India’s first Surety Bond Insurance product to be launched on December 19: Nitin Gadkari

India’s first ever Surety Bond insurance product is going to be launched on December 19 said Minister of Road Transport and Highways, Nitin Gadkari. Speaking at the CII Global Economic Policy Summit, he said that this product will come to the aid of contractors.

“This is going to give good relief to the contractors. The Surety Bond insurance will help in boosting the liquidity in infrastructure sector by freeing the contractors working capital stuck in bank guarantees,” he said, adding that contractors can utilise this fund for the growth of their business.

It is estimated that banks seek close to 30-50 percent of cash money margin (from smaller construction companies), which is then stuck in the bank guarantees. The premium charged for this insurance bond is expected to be lower to make the product affordable. According to officials in the know, Gadkari will be launching surety bond insurance product be offered by Bajaj Allianz.


Surety bonds can be used as a substitute for bank guarantees in government procurement tenders. The Insurance Regulatory and Development Authority of India (IRDAI) had issued guidelines for these bonds and allowed their issuance from April 1 this year. IRDAI’s guidelines have listed six types of Surety Contracts. These contracts are being viewed as essential for meeting the infrastructure development goals.

In the Union Budget 2022-23, Finance Minister Nirmala Sitharaman had also announced that surety bonds will be accepted as a substitute for bank guarantee in government procurements. This was done with the intent to reduce indirect cost for suppliers and work-contractors.

Gadkari said that the world global scenario is facing recession and that spending should be ramped up. “It is the time for Indian economy to create more infrastructure, increase expenditure, and create employment potential to resolve the problem of recession.”

He said that the centre is open to change policies to support the growth of Indian industry.