Government to Revise Model Contract for Greenfield Highways by April 2025

By April 2025 the Indian government will launch a revamped Model Concession Agreement (MCA) for Build-Operate-Transfer (BoT) projects. The approach is part of a broader effort to address industry concerns, cut down on disputes and lure more private investment investment into the highway sector. This legislation called the MCA, serves as the framework for public-private partnership (PPP) projects in the country, setting the guidelines for roles, responsibilities, and risk sharing there between the government and private players.

The proposed revision follows last year’s introduction of updated MCA for brownfield BoT projects. The last update was aimed at providing more flexible construction support, allowing borrowing with non-bank lenders, and enhancing how people could be compensated if revenue projections didn’t pan out. This new edition for greenfield projects will continue to achieve improvements in security for the builders, making investments in highway projects even more attractive.

At present, the government has 53 highway projects pipeline of ₹2.1 lakh crore under the BoT model. Some of these projects are already in the bidding stage, while the rest will be bid out in the next three months. The official, who did not wish to be named, said the focus area of the MCA revision was its endeavor to promote fair professional risk-sharing between the government and the private sector participants. Part of this plan includes a mid-October MoRTH directive specifying that all pre-construction activities must be completed before contracts are signed to eliminate bottlenecks and uncertainty.

Reviving such BoT projects is a key part of a larger plan to significantly expand high-speed road corridors in the country. It hopes to extend those corridors from 4,500 kilometers to 50,000 kilometers. This will be completed nearly 25,000 kilometers by 2030-31 and will remain for the next five years. The growth is perceived as critical to improving the efficiency of logistics nationwide, which must work hand in hand with massive investment by private capital.

These goals are crucial to realize the hopes pinned on a revised MCA that achieves infrastructure growth, making the BoT model attractive to investors from the private sector and helping a smoother execution of projects.