In Budget 2023-24, capital investment outlay for infrastructure is being increased by 33% to Rs.10 lakh crore (US$ 122 billion), which would be 3.3% of GDP. Infrastructure Finance Secretariat is established to enhance opportunities for private investment in infrastructure that will assist all stakeholders for more private investment in infrastructure.
The Indian government has introduced various formats in order to attract private investments, especially in roads and highways, airports, industrial parks and higher education and skill development sectors. Private Equity-Venture Capital firms invested US$ 46 billion (across 1,261 deals) in Indian companies in 2022.
India’s logistics market is estimated to be US$ 410.75 billion in 2022 and is expected to reach US$ 556.97 billion by 2027, growing at a CAGR of 6.28%. The Ministry of Commerce and Industry, states that the logistics sector accounts for 5% of India's GDP and provides job for nearly 2.2 crore Indians.
FDI in construction development (townships, housing, built-up infrastructure and construction development projects) and construction (infrastructure) activity sectors stood at US$ 26.23 billion and US$ 28.95 billion, respectively, between April 2000-September 2022.
The production of Coal, Electricity, Steel, Cement, Fertilizers, Refinery Products and Natural Gas increased in March 2023.
The combined Index of Eight Core Industries (ICI) increased by 3.6% (provisional) in March 2023.
In March 2023, the overall index of eight core industries stood at 163.6 (provisional) driven by the production of coal, refinery products, fertilizers, steel, electricity, and cement industries.
The cumulative growth rate of ICI during FY23 stood at 7.6% (provisional) as compared to the corresponding period of last year.
In November 2022, NETRA NTPC and the National Centre of Excellence in Carbon Capture & Utilisation (NCoE-CCU), IIT Bombay have launched the assessment of ‘CO2 Geological Storage Potential’ in India at NITI Aayog.
In August 2022, Prime Minister of India inaugurated the nation's first second-generation (2G) ethanol project in Panipat, built at an estimated cost of over Rs. 900 crore (US$ 108.7 million) by Indian Oil Corporation Ltd. (IOCL).
The ‘Green Energy Project’ is an initiative to make Indian Railways environment-friendly by focusing on renewable sources of energy.
In April 2023, the network planning group (NPG) under the PM GatiShakti initiative approved four railway projects related to the doubling of lines between Aurangabad and Ankai in Maharashtra.
In February 2023, the network planning group (NPG) under the PM GatiShakti initiative has approved three railway projects related to doubling of lines between Aurangabad and Ankai in Maharashtra.
In FY23, cement production increased by 11% driven by the government’s push for infrastructure development and increased real estate activity.
As of March 2022, Ministry-wise progress of projects is as follows:
Ministry of Road Transport and Highways has completed 1,41,190 km of National Highways out of the set target of 2,00,000 km for 2024-25.
Department of Telecommunication has created the OFC (Optical Fibre Cable) network of 33,00,997 km against the set target of 50,00,000 km for 2024-25.
Ministry of Petroleum has completed laying of a gas pipeline of 20,000 km out of 34,500 km targeted for the same period.
Ministry of Power has surpassed its target for laying the transmission network of 4,54,200 km.
As on 31 October 2021, 121.47 Mega Watt (MW) solar rooftop capacity has been installed at 1094 railway stations across the country including major railway stations such as Varanasi, New Delhi, Old Delhi, Jaipur, Kolkata, Guwahati, Katra, Secunderabad, Howrah stations, etc.
India has about 63.73 lakh km of road network, which is the second largest in the world.
National Highways play a very important role in the economic and social development of the country by enabling efficient movement of freight and passengers and improving access to market. MoRTH and its implementing agencies have implemented multiple initiatives in last 8 years to augment the capacity of the National Highway infrastructure in India.
In the Union Budget 2023-24, the government has decided to raise the allocation towards the Ministry of Roads by some 36% to Rs. 2.7 lakh crore (US$ 32.6 billion) for 2023-24.
As on 30 November 2022, the total length of National Highways in the country was 1,44,634 km.
