Increased impetus to develop infrastructure in the country is attracting both domestic and international players. Private sector is emerging as a key player across various infrastructure segments, ranging from roads and communications to power and airports. In order to boost the construction of buildings in the country, the Government of India has decided to come up with a single window clearance facility to accord speedy approval of construction projects. India ranked second in the 2019 Agility Emerging Markets Logistics Index.
In FY20, the cumulative growth of the eight core industries stood at 0.6 per cent. In the road’s sector, the Government’s policy to increase private sector participation has proved to be a boon for the infrastructure industry as many private players are entering the business through the public-private partnership (PPP) model. India is expected to become the third largest construction market globally by 2022. India plans to spend US$ 1.4 trillion on infrastructure during 2019-23 to have a sustainable development of the country.
Large investments in infrastructure has provided momentum to the overall PE (Private Equity)/VC (Venture Capital) investment in India, recording an all-time high investment of US$ 14.5 billion in 2019. All the villages in India was to be connected through a road network by 2019 under the Pradhan Mantri Gram Sadak Yojana (PMGSY). Also, to upgrade 1,25,000 kms of road length over the next five years, an estimated cost of Rs 80,250 crore (US$ 12.03 billion) is envisaged under Pradhan Mantri Gram Sadak Yojana-III (PMGSY). Road building in India has become the second cheapest in Asia.
As per Union budget 2020-21, Rs 72,216 crore (US$ 10.33 billion) has been allocated to the Ministry of Railways. The Government is also working on improving the country’s energy infrastructure and investment opportunities worth Rs 21 lakh crore (US$ 300 billion) will be available in the sector in the coming 10 years.
Highway construction in India increased at 20.57 per cent CAGR during FY14-FY19. In FY19, 10,855 km of highways were constructed. NHAI (National highways Authority of India) will be able to generate revenue of Rs 1 lakh crore (US$ 14.31 billion) from toll and wayside amenities during 2019-23. In April 2020, the Government set a target of constructing roads worth Rs 15 lakh crore (US$ 212.80 billion) in the next two years.
The infrastructure sector has become the biggest focus area for the Government of India. In Union Budget 2020-21, the Government has announced Rs 91.82 billion (US$ 13.14 billion) for road transport and highways. For FY21, budgetary allocation to the Ministry of Development of North Eastern Region has been increased to Rs 3,049 crore (US$ 429.25 million) from Rs 2,670 crore (US$ 376.16 million) in FY20.
According to the Department for Promotion of Industry and Internal Trade (DPIIT), construction development and infrastructure activities sectors received FDI inflow amounting to US$ 25.66 billion and US$ 16.84 billion, respectively, between April 2000-March 2020.
In 2019, the sector witnessed seven mergers and acquisition (M&A) deals worth US$ 1,461 million.