Surety Bonds for Port Tenders in India: Acceptance Rules at Major Ports
- Rajeev Chari
- 6 days ago
- 8 min read
TL;DR
Insurance surety bonds aren't a theoretical option at major ports, they're already being accepted in live tenders. A January 2026 JNPA tender corrigendum explicitly lists an insurance surety bond as an accepted EMD format alongside bank guarantees.
All 12 major ports were corporatized under the Major Port Authorities Act, 2021, with Chairpersons appointed directly by the Central Government. That makes them central entities bound by GFR 2022 and the DFS September 2024 directive, arguably an even clearer case than other public bodies with mixed ownership.
Civil works, dredging, cargo handling, and Sagarmala projects all qualify for insurance surety bonds because they secure performance obligations, not financial debt repayment.
If a specific port tender still shows a bank guarantee-only format, that's a documentation lag, not a legal barrier, and there's a clear escalation path to push back on it.
A contractor bidding on a major port tender in India today doesn't need to take anyone's word for whether insurance surety bonds are accepted. Jawaharlal Nehru Port Authority's own tender documents already show it happening. This piece explains why that's not an isolated case, walks through where insurance surety bonds apply across port project types, and gives contractors a clear path to push back if a specific tender still insists on a bank guarantee only. If you're newer to the instrument itself, our guide to insurance surety bonds in India covers the basics, and our piece on replacing EMD with bid bonds covers the bid-stage mechanics in more depth.
Why Surety Bonds Matter for India's Port Projects
India's port sector is in the middle of a genuinely large infrastructure cycle. A few numbers make the scale concrete:
Major ports handled a record 915.17 million tonnes of cargo in FY 2025-26, surpassing the annual target and marking 7.06% year-on-year growth.
The Sagarmala programme has taken up around 845 projects worth roughly ₹6.06 lakh crore, with 315 projects worth ₹1.57 lakh crore already completed and another 210 currently under implementation.
Sagarmala 2.0 adds ₹85,482 crore in government support aimed at catalysing a further ₹3.6 lakh crore in investment.
At India Maritime Week 2025, investment pledges worth roughly ₹12 lakh crore were signed, with close to 30% of that directed specifically toward port development and modernisation.
The sector is expected to add 500 to 550 million tonnes per annum of new capacity between FY23 and FY28.
Every one of those projects, whether it's a new berth, a dredging contract, or a cargo terminal upgrade, gets built through a tender that requires bid security and performance security. That's where the choice between an insurance surety bond and a bank guarantee matters directly to a contractor's working capital. At this scale, it matters to a large number of contractors bidding at once, not just a handful of large EPC firms.
Which Indian Ports Are Covered by These Surety Bond Rules?
The rules covered in this piece apply specifically to India's 12 major ports, all corporatized under the Major Port Authorities Act, 2021:
Chennai Port Authority
Cochin Port Authority
Deendayal Port Authority (Kandla)
Jawaharlal Nehru Port Authority (JNPA)
Kolkata Port Authority (Shyama Prasad Mukherjee Port)
Mormugao Port Authority
Mumbai Port Authority
New Mangalore Port Authority
Paradip Port Authority
V.O. Chidambaranar Port Authority (Tuticorin)
Visakhapatnam Port Authority
Kamarajar Port Authority (Ennore)
Together, these 12 ports handle the majority of India's containerised and bulk cargo by volume. In FY 2025-26, Deendayal Port Authority was the single largest by cargo handled, followed by Paradip Port Authority and JNPA. This piece does not cover India's roughly 200 non-major or minor ports, which fall under state government jurisdiction rather than this central mandate. That distinction is covered in more detail in the FAQ section below.
Which Surety Bonds Are Used in Port Tenders?
Before getting into port-specific rules, it's worth being clear on what these instruments actually guarantee.
Bid bond: submitted with a tender, guarantees a winning bidder won't withdraw before signing the contract.
Performance bond: submitted after award, guarantees the contracted work will actually be completed, typically staying valid through the contract period plus a defect liability period.
Both sit under IRDAI's broader Contract Bond category, alongside advance payment bonds and retention money bonds.
Port projects carry one specific wrinkle worth flagging: dredging and marine works often involve longer, weather-dependent execution windows than typical civil contracts. That can affect two things in particular:
How long a performance bond needs to stay valid, since monsoon-driven delays are common and expected rather than exceptional.
How insurers assess the underlying risk, since marine works carry a different technical risk profile than standard civil construction.
What Rules Govern Surety Bond Acceptance at Major Ports?
All 12 major ports were corporatized under the Major Port Authorities Act, 2021, replacing the earlier port trust model. A few structural facts matter here:
Each port's Chairperson and Deputy Chairperson are appointed directly by the Central Government.
This makes major ports central government entities in a fairly unambiguous sense, arguably a cleaner case than some other public bodies with mixed central-state ownership.
As central entities, major ports fall within the scope of GFR 2022's procurement rules and the September 2024 DFS directive that made insurance surety bond acceptance mandatory rather than merely permitted.
This isn't just a theoretical reading of the rules either. A JNPA tender corrigendum dated January 2026 explicitly lists an insurance surety bond as an accepted EMD format, alongside DD, NEFT, RTGS, and bank guarantee, with a note that the format of the insurance surety bond is enclosed with the tender. That's a major port actively implementing the mandate, not just being theoretically bound by it.
Which Port Projects Can Use Insurance Surety Bonds?
Insurance surety bonds apply across most of the major categories of work that get tendered at ports, because each one secures a performance obligation rather than a financial debt.
1. Civil Works and Infrastructure
Berth construction, terminal buildings, and other port infrastructure projects follow the same bid bond and performance bond structure as civil works tenders elsewhere in government procurement.
