The Indian construction equipment industry's revenues are estimated to reach US$ 22.7 billion by 2020.

Infrastructure Sector in India

Latest update: September, 2015

Infrastructure development is a priority for Government

•Infrastructure is a priority for the government’s economic policy; funding from private as well as public sectors is set to increase sharply in the near term 

•Infrastructure’s total share in bank funding rose from 3.74 per cent in 2002 to about 10.40 per cent in 2015 

• It is estimated that total spending on infrastructure would reach US$ 19 billion during FY12-17 


Healthy growth in Indian construction equipment revenues

•The construction equipment industry’s revenues reached to US$ 6.5 billion by FY14

•Revenues increased at a CAGR of 8.38 per cent during FY 2007-14 and is further estimated to rise at a CAGR of 13.1 per cent on rapid infrastructure development undertaken by the Government of India

•On the other hand, global construction equipment industry is expected to grow at a CAGR of 7.7 per cent during FY 2012-16


Last Updated: September, 2015



Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling India’s overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country.

Infrastructure sector includes power, bridges, dams, roads and urban infrastructure development.

Market Size

The Indian power sector has an investment potential of US$ 250 billion in the next 4-5 years, providing immense opportunities in power generation, distribution, transmission and equipment, according to Mr Piyush Goyal, Union minister of coal, power and renewable energy.

The total approximate earnings of Indian Railways on originating basis during FY 2014-15 were Rs 1,57,880 crore (US$ 23.76 billion) compared with Rs 1,40,761 crore (US$ 21.19 billion) in FY 2013-14, registering an increase of 12.2 per cent. The total approximate earnings from goods during FY 2014-15 were Rs 1,07,074 crore (US$ 16.17 billion) compared with Rs 93,476 crore (US$ 14.07 billion) in FY 2014-15, an increase of 14.5 per cent.

The number of export and import containers moving through major ports in India expanded 7.34 percent year-over-year from April to October 2014, as a result of the Modi Government’s efforts to make port development a major priority.

Foreign direct investment (FDI) received in construction development sector from April 2000 to June 2015 stood at US$ 24.09 billion, according to the Department of Industrial Policy and Promotion (DIPP).

Recent Developments

India is witnessing significant interest from international investors in the infrastructure space. Many Spanish companies are keen on collaborating with India on infrastructure, high speed trains, renewable energy and developing smart cities

  • The Government of India has earmarked Rs 50,000 crore (US$ 7.53 billion) to develop 100 smart cities across the country. The Government released its list of 98 cities for the smart cities project in August 2015.
  • The Government of India has unveiled plans to invest US$ 137 billion in its rail network over the next five years, heralding Prime Minister Narendra Modi's aggressive approach to building infrastructure needed to unlock faster economic growth.
  • The Government of India has announced highway projects worth US$ 93 billion, which include government flagship National Highways Building Project (NHDP) with total investment of US$ 45 billion over next three years.
  • International Finance Corporation (IFC), part of The World Bank group, plans to invest at least US$ 700 million in existing transport and logistics infrastructure projects in India.
  • The World Bank has approved a US$ 650 million debt funding for a part of the eastern arm of the Dedicated Freight Corridor (DFC) project in India.
  • Andhra Pradesh-based regional airline Air Costa will add eight aircrafts before 2016 to its existing four aircrafts. The airline, which reported an operating profit in the month of December, 2014 for the first time, said that it will be a pan-India player by the end of 2015
  • Government-owned Kolkata Port Trust has signed an agreement with the West Bengal government to set up a new port at Sagar Island in South 24 Parganas district. The Sagar Island port is estimated to cost Rs 11,900 crore (US$ 1.79 billion) and will be the first port to be built by the Union government in 14 years.
  • Indostar Capital Finance Limited and Reliance Capital Limited have invested Rs 200 crore (US$ 30.10 million) in Alliance group, a real estate company. The consortium of institutions has invested in the holding company of Alliance group, Alliance Infrastructure Projects Private Limited.

Government Initiatives

The Government of India is taking every possible initiative to boost the infrastructure sector. Some of the steps taken in the recent past are being discussed hereafter.

  • The Reserve Bank of India (RBI) has notified 100 per cent foreign direct investment (FDI) under automatic route in the construction development sector. The new limit came into effect in December 2014.
  • The Government of India has relaxed rules for FDI in the construction sector by reducing minimum built-up area as well as capital requirement. It has also liberalised the exit norms. In fact, the Cabinet has also approved the proposal to amend the FDI policy.
  • In the Budget 2015-16, the capital outlays for roads, and railways have been increased by Rs 140.3 billion (US$ 2.11 billion) and Rs 100.5 billion (US$ 1.51 billion) respectively.
  • India and the US have signed a memorandum of understanding (MoU) in order to establish Infrastructure Collaboration Platform. The document showcases the relationship between both the Governments which intend to facilitate US industry participation in Indian infrastructure projects to improve the bilateral relationship and benefit both economies. The MoU’s scope envisages efforts in the areas of Urban Development, Commerce and Industry, Railways, Road Transport and Highways, Micro Small and Medium Enterprises, Power, New & Renewable Energy, among others.

Road Ahead

Indian port sector is poised to mark great progress in the years to come. It is forecasted that by the end of 2017 port traffic will amount to 943.06 MT for India’s major ports and 815.20 MT for its minor ports.

Along with that, Indian aviation market is expected to become the third largest across the globe by 2020, according to industry estimates. The sector is projected to handle 336 million domestic and 85 million international passengers with projected investment to the tune of US$ 120 billion. Indian Aviation Industry, which currently accounts for 1.5 per cent of the gross domestic product (GDP), has been instrumental in the overall economic development of the country. Given the huge gap between potential and current air travel penetration in India, the prospects and possibilities of growth of Indian aviation market are enormous.

Exchange Rate Used: INR 1 = US$ 0.01505 as on September 15, 2015

References: Media Reports, Press Releases, Press Information Bureau, Department of Industrial Policy and promotion (DIPP).

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.


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