By S&S Co. Advocates & Solicitors · Published 12 January 2026 · Informational content, not legal advice. See our disclaimer
Why These Clauses Exist
PPP concession agreements are typically signed for periods of fifteen to thirty years, during which the regulatory and taxation environment can shift substantially. Change in law and change in scope clauses are risk-allocation mechanisms that address two distinct categories of post-signing disruption: changes imposed by government action outside the parties' control (change in law), and changes to the project's physical or service scope requested by the authority (change in scope).
Change in Law: What Typically Qualifies
A standard change in law clause covers the enactment, amendment or repeal of a statute, rule, regulation or government policy that was not in force, or not reasonably foreseeable, as of the concession agreement's date, and which has a demonstrable adverse (or, in some formulations, beneficial) financial impact on the concessionaire. Common examples in Indian infrastructure contracts include new GST notifications affecting the tax treatment of concession revenues, revised environmental or safety standards requiring capital expenditure, and new labour welfare cess obligations.
Most Indian concession agreements distinguish between a change in law occurring before commercial operations date (typically relieved through extension of time and cost compensation) and one occurring during the operations period (typically relieved through a tariff or annuity adjustment, or a lump-sum compensation payment), reflecting the different risk profile at each project stage.
Change in Scope: The Authority-Initiated Variation
Change in scope clauses address a different scenario: the authority itself directs an addition, deletion or modification to the agreed project scope: for instance, an additional interchange on a highway concession, or an expanded service area under a water supply PPP. These clauses typically require the authority to issue a formal change of scope order, following which the concession period, capital cost base and, where relevant, the annuity or tariff are adjusted through a pre-agreed mechanism or an independent engineer's assessment.
A recurring point of dispute is whether a particular authority instruction genuinely constitutes a 'change of scope' order under the clause, or is instead an ordinary exercise of the authority's monitoring and quality-control rights under the concession agreement, for which no separate compensation is due. Concessionaires should insist on a written change of scope order before commencing any work claimed to fall outside the original scope.
Building the Evidentiary Record
Claims under both clauses live or die on contemporaneous documentation: the specific statutory or policy change relied upon (with its date of notification), a clear computation methodology tied to the concession agreement's compensation formula, and correspondence establishing that the authority was notified of the change and its impact within any contractually prescribed notice period. A change in law or change in scope claim raised for the first time years after the triggering event, without contemporaneous notice, is significantly harder to sustain.
Frequently Asked Questions
Is every tax change automatically a 'change in law' event?
Not necessarily. Most concession agreements require the change to be one not reasonably foreseeable as of the agreement date and to have a demonstrable, quantifiable financial impact: a routine periodic revision within an existing tax regime may not qualify, depending on the specific clause wording.
Can an authority direct a change of scope without agreeing compensation upfront?
Typically yes, procedurally: the authority can issue a change of scope order, with compensation determined afterward through the agreed mechanism or an independent engineer, but the concessionaire should ensure the order itself is in writing and referenced to the change of scope clause before proceeding.
Does a change in law claim survive if notice was given late?
It depends on the specific clause: some concession agreements treat the notice period as directory rather than mandatory, while others make timely notice a precondition to the claim. The safer course is always to notify within the stipulated window.
References & Further Reading
This article references the following statutory provisions. Readers should always verify current rules, fees and timelines against the applicable statute and rules as amended, since these are revised from time to time.
- Model Concession Agreements published by NHAI and other central PPP authorities, change in law and change in scope clauses.
- Guidelines for Formulation, Appraisal and Approval of PPP Projects, Department of Economic Affairs, Ministry of Finance.