Investigation | BharatNet Phase-3 in Gujarat: Administrative Failure or Institutional Inertia?
From ₹1,200 Crore to ₹4,700 Crore: How Did Higher Turnover Thresholds, Stringent Technical Experience Requirements and a ₹50-Crore EMD Restrict Competition?
By Abhishek Pandey | Gandhinagar
Eligibility criteria in public procurement do more than determine which companies can bid for a contract. They shape the level of competition and, ultimately, the choices available to the government when selecting a contractor. Setting these requirements requires a careful balance between a bidder’s financial capacity, technical experience and the scale and risks of the project.
The revised tender issued by Gujarat Fibre Grid Network Limited (GFGNL) in 2026 for the Amended BharatNet Programme (ABP), Phase-3, raises questions about how that balance was struck. In the first tender, issued in 2025, the average annual turnover requirement for a single package was approximately ₹1,200 crore. The revised Request for Proposal (RFP) raised that threshold to ₹4,700 crore. It also tightened the requirements for optical fibre cable (OFC) construction and operations and maintenance experience, while increasing the earnest money deposit (EMD) required to participate in the bidding process.
Taken together, these changes have consequences beyond the financial and technical assessment of bidders. They determine how many companies can qualify for a publicly funded infrastructure contract. The central question is what financial and technical assessments informed the revisions, and whether their likely impact on competition was adequately considered.
1. A Nearly Fourfold Increase in the Turnover Threshold
An average annual turnover requirement is intended to establish whether a bidder has the financial capacity to execute a contract. The threshold, however, must be proportionate to the project’s cost, scope and financial risks.
A comparison of the 2025 and 2026 tender documents for BharatNet Phase-3 in Gujarat reveals a substantial change in the financial eligibility criteria.
The 2025 tender: The original tender prescribed an average annual turnover of approximately ₹1,200 crore for a company bidding for a single package.
The revised 2026 RFP: The new tender raised the requirement to an average annual turnover of ₹4,700 crore over the preceding three financial years.
The threshold thus increased nearly fourfold. This revision came as the project was structured as a single, large package rather than being divided into separate zones or packages.
What assessment justified the increase from ₹1,200 crore to ₹4,700 crore? Was the revision based on an evaluation of the project’s financial risks, scope of work or payment structure? Where in the tender records is the financial rationale for such a substantial increase documented?
2. Finance Ministry Guidelines and the ₹4,700-Crore Test
The Ministry of Finance’s Manual for Procurement of Works treats the relationship between the estimated contract value and a bidder’s average annual turnover as an important consideration in determining financial eligibility. A range of 30 to 50 per cent is generally cited in this context. The objective is to assess a bidder’s financial capacity without unnecessarily restricting competition.
Documents relating to Gujarat’s BharatNet Phase-3 project refer to project costs ranging from approximately ₹2,000 crore to ₹5,631 crore. Against this backdrop, the relationship between the project’s estimated value and the ₹4,700-crore turnover requirement warrants scrutiny.
Measured against the total project cost of ₹5,631 crore, the prescribed turnover threshold amounts to approximately 83.5 per cent. This requires bidders to demonstrate average annual business turnover approaching the project’s entire estimated cost.
The issue is not whether bidders should demonstrate adequate financial capacity. It is how GFGNL arrived at the ₹4,700-crore threshold. Were the project cost, payment schedule, execution risks and the contractor’s actual financial obligations assessed separately? Does the tender record contain the analysis underpinning this requirement?
When an annual turnover threshold approaches the total estimated value of a project, it does more than test financial strength. It can also determine how many companies remain eligible to compete.
3. Technical Experience and EMD: Two More Barriers to Entry
The increase in the turnover threshold was accompanied by revisions to technical experience requirements and the financial commitment bidders must make to participate in the tender.
OFC construction experience: The first tender in 2025 required experience in constructing approximately 8,000 kilometres of optical fibre cable network, or executing work valued at ₹500 crore. The revised 2026 RFP raised the requirement to 30,000 kilometres of network construction or work valued at ₹1,200 crore. It also stipulated that qualifying experience must be demonstrated through no more than three work orders.
Operations and maintenance experience: The eligibility criteria for the operation and maintenance (O&M) of OFC networks were also revised. The amended documents prescribe a benchmark of 30,000 Year-Km. Figures of 85,000 and 57,000 kilometres also appear in different sections of the documents. The basis of calculation and the relationship between these benchmarks require clarification.