2. Dredging Contracts
Dredging, whether capital dredging for new capacity or maintenance dredging to keep channels navigable, is a performance obligation like any other contracted work, and qualifies for insurance surety bonds on the same basis.
3. Cargo Handling Operations
Contracts for cargo handling equipment, terminal operations, and related services at ports also fall within the scope of standard bid and performance security requirements.
4. Sagarmala Projects
Projects executed under the Sagarmala programme, including port modernisation, connectivity, and coastal development work, are tendered through the same procurement rules as any other major port contract, so insurance surety bond acceptance applies here too.
Why Do Some Port Tenders Still Require Bank Guarantees?
Given how clearly the mandate applies to major ports, a contractor might reasonably expect every tender to already reflect it. Some still don't, and it's worth understanding why rather than assuming it means insurance surety bonds aren't actually accepted.
Here's the mechanism behind the lag:
Major ports are central government entities, but they operate as corporatized Port Authorities rather than government departments.
GFR is deemed applicable to autonomous bodies and corporate entities like these, with room for exceptions, rather than binding them automatically the way it binds a ministry.
Each port authority has to individually update its own Standard Bidding Documents to reflect the mandate.
A tender that still shows a bank guarantee-only format usually reflects a template that hasn't been revised yet, not a legal decision to exclude insurance surety bonds.
What Documents Are Required for a Port-Tender Surety Bond?
Once you've confirmed a tender accepts insurance surety bonds, or decided to push for one where the template is silent, a few things are worth having ready:
The insurance surety bond itself, issued by an IRDAI-licensed insurer, in the format the tender specifies or, where the format is enclosed as with JNPA's corrigendum, matching that exact format.
Proof the issuing insurer is IRDAI-licensed for surety insurance business specifically, since not every general insurer writes this line of business.
The underlying tender or contract reference number, since insurance surety bonds are issued against a specific project and cannot be reused across multiple tenders.
Your company's financial documentation, whatever the insurer's underwriting process requires, which the insurer uses to assess and price the bond rather than something you submit to the port directly.
A cover note referencing the GFR 2022 amendment and the September 2024 DFS directive, especially useful if the tender's own SBD hasn't been updated yet.
What Should You Do If a Port Rejects Your Surety Bond?
If a specific tender's SBD only mentions a bank guarantee, or a submitted insurance surety bond gets pushed back on, there's a clear path forward rather than simply accepting the rejection.
Confirm your bond meets IRDAI's requirements and is issued by a licensed insurer, before assuming the issue is on the port's side.
Submit formal written communication to the procurement officer, citing the GFR 2022 amendment and the September 2024 DFS directive by name.
Escalate to the port authority's finance head if the procurement officer doesn't resolve it, since the mandate is a finance-department-level policy, not a discretionary call at the tender-desk level.
Reference other ports already implementing it, such as JNPA's own tender documentation, as evidence this isn't a novel or untested request.
Keep a written record of every exchange, since a documented paper trail strengthens any further escalation if needed.
How axiTrust Helps Contractors With Port-Tender Surety Bonds
axiTrust is a technology and consulting platform that helps contractors navigate insurance surety bond requirements across port, infrastructure, and other public sector tenders in India. axiTrust does not issue or underwrite bonds; all underwriting decisions rest with the IRDAI-licensed insurer.
For a contractor bidding on a port tender, this typically means help reading a specific Standard Bidding Document for outdated language, and support structuring a formal escalation if a valid insurance surety bond gets rejected without cause.
Talk to axiTrust before your next port tender submission, to confirm whether your specific bidding document actually reflects the current mandate.
Conclusion
Insurance surety bond acceptance at major ports in India isn't a matter of waiting for the rules to catch up. The legal mandate already applies to all 12 major ports, and at least one, JNPA, is already implementing it in live tenders. Where a specific tender still shows a bank guarantee-only format, that reflects a documentation lag at that particular port authority, not a legal gap. Contractors who understand this distinction, and who come prepared with the right documentation, are in a much stronger position to push back and get the outcome the mandate already entitles them to.
Frequently Asked Questions
Do all 12 major ports accept insurance surety bonds today, or only JNPA?
The legal mandate applies to all 12 major ports equally, since they share the same corporatized structure under the Major Port Authorities Act. JNPA's tender documentation is simply the clearest current evidence that implementation is already underway.
Are non-major ports, like state-owned minor ports, covered by the same mandate?
Not automatically. Non-major ports fall under state governments rather than the Major Port Authorities Act, so acceptance depends on each state's own procurement rules rather than the central GFR and DFS mandate.
Does a longer dredging contract duration affect the cost of a performance bond?
Yes, generally. Premium is priced case by case, and a longer validity period tied to an extended dredging timeline is one factor insurers weigh alongside the contractor's financial strength and track record.
Can a contractor use an insurance surety bond for a Sagarmala project funded partly through a PPP structure?
Generally yes, since the security requirement is tied to the specific tender's bid and performance conditions rather than to how the project is financed overall, though it's worth confirming against the specific tender's wording.
If JNPA already accepts insurance surety bonds, does that set a precedent for other ports?
Not a binding legal precedent, since each port authority manages its own tender documentation, but it is strong practical evidence a contractor can cite when pushing back on an outdated template elsewhere.
Does the port authority or the contractor choose which insurer issues the bond?
The contractor chooses. Any IRDAI-licensed insurer writing surety insurance business can be approached, independent of which insurer, if any, the port authority itself works with for other purposes.
Is a Public Private Partnership terminal operator treated the same as a direct contractor for bond purposes?
Generally yes for the construction and civil components of a PPP terminal project, since those obligations are tendered and secured the same way as any other port works contract, though concession-specific terms should always be checked.
