Will Adani Build Bengaluru's Mega Tunnel Road? Karnataka Cabinet Set To Take Final Call

The Karnataka Cabinet is expected to take a crucial call on awarding the Bengaluru tunnel road project to Adani Enterprises, after officials escalated the file because the company’s bid crossed approved cost limits. The decision comes at a time of political churn and debate over major infrastructure contracts.

The proposal for the 16.75-km tunnel between Central Silk Board and Hebbal, planned to reduce heavy traffic in south and north Bengaluru, was sent by Bengaluru Smart Infrastructure Ltd (B-SMILE) to the state government on May 29. On the same day, Governor Thawar Chand Gehlot accepted former Chief Minister Siddaramaiah’s resignation.

Bengaluru tunnel road project and Adani Enterprises bid

According to a report by Moneycontrol, financial bids for the Bengaluru tunnel road project were opened in December 2025, when Adani Enterprises quoted the lowest prices for both construction packages. Despite this, the contract has not been finalised, and officials say Cabinet clearance is mandatory due to cost escalation.

The Karnataka government had earlier pegged the tunnel road cost at Rs 17,698 crore. Adani Enterprises submitted a combined offer worth Rs 22,267 crore, which is about Rs 4,600 crore higher than the official estimate. This variation breaches the permitted margin over the sanctioned project cost, triggering the need for Cabinet scrutiny.

Bengaluru tunnel road project, Adani Enterprises and Cabinet decision

A senior B-SMILE official told Moneycontrol that the file has already moved from the implementing agency to the government. "The file has already been sent to the government, and the Cabinet will take the final decision. The bid amount is higher than what was originally estimated. Since it exceeds the prescribed limits, cabinet approval is required," a senior B-SMILE official told Moneycontrol.

The award decision carries political weight because Congress leader Rahul Gandhi has repeatedly attacked the Adani Group, accusing the Narendra Modi-led Union government of giving the conglomerate undue advantage and criticising several projects linked to the group. The Adani Group and the Centre have consistently rejected those charges.

Bengaluru tunnel road project, Adani Enterprises and BOOT model

Despite criticism from some urban planners and civil society groups, the tunnel has strong backing from D.K. Shivakumar. While serving as Bengaluru Development Minister, Shivakumar often supported the project and argued for its necessity to ease congestion, even as opponents raised questions about cost, design and environmental impact.

Officials quoted by Moneycontrol said the Bengaluru tunnel road project is planned under a modified Build, Own, Operate and Transfer model. The Karnataka government is expected to provide viability gap funding of 40 per cent of the total project outlay, with the private concessionaire recouping investment over a 30-year concession window.

The scheme will use a variable concession format, which officials described as a first for Karnataka at this financial scale. One official told Moneycontrol, "Unlike a conventional Engineering, Procurement and Construction contract, this model allows the concessionaire to recover its investment over a longer concession period. Since this is the first time we are attempting such a structure, considerable due diligence is required before a final decision is taken," an official told Moneycontrol.

Bengaluru tunnel road project, Adani Enterprises and presence in Karnataka

The Adani Group already has a significant business presence in Karnataka through investments in renewable energy, cement and food processing. The group operates the Udupi thermal power plant and manages Mangaluru International Airport, adding another layer of attention to any decision that may hand the Bengaluru tunnel road project to Adani Enterprises.