India’s infrastructure-led economic growth has increased the importance of surety insurance as an alternative to traditional bank guarantees, helping improve contractor liquidity, project execution, and risk management. Mature markets such as the US and Europe demonstrate that successful surety ecosystems rely on strong underwriting discipline, financial due diligence, indemnity frameworks, and transparent contractor performance data. While the IRDAI’s regulatory framework has created growth opportunities for surety bonds in India, the market continues to face structural challenges including limited underwriting expertise, lack of historical data, and low financial transparency among contractors. The study also highlights the importance of pricing discipline to avoid a “race to the bottom,” drawing lessons from failure cases in developed markets where weak underwriting led to significant losses. With rising infrastructure investments and increasing policy support, surety bonds have the potential to become a key instrument in strengthening India’s infrastructure and financial risk management ecosystem.