In a major crackdown on poor construction quality, the Ministry of Road Transport and Highways (MoRTH) plans to use Goods and Services Tax (GST) payment trails to expose and blacklist contractors who delegate work through multiple layers of sub-contracting.

Speaking at FICCI’s Tunnels and Bridges Conference on Wednesday, Road Transport and Highways Minister Nitin Gadkari warned that developers engaging in illicit multi-tiered subcontracting face two-to-three-year bans.

“The government will blacklist such developers and publicise it so that it hits them where it hurts most — their share prices,” Gadkari said, noting that traditional monetary fines running in mere lakhs have failed to act as an effective deterrent.

The Minister cited instances of contracts being awarded substantially below the estimated cost and subsequently being subcontracted through multiple layers, with each intermediary retaining a margin and construction quality suffering.

The quality of highways is the first priority, followed by costs. The ministry was already assessing contractors based on their performance and had begun extending the exercise to consultants preparing Detailed Project Reports (DPRs), proposing to link tender eligibility to these performance assessments.

Apart from poor construction in some cases, which he said discredits him, the minister also expressed dissatisfaction with the quality of Detailed Project Reports (DPR).

Many reports are prepared without visiting the site, which leads to design flaws and results in accidents and deaths of 1.8 lakh people annually.

Gadkari proposed using international agencies or standards for project report preparation. The government could mandate that for each project worth more than Rs 1,000 crore a company with more than 51% foreign holding be allowed to participate, the minister said.

The ministry is preparing tunnel tenders worth Rs 2 lakh crore to Rs 2.5 lakh crore. The minister said India will have to make tunnel boring machines locally, whose capital cost he identified as a binding constraint. He asked the local industry to look at this sector as there will be a big demand for them in India across different sectors going forward.

He also disclosed his efforts to bring the German tunnel boring machine makers to set up a facility in India. Offering them high quality steel and other requirements.