India’s highway construction industry has raised serious concerns over recent changes to arbitration norms governing large infrastructure contracts. The National Highways Builders Federation (NHBF), which represents major road developers, has written to the Union Finance Minister and the Ministry of Road Transport and Highways seeking a review of the revised dispute-resolution framework.
The new norms restrict the use of arbitration in government contracts where the claim value exceeds ₹10 crore. Instead, such disputes are now expected to be resolved through conciliation or mediation, followed by litigation if no settlement is reached. These changes also apply to ongoing projects where arbitration proceedings have not yet begun.
Highway builders argue that arbitration has long provided a faster, technically informed and commercially viable mechanism for resolving complex disputes in infrastructure projects. The federation has warned that removing arbitration as a standard option could increase uncertainty, delay dispute resolution and adversely affect cash flows, especially for projects already under financial stress.
The industry also fears that prolonged litigation may discourage private investment, strain lender confidence and lead to cost escalations in large national highway projects. According to the federation, the lack of clarity on how the new norms apply across different contract models, including EPC, BOT and hybrid annuity projects, further complicates the situation.
While the government aims to reduce arbitration-related risks and fiscal exposure, highway developers are urging a balanced approach that protects public interest without undermining project viability. The outcome of these discussions could have a significant impact on India’s infrastructure pipeline and long-term road development plans.
