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Infrastructure Sector in India
GOI allocated Rs. 111 lakh crore (US$1.4 trillion) under the NIP for FY2019-25. Sectors such as energy, roads, urban and railways amount to ~71% of the projected infrastructure investments in India.

Infrastructure Sector in India

    Last updated on Mar, 22 2021

Indian Infrastructure Sector in India Industry Report  (Size: 674.71 KB ) (January, 2021)


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. India was ranked 44 out of 167 countries in World Bank's Logistics Performance Index (LPI) 2018. India ranked second in the 2019 Agility Emerging Markets Logistics Index.

Market Size

According to the Department for Promotion of Industry and Internal Trade (DPIIT), FDIs in the construction development sector (townships, housing, built up infrastructure and construction development projects) and construction (infrastructure) activities stood at US$ 25.78 billion and US$ 17.22 billion, respectively, between April 2000 and September 2020. The logistics sector in India is growing at a CAGR of 10.5% annually and is expected to reach US$ 215 billion in 2020.


India requires investment worth Rs. 50 trillion (US$ 777.73 billion) in infrastructure by 2022 to have sustainable development in the country. India is witnessing significant interest from international investors in the infrastructure space. Some of the key investments made in the sector are listed below:

  • Large investment in infrastructure has seen momentum as overall PE (private equity)/VC (venture capital) investment touched an all-time high of US$ 14.5 billion in 2019.
  • The largest deal was done by Abu Dhabi Investment Authority, Public Sector Pension Investment Board and National Investment and Infrastructure Fund as they made investment worth US$ 1.1 billion in GVK Airport Holdings Ltd.
  • In FY20, the cumulative growth of eight core industries stood at 0.6%.
  • In December 2020, Oil Minister, Mr. Dharmendra Pradhan stated that as the government pushes for increased use of cleaner fuels to reduce carbon emissions, India is likely to see a US$ 66 billion investment in the construction of gas infrastructure. The government is planning to increase the share of natural gas in its energy portfolio from the existing 6.3% to 15% by 2030.
  • In December 2020, Mr. Nitin Gadkari, the Union Minister for Road Transport, Highways and MSMEs, inaugurated and laid the foundation stones for 15 Nagaland National Highway (NH) projects. These NH projects have a length of ~266 kms, including costs of ~Rs. 4127 crore (US$ 560.45 million).
  • In November 2020, the National High Speed Rail Corporation Limited (NHSRCL) signed a contract with Larsen & Toubro (L&T) to design and construct a 237 kms long viaduct between Vapi (Maharashtra-Gujarat border village of Zaroli) and Vadodara (Gujarat). This high-speed rail corridor implementation agreement is the biggest infrastructure contract for construction and design in the country.
  • In November 2020, the Union Cabinet approved Rs. 2,480 crore (US$ 337.35 million) foreign direct investments (FDIs) in ATC Telecom Infra Pvt. Ltd.
  • In November 2020, Warburg Pincus-backed logistics real estate firm, ESR India signed an agreement with the Maharashtra government to invest Rs. 4,310 crore (US$ 578.88 million) to set up 11 industrial and logistics parks around Mumbai and Pune.


Government Initiatives

The Government of India is expected to invest highly in the infrastructure sector, mainly highways, renewable energy, and urban transport.

  • Indian energy sector is expected to offer investment opportunities worth US$ 300 billion over the next 10 years.
  • NHAI will be able to generate revenue of Rs. one lakh crore (US$ 14.31 billion) from toll and wayside amenities over the next five years.
  • In the Union Budget 2020-21, the Government has given a massive push to the infrastructure sector by allocating Rs. 1,69,637 crore (US$ 24.27 billion) to develop the transport infrastructure.
  • Communication sector has been allocated Rs. 38,637.46 crore (US$ 5.36 billion) to develop post and telecommunications departments.
  • Indian Railways has received an allocation of Rs. 72,216 crore (US$ 10.33 billion) under Union Budget 2020-21.
  • Ministry of Housing and Urban Affairs received an allocation of Rs. 50,040 crore (US$ 6.85 billion) under the Union Budget 2020-21.
  • In December 2020, the Ministry of Road Transport and Highways signed a memorandum of understanding (MoU) on technology cooperation in the road infrastructure sector with the Federal Ministry of Climate Action, Environment, Energy, Mobility, Innovation and Technology of the Republic of Austria. The MoU aims to establish a framework for bilateral cooperation in the field of road transport, road/highway and road infrastructure.
  • In November 2020, the Union Cabinet approved investments of Rs. 6,000 crore (US$ 816.18 million) equity in the debt platform of National Infrastructure Investment Fund (NIIF) for the next two years to drive infrastructure growth in the country. This step would assist the organisation to collect Rs. 1.10 lakh crore (US$ 15 billion) for infrastructure project funding by 2025.
  • In October 2020, the government announced a plan to set up an inter-ministerial committee under NITI Aayog to forefront research and study on energy modelling. This, along with a steering committee, will serve the India Energy Modelling Forum (IEMF) jointly launched by NITI Aayog and the United States Agency for International Development (USAID).
  • In October 2020, the Ministry of Housing and Urban Affairs (MoHUA) launched an affordable rental housing complex portal.

Road Ahead

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. The Government has suggested investment of Rs. 5,000,000 crore (US$ 750 billion) for railways infrastructure from 2018-30.

India and Japan have joined hands for infrastructure development in India's Northeast states and are also setting up an India-Japan Coordination Forum for Development of Northeast to undertake strategic infrastructure projects for the region.

Note: Conversion rate used for December 2020 is Rs. 1 = US$ 0.014

References: Media Reports, Press releases, National Infrastructure Pipeline, Union Budget 2019-20, Ministry of Commerce and Industry, Economic Survey-2019-20

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

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