National Highways had increased from 91,000 km in 2008 to 1,41,000 km, and the pace of construction had improved from 12 km a day to 37 km in 2022.
In December 2022, Mr. Nitin Gadkari, Minister of Road Transport and Highways inaugurated and laid foundation stone of 8 National Highway projects of 226 km length worth Rs. 1800 crore (US$ 217.4 million) at Igatpuri, Nashik, Maharashtra.
In October 2022, Prime Ministry of India laid the foundation of road and ropeway projects worth more than Rs. 3,400 crore (US$ 410 million) in Mana, Uttarakhand.
A network of 35 Multimodal Logistics Parks is planned to be developed as part of Bharatmala Pariyojana, with a total investment of about Rs. 46,000 crore (US$ 5.5 billion), which once operational, shall be able to handle around 700 million metric tonnes of cargo. Of this, MMLPs at 15 prioritized locations will be developed with a total investment of about Rs. 22,000 Crore (US$ 2.6 billion). Government is working towards the development of a national highway network of 2 lakh kilometres by 2025.
The Indian Railways expects to complete total revenue of Rs. 2,35,000 crore (US$ 28.3 billion) by the end of the fiscal year 2022-23. The overall revenue of Indian Railways at the end of August 2022 was Rs. 95,486.58 crore (US$ 11.5 billion), showing an increase of Rs. 26271.29 crore (US$ 3.1 billion) (38%) over the corresponding period of last year.
As per the Union Budget 2023-24, a capital outlay of Rs. 2.40 lakh crore (US$ 29 billion) has been provided for the Railways, which is the highest ever outlay and about 9 times the outlay made in 2013-14.
For 2023-24:
- Total revenue from traffic is estimated to be Rs. 2,64,600 crore (US$ 32.17 billion), an increase of 9% over the previous year.
- Freight revenue is estimated to be Rs. 1,79,500 crore (US$ 21.82 billion), an increase of 9% over the previous year.
- The passenger revenue is estimated to be Rs. 70,000 crore (US$ 8.51 billion), an increase of 9% over the previous year.
- Vision 2024 has been envisaged to achieve targets of 2024 MT freight loading by 2024.
- Indian Railways has planned to install 1000 MW of solar power plants and about 200 MW of wind plants by 2022-23. Out of this, about 204.82 MW (101.42 MW solar and 103.4MW wind power) renewable power has already been set up.
- As of November 2022, 83% of the total Broad-Gauge network has been electrified. During 2022-23, electrification of 1,973 Route km (2,647 TKM) has been achieved, which is 41% higher as compared to the corresponding period of 2021-22.
- As of November 2022, 83% of the total Broad-Gauge network has been electrified. During 2022-23, electrification of 1,973 Route km (2,647 TKM) has been achieved, which is 41% higher as compared to the corresponding period of 2021-22.
- In addition, 1,161 & 296 km of electrification of double lines & sidings respectively have also been completed till date. Thus, total 4100 TKM have been electrified during 2022-23.
- Indian Railways' Coach production units have ramped up LHB coach production by manufacturing 4,175 LHB coaches in 2022-2023, till 31st January, to ensure convenient and faster mobility.
- As on January 2023, India’s total installed electricity generation capacity stood at 411,694 MW.
- As of February 2023, India’s installed renewable energy capacity has increased 396% in the last 8.5 years and stands at more than 174.53 Giga Watts (including large Hydro), which is about 42.5% of the country’s total capacity.
- As of February 2023, the installed solar energy capacity has increased by 24.4 times in the last 9 years and stands at 63.3 GW.
- The cumulative FDI equity inflow in the Power sector is US$ 16.43 billion during the period April 2000 to September 2022. This constitutes 2.67% of the total FDI inflow received across sectors.
- For 2022-23, the total budgetary allocation towards the Ministry of Power stood at Rs. 16,074.74 crore (US$ 1.9 billion).
- In fiscal year 2022-23, India expected to commission 10 thermal power units of an aggregate 7,010 MW capacity.
- Cumulatively 39 thermal power plants with capacity of 27,550 MW are under construction and will likely take another four years to complete.
