression of Interest (“EOI”) and/or a Request for Quote (“RFQ”) and/or a Request for Proposal (“RFP”), followed by the preparation of a Concession Agreement (“CA”). The highest bidder is chosen, the project is awarded to the successful bidder and the CA is executed thereafter. Post the issuance of the Letter of Award to the successful bidder, several procedures are to be followed, such as achieving financial closure, undertaking technical planning and design, obtaining necessary permits and approvals, and establishing a proper team for implementing the project.
  2. Phase 2 (PPP Development Phase): The next phase is the construction phase, where the project is implemented. After the construction of the facilities is completed, the authority inspects. If the inspection is satisfactory, it declares the project ready for operation and sets the commercial operation date (“COD”).
  3. Phase 3 (PPP Operation & Maintenance): Following the COD declaration, this phase designates a project in operation, which includes maintenance during the operation phase.


Risks and Their Mitigation Mechanisms

The most common and significant risks in PPP are:

  1. Delays in land acquisition or rights of way – This is one of the most critical risks in every PPP project. When the land acquisition processes fail, timely access to sites and other subsequent formalities stand compromised leading to unwarranted delays in the development project.
  2. Delays in obtaining relevant approvals/permits – Prior to large scale construction projects being commenced, there is a requirement to obtain different types of permits and approvals for commencing such activities, such as environmental clearance, permits for moving civic activities to other locations, etc.
  3. Design Risk – Usually means a faulty design that does not meet predetermined parameters of the facility, requiring changes, resulting in time and cost overruns.
  4. Inflation Risk – Inflation leads to an overall increase in the price of raw materials, transportation costs and general costs of services. This is aggravated by undue delays in projects translating to an increase in the overall project cost.
  5. Revenue/Demand Risk – This is where the forecasted revenue for the project and/or the potential that can be generated has been improperly projected or based on outdated data, thereby affecting the viability of the project.
  6. Construction/Completion Risk/Time and Cost Overruns Risk – One of the major risks in PPP project that causes delays in achieving COD is delays in construction and eventual completion.
  7. Financial Risk – Difficulty in raising project finances or raising very expensive financing that may not be feasible in the long run. Read a detailed analysis of the Project Cost in Infrastructure Projects
  8. Operational Risk – Inefficiencies in operating costs, lead to higher operating costs, arresting leakage of revenue.
  9. Political/Regulatory Risk – Changes in political and/or regulatory regimes that result in project devaluation, lower revenues or faulty project implementation.
  10. Performance/Default/Termination Risk – When the private contractor or consortium is responsible for investing funds in the project’s execution and becomes insolvent or undertakes faulty construction and erection of facilities due to lack of expertise on the part of the private contractor.
  11. Asset Value/Technology Obsolescence Risk – Occurs when the technology is not a proven one or when the asset value decreases significantly owing to policy or regulatory changes.
  12. Social and Environmental Risks – The project affects the local environment in the region of construction or has a significantly adverse collateral impact on the local population in the region, thereby creating obstacles in the implementation of the project or increasing time and cost overruns.
  13. Absence of renegotiation clause in CA – This is one of the oldest demands of many concessionaires in any PPP project in India, which is yet to be addressed by the authorities. As CA is valid for a longer duration, sometimes lasting 30 years, no concessionaire is in a position to perceive risk which may affect the project during the length of the entire concession period. The authorities should provide the necessary mechanisms for renegotiation of long-term PPP contracts.

Now we shall examine a few case studies that would demonstrate any combination of the above set of risk factors.

Case Study 1: Delhi – Gurgaon Expressway[1]

The National Highways Authority of India (“NHAI”) was entrusted with the task of executing the golden quadrilateral project wherein the four metro cities were sought to be connected. The Delhi-Gurgaon Expressway stretch of the golden quadrilateral project was to be executed via the Build, Operate and Transfer (“BOT”) method and was awarded to a consortium of Jaiprakash Industries Ltd. and DS Constructions Ltd. Right from the start, there were several issues with the execution of the project. They’re discussed as below.

  1. Land acquisition – NHAI was responsible for granting the right of way to the concessionaire, which was delayed significantly, leading to a delay in developing and a consequential delay in commissioning the project.

