NEW DELHI, July 17 -- The road transport ministry has launched a crackdown on the ballooning costs of legal disputes over highway projects as the central government aims to make the country's premier road-building agency debt-free by 2030.

The ministry has decided to strictly cap arbitrator fees and mandate tiered payouts as it aims to clear Rs.1.17 trillion of pending construction claims that have choked the National Highways Authority of India (NHAI) and strained the federal budget.

As part of this push, the ministry has asked state and municipal road-building authorities to strictly follow the rules for calculating arbitrator fees after noting they had been flouted in some cases, according to correspondence reviewed by Mint and a per...