₹50-crore EMD: The earnest money deposit required to participate in the tender increased from ₹10 crore to ₹50 crore. Requiring bidders to furnish such a substantial amount through a bank guarantee or an insurance surety bond has direct implications for their banking limits and available financial resources. For mid-sized companies in particular, securing a non-fund-based banking facility of this scale can become a significant constraint.
The revised RFP therefore raises the threshold for entry on three fronts: financial turnover, technical experience and the banking commitment required to participate.
What financial and technical assessments supported these revisions? What project-specific evaluation justified increasing the construction experience requirement from 8,000 kilometres to 30,000 kilometres and raising the EMD fivefold?
4. From Nine Bidders to Two or Three Companies: The Competition Question
The potential impact of the revised conditions becomes clearer when the two tender processes are examined together.
The 2025 tender: Nine companies participated in the first bidding process:
- Dinesh Engineers Limited
- Fastway Transmissions Private Limited
- GTPL Hathway Limited
- L&T Technology Services Limited
- L C Infra Projects Private Limited
- NCC Limited
- Polycab India Limited
- Pratap Technocrats Private Limited
- STL Networks Limited
The 2026 tender: The revised requirements included a ₹4,700-crore turnover threshold, 30,000-kilometre OFC construction experience and a ₹50-crore EMD. Concerns subsequently emerged that the pool of eligible bidders had narrowed considerably. According to industry representatives and information available to this investigation, only a small number of companies may be able to meet all these requirements independently.
Representations submitted to the Chief Minister’s Office (CMO) and the Prime Minister’s Office (PMO) also raised concerns that the revised eligibility criteria could restrict competition. The complaints argued that the new benchmarks were likely to leave only two or three large infrastructure companies, principally Larsen & Toubro (L&T) and NCC Limited, in a position to qualify.
The implications extend beyond the number of companies able to participate. Competition is central to price discovery in public procurement. A narrower field of bidders can reduce competitive pressure and leave the government with fewer options for comparing costs and contractual terms.
Did GFGNL assess the technical and financial capabilities of companies operating in the market before preparing the revised RFP? Did it establish how many companies would meet the new requirements? Was the likely impact of the revised criteria on competition evaluated?
5. Eligibility or a Restriction on Competition in a Public Project?
BharatNet Phase-3 aims to extend high-capacity digital connectivity to gram panchayats across Gujarat. Given the project’s scale and estimated cost of ₹5,631 crore, selecting a contractor with adequate technical and financial capacity is essential. Equally important is ensuring that eligibility conditions reflect the project’s actual requirements without unnecessarily restricting competition.
The first tender in 2025 attracted nine companies. The revised RFP issued in 2026 raised the turnover threshold nearly fourfold, increased the OFC construction experience requirement from 8,000 kilometres to 30,000 kilometres and raised the EMD from ₹10 crore to ₹50 crore.
At what level were these changes approved? Were they supported by detailed financial and technical assessments? Was the likely number of eligible bidders evaluated? Was the proportionality of these requirements to the project’s actual needs examined?
For a public project worth ₹5,631 crore, these questions go to the heart of procurement transparency, competitive bidding and the effective use of public funds.
Key Questions That Demand Answers
- What financial and project-specific assessment did GFGNL undertake before fixing the average annual turnover requirement at ₹4,700 crore?
- On what technical and financial grounds were the ₹50-crore EMD, the 30,000-kilometre OFC construction experience requirement and the restriction to a maximum of three work orders prescribed?
- Why were the eligibility conditions revised so substantially after nine companies had participated in the first tender in 2025?
- Did GFGNL assess how the revised criteria would affect the pool of companies eligible to compete?
- Are the financial and technical requirements for a single-package project consistent with the core objectives of public procurement: transparency, competition and value for money?
In the Next Episode: BSNL’s Objections and the State Administration’s Response
The next episode will examine the objections raised by BSNL, the Central Project Management Consultant (PMC) for BharatNet Phase-3, concerning the tender conditions. It will also investigate, through documentary records, the basis on which the state administration proceeded with the revised procurement process despite these objections and warnings.
The investigation continues...
Project Reference: Amended BharatNet Programme (ABP), Phase-3, Gujarat.
Original Tender Reference: GFGNL/GFG/e-file/263/2025/0006.
Revised Tender Reference: GFGNL/GFG/e-file/263/2026/0070.
ગુજરાતીમાં વાંચો: Episode 5: કડક શરતો, મર્યાદિત સ્પર્ધા! કોને ફાયદો?