- India's power consumption grew by 13.31% on an annual basis to 127.39 billion units (BU) in September 2022 and 11.65% in H1 FY23.
- Thermal power plant load factor or capacity utilization will improve to 63% in FY24, fueled by strong demand growth along with subdued capacity addition in the sector.
- In October 2022, Ministry of Power launched a Scheme for Procurement of Aggregate Power of 4500 MW on competitive basis or five years on Finance, Own and Operate (FOO) basis under B (v) of SHAKTI Policy to help the states that are facing power shortage and also help generation plants to increase their capacities.
India’s logistics market is estimated to reach US$ 410.75 billion in 2022 and is expected to reach US$ 556.97 billion by 2027, growing at a CAGR of 6.28%.
India intends to raise its ranking in the Logistics Performance Index to 25 and bring down the logistics cost from 14% to 8% of GDP, leading to a reduction of approximately 40%, within the next five years.
The logistics sector has attracted investments of Rs. 8,257 crore (US$ 997.4 million) since the beginning of the year 2022.
The growth of third-party logistics is the second-largest incentive causing the rise in demand for warehouses.
The warehousing market in India is expected to grow to Rs. 2243.79 billion (US$ 27 trillion) by 2026, expanding at a CAGR of 10.90%, as per the Warehousing Market in India 2022 Report.
Real estate PE investments registered an increase of 28% in Q1 FY23 as compared to Q1 FY22 driven by improved market sentiments, widespread vaccine coverage, and lifting of lockdown restrictions helped this revival.
2021, the Government’s Bharatmala project focused on establishing 35 multimodal logistics parks throughout the country, with four proposed for development in Maharashtra under the Public-Private Partnership. Such a mix of logistics operations is expected to boost the logistics and warehouse operations in the country.
In addition, with India’s significant policy changes, the interest of foreign investors to increase their footprint in the country by way of investments in the warehousing and logistics sectors has witnessed an uptick.
In 2021, the 3PL (third-party logistics) sector acquired the maximum warehousing space, succeeded by e-commerce. Due to increasing Foreign Direct Investments and relaxed policy reforms, the agriculture and manufacturing sectors will continue to increase 3PL warehousing demand.
FDI in construction development (townships, housing, built-up infrastructure, and construction development projects) and construction (infrastructure) activity sectors stood at US$ 26.23 billion and US$ 28.95 billion, respectively, between April 2000-September 2022.
In January 2023, the Construction arm of Larsen & Toubro has secured orders for its power transmission & distribution and buildings & factories businesses to establish a 112.5MW Solar Power Plant in West Bengal and to construct a 600-bed super specialty hospital at Mumbai, respectively.
In December 2022, BHEL formed a consortium with Titagarh Wagons and is among five entities which have bid for the mega Rs. 58,000 crore (US$ 7 billion) contract to manufacture 200 Vande Bharat trains and maintaining them for the next 35 years.
In December 2022, Mr. Nitin Gadkari, Minister of Road Transport and Highways inaugurated and laid foundation stone of 8 National Highway projects of 226 km length worth Rs. 1800 crore (US$ 217.4 million) at Igatpuri, Nashik, Maharashtra.
In December 2022, Mr. Nitin Gadkari, Minister of Road Transport and Highways inaugurated 7 National Highway projects worth Rs. 2,444 crore (US$ 295 million) with total length of 204 km in Rewa, Madhya Pradesh.
In November 2022, Prime Ministry of India laid the foundation stone of various road projects worth over Rs. 2200 crore (US$ 2.6 billion), namely Medak-Siddipet-Elkathurthy section of NH-765DG; Bodhan-Basar-Bhainsa section of NH-161BB; Sironcha to Mahadevpur Section of NH-353C in Telangana.
In November 2022, Mr. Nitin Gadkari, Minister of Road Transport and Highways inaugurated the construction of 3.8 km long 4-lane elevated structure flyover at Ahmednagar, Maharashtra on National Highway-61 at a cost of Rs. 331.17 crore (US$ 40 million).
