The National Highway Authority of India (NHAI) plans to award Rs150bn ($2.8bn) worth of road contracts to small construction firms on a cash or engineering, procurement, construction (EPC) basis.

NHAI will construct 2,800km of road into a two-lane network, which is only a third of the agency’s current fiscal year target of 8,800km.

NHAI member-finance JN Singh was quoted as saying: "As most of the two-lane roads lack heavy traffic, the projects would be awarded on EPC or cash contract basis rather than on build-operate-transfer (BOT) or build, own, operate and transfer (BOOT) basis."

The government agency will fund the construction project, using capital raised from tax-free infrastructure bonds and has also received an additional Rs100bn ($1.87bn) in bonds this fiscal year.

NHAI, which had raised Rs100bn ($1.87bn) through bonds in 2011, is expecting to attract many small construction firms because the contracts are EPC or cash-based, which will result only in marginal gains.

NHAI is a government-backed autonomous agency that is responsible for the management of a network of over 60,000km of national highways in the country.