Mitigation mechanism: NHAI should not bid out any project until 90 % of the land is acquired and subsequent possession is taken over.

  1. Approvals – The obtaining of permits/approvals is another important risk to be addressed. NHAI shall assist the bidder in facilitating the said approval within the stipulated time as envisaged in the CA.

Mitigation mechanism: To speed-up the process, the government could have constituted a single authority that the concessionaire could approach to expeditiously obtain all the required permits/approvals.

  1. Design & Social Risk – Such large-scale projects possess the capability of displacing and affecting multiple lives and families.

Mitigation mechanism: Large-scale public consultations involving affected families and relevant government agencies should have been conducted prior to the commencement of the project, to mitigate their concerns and ascertain viable steps forward.

  1. Technology Risk – NHAI generally relied on older traffic studies to predict the volume of traffic to arrive at bid numbers. This was a gross underestimation of the eventual flow of traffic, leading to an improper estimation of traffic numbers.

Mitigation mechanism: NHAI should use the latest technology and traffic studies to finalise the bid numbers.

Case Study 2: Vadodara Halol Toll Road[2]

The Vadodara Halol Toll Road was one of the first projects involving the widening of state highways and commenced under the aegis of the Government of Gujarat. The Infrastructure Leasing and Financial Services (“IL&FS”) was roped in by the Government of Gujarat to develop the road project. A special purpose vehicle (“SPV”) was incorporated for this purpose and the project was developed using the Build, Own, Operate and Transfer (“BOOT”) model. Considering that the World Bank was one of the investors in this project, high standards of execution and implementation were followed, and this project turned out to be an example of best practises followed to mitigate various types of risks. The same is discussed below, along with a few mitigation strategies where appropriate.

  1. Environmental and Social Risk: One of the significant plus points of this project was the extensive environmental and social impact assessment that was undertaken during the project development phase itself. As per initial reports, around 300 families would have been affected by the initial plan of the project. However, intense public consultations were held at the development stage of the project and bypasses and various alternatives were introduced and the number of affected households was eventually reduced to 10. The project also complied with the environmental and social norms by creating wetlands, reducing emissions, constructing pedestrian subways, planting 550 trees across the sides of the roads, creating noise barriers at sensitive receptors and deepening the waterbodies in some villages along the project site.
  2. Policy Risk: The drop in revenues because of eventual changes in government policies certainly affected the concessionaire’s ability to recover their investment from the project.

Mitigation mechanism: Robust consultations and even ongoing consultations with several government departments and agencies to ensure government incentives to increase road traffic in this area might have been useful in mitigating this policy risk and enabling the project to recoup its initial investments.

  1. Financial Innovation / Risk: This is one of the first projects where innovative financing mechanisms were adopted such as the use of Deep Discount Bonds with the option of take-out financing, cumulative convertible preference shares and long-term loans from IL&FS. The project created several such examples of innovative financing, which were eventually replicated in other projects in the infrastructure industry.


In light of the discussed range of risks that one may encounter during the entire lifecycle of PPP projects and their potential impact; it is pertinent that the authorities approach every PPP project in every sector as a partnership and weighs the inputs of all the relevant stakeholders. If the government proactively strategizes to remove the unidirectional nature of PPP CAs in India, and both the private partner and the authorities work in resonance, the current risks plaguing the PPP project will be resolved, resulting in an active involvement and interest from the private sector in participating in PPP projects in India.


[1] See “Case Study 8: Delhi Gurgaon Expressway” in Public Private Partnerships in India – A Compendium of Case Studies, available at Last visited on November 1, 2021

[2] See “Case Study 6: Vadodara Halol Toll Road” in Public Private Partnerships in India – A Compendium of Case Studies, available at Last visited on November 1, 2021

Image Credits:

Photo by Lance Anderson on Unsplash

Considering the long timelines, involvement of multiple stakeholders, and significant capital expenditure in infrastructure projects, there are significant risks associated with them that are likely to emerge at any phase of the project. So far, in India, PPP seems to be the only viable model for the implementation of public infrastructure projects in an otherwise cash-strapped economy.