MoRTH Introduces Interim Measures on Cost Escalation for Highway Projects

The Ministry of Road Transport and Highways (“MoRTH”), vide its letter dated April 1, 2026, read with NHAI Policy Circular dated April 8, 2026 (the “Circular”), has introduced interim measures in relation to price adjustment provisions for National Highway projects in light of the recent increase in fuel prices, construction materials and logistics costs. The measures are intended to mitigate the impact of rising input costs and support uninterrupted execution of highway projects.

National Highway projects executed under engineering, procurement and construction (EPC) and hybrid annuity model (HAM) frameworks incorporate price adjustment mechanisms linked to specified indices. The Circular introduces certain time-bound relaxations within this existing framework to address the impact of recent price increases.

One of the key measures is the relaxation in payment provisions under Schedule-H of EPC contracts and Schedule-G of HAM agreements, enabling monthly payments to contractors and concessionaires for work executed, subject to compliance with applicable quality standards.

The Circular also revises the reference period for price adjustment calculations. Under EPC contracts, the Wholesale Price Index (WPI) for construction machinery, ordinary portland cement, mild steel and other commodities will now be considered based on data corresponding to one month prior to the relevant Interim Payment Certificate (IPC) month, instead of the earlier three-month lag. Similarly, for bitumen, the applicable retail price will be taken as the price prevailing on the first day of the month immediately preceding the IPC month.

Further, escalation amounts under EPC contracts may be released along with monthly payments. Under HAM projects, escalation calculated using the Price Index Multiple (PIM) methodology may also be disbursed on a monthly basis.

MoRTH has clarified that these measures will remain in force for a limited period of three months with effect from April 1, 2026, i.e., until June 30, 2026, or until improvement in the prevailing global situation, whichever is earlier.