In October 2022, Prime Ministry of India laid the foundation of road and ropeway projects worth more than Rs. 3,400 crore (US$ 410 million) in Mana, Uttarakhand.
In October 2022, National Highways Infra Trust (NHAI InvIT), the infrastructure investment trust sponsored by National Highway Authority of India (NHAI) to support Government of India's National Monetization Pipeline, has raised a sum of Rs. 1,430 crore (US$ 172.6 million) from domestic and international investors through placement of its units, for part funding its acquisition of three additional road projects from NHAI.
As many as 52 critical infrastructure gap projects identified by MoPSW for connecting maritime ports and IWTs (Inland Waterway Terminals) to be taken up under PM Gati Shakti National Master Plan. Currently, DPR of total 56 projects (including 11 IWT projects) under this category with total of 1215 km length are under bidding stage for the feasibility assessment of these projects, which is being carried out by NHAI.
A capital outlay of Rs 2.6 lakh crore (US$ 31.61 billion) has been provided for the Railways in 2023-24, which is the highest ever outlay and about 9 times the outlay made in 2013- 14.
Infrastructure Finance Secretariat is being established to enhance opportunities for private investment in infrastructure that will assist all stakeholders for more private investment in infrastructure, including railways, roads, urban infrastructure, and power.
The Government has decided to continue the 50-year interest free loan to state governments for one more year to spur investment in infrastructure and to incentivize them for complementary policy actions, with a significantly enhanced outlay of Rs. 1.3 lakh crore (US$16 billion).
A capital outlay of Rs. 2.40 lakh crore (US$ 29 billion) has been provided for the Railways, which is the highest ever outlay and about 9 times the outlay made in 2013- 14.
100 critical transport infrastructure projects, for last and first mile connectivity for ports, coal, steel, fertilizer, and food grains sectors have been identified and will be taken up on priority with investment of Rs. 75,000 crore (US$ 9 billion), including Rs. 15,000 crore (US$ 1.8 billion) from private sources.
50 additional airports, heliports, water aerodromes and advance landing grounds will be revived for improving regional air connectivity.
An Urban Infrastructure Development Fund (UIDF) will be established through use of priority sector lending shortfall, which will be managed by the National Housing Bank, and will be used by public agencies to create urban infrastructure in Tier 2 and Tier 3 cities.
States will be encouraged to leverage resources from the grants of the 15th Finance Commission, as well as existing schemes, to adopt appropriate user charges while accessing the UIDF.
For realizing the vision of “Make A-I in India and Make A-I work for India”, three centres of excellence for Artificial Intelligence will be set-up in top educational institutions.
The Digital Public infrastructure for agriculture will be built as an open source, open standard and inter operable public good that will enable inclusive, farmer-centric solutions through relevant information services for crop planning and health, improved access to farm inputs, credit, and insurance, help for crop estimation, market intelligence, and support for growth of agri-tech industry and start-ups.
157 new nursing colleges will be established in co-location with the existing 157 medical colleges established since 2014.
National Digital Library for Children and Adolescents will be set-up for facilitating availability of quality books across geographies, languages, genres and levels, and device agnostic accessibility. States will be encouraged to set up physical libraries for them at panchayat and ward levels and provide infrastructure for accessing the National Digital Library resources.
Skill India International Centres to be set up across different States to skill youth for international opportunities.
Central Processing Centre to be setup for faster response to companies through centralized handling of various forms filed with field offices under the Companies Act.
District Institutes of Education and Training to be developed as vibrant institutes of excellence for Teachers’ Training.
States will be encouraged to set up a Unity Mall in their state capital or most prominent tourism centre or the financial capital for promotion and sale of their own ODOPs (one district, one product), GI products and other handicraft products, and for providing space for such products of all other States.
Since 2016-’17, the budget for the Pradhan Mantri Awas Yojana, the flagship housing scheme of the government, has increased 280% from Rs. 20,936 crore (US$ 2.5 billion) in the revised estimates of 2016-’17 to Rs. 79,590 crore (US$ 9.6 billion) in the latest 2023-’24 budget.
The Awas Yojana budget estimate for 2023-’24 constitutes an allocation of Rs. 25,103 crore (US$ 3 billion) to Pradhan Mantri Awas Yojana-Urban and Rs. 54,487 crore (US$ 6.5 billion) to Pradhan Mantri Awas Yojana-Gramin.
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 is expected to become the third-largest construction market globally by 2022. India plans to spend US$ 1.4 trillion on infrastructure projects through the National Infrastructure Pipeline (NIP), from 2019 to 2023, to ensure sustainable development in the country.
The infrastructure sector has seen some major developments, investments, and support from the government in the recent past.
In September 2022, the government approved rail-cum-road bridge across Brahmaputra River near the existing Saraighat bridge at Guwahati at the cost of Rs. 996.75 crore (US$ 122.27 million) which will be shared by NHAI & Ministry of Railways.
In 2022-23 (until October 20, 2022), passenger earnings stood at Rs. 33,838.16 crore (US$ 4.15 billion).
In August 2022, Mr. Nitin Gadkari, Minister of Road Transport and Highways laid foundation stone of six NH projects worth Rs. 2,300 crore (US$ 287.89 million) in Indore, Madhya Pradesh.
In FY23, the combined index of eight core industries stood at 146.5 driven by the production of coal, refinery products, fertilizers, steel, electricity, and cement industries.
FDI in construction development (townships, housing, built-up infrastructure, and construction development projects) and construction (infrastructure) activity sectors stood at US$ 26.22 billion and US$ 28.64 billion, respectively, between April 2000-June 2022.
Budget 2023-24 highlights:
For FY24, the budgetary allocation for the Ministry of Development of North-eastern Region stood at Rs. 5892 crore (US$ 711 million).
Rs. 2,200 crore (US$ 265.5 million) allocated for Prime Ministers Development Initiative for North-East (PMDevINE) Scheme.
Rs. 2491 crore (US$ 300.6 million) was allocated to Northeast Special Infrastructure Development Scheme (NESIDS).
Indian logistics market is estimated to touch US$ 320 billion by 2025, according to a report by Aviral Consulting OPC Pvt Ltd. in association with Indian Chamber of Commerce.
In June 2022 Mr. Nitin Gadkari, Minister of Road Transport and Highways inaugurated 15 National Highway projects in Patna and Hajipur in Bihar worth Rs. 13,585 crore (US$ 1.75 billion).
A multi-crore inland canal transit project on Mizoram's Khawthlangtuipui-Tuichawng rivers would be constructed to serve the demands of the southern regions.
In November 2021, the Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles, Mr. Piyush Goyal called out to reduce the logistics cost by 5% over the next five years to transform the sector for further growth so that it contributes to make India a US$ 5-trillion economy by 2025.
The initiative ‘Infrastructure for Resilient Island States’ (launched in November 2021) will give India a huge opportunity to contribute to the betterment of other vulnerable countries in the world.
In November 2021, India, the US, Israel and the UAE established a new quadrilateral economic forum to focus on infrastructure development projects in the region and strengthen bilateral co-operation.
In November 2021, the Asian Development Bank (ADB) has approved a US$ 250 million loan to support development of the National Industrial Corridor Development Programme (NICDP). This is a part of the US$ 500-million loan to build 11 industrial corridors bridging 17 states.
By 2024, the Ministry of Road Transport and Highways aims to build 60,000 kms of world-class national highways at a rate of 40 kms each day.
India has set a target of road construction of worth Rs. 15 lakh crore (US$ 206 billion) in the next two years.
The Mega Investment Textiles Parks (MITRA) scheme was launched to establish world-class infrastructure in the textile sector and establish seven textile parks over three years.
The future outlook of the infrastructure sector looks on track with pandemic easing out.
The infrastructure sector has become the biggest focus area for the Government of India. India plans to spend US$ 1.4 trillion on infrastructure during 2019-23 to have a sustainable development of the country. India and Japan have partnered together for infrastructure development in the north-eastern states of India, and are also establishing an India-Japan Coordination Forum for Development of Northeast to carry out important infrastructure projects for the area.
