Construction and Infrastructure Outlook for the New Financial Year in India

India is a rapidly developing country with a strong focus on infrastructure and construction. Niti Ayog has been instrumental in formulating policies and strategies for the development of infrastructure in the country. The organization has identified key sectors like energy, transport, and water management as priority areas for infrastructure development. Niti Ayog has also emphasized the importance of public-private partnerships (PPP) in infrastructure development to bridge the investment gap. In this context, Niti Ayog CEO Amitabh Kant stated, “The PPP model has huge potential for infrastructure development in India. We need to create an environment
where private players are incentivized to participate in infrastructure projects.”

Indian Prime Minister Narendra Modi has also emphasized the importance of infrastructure development in the country. In a statement, he said, “Infrastructure is the backbone of any nation’s development. We are committed to creating world-class infrastructure in India that will boost economic growth and create jobs.” The Indian construction industry is predicted to experience a 12.0% growth rate, reaching INR 45,907 billion by the year 2023. Although there are some short-term difficulties in specific segments of the construction industry, the long-term outlook for growth in India remains unchanged. The construction industry is expected to grow steadily in the next four quarters, with a Compound Annual Growth Rate (CAGR) of 9.9% from 2023 to 2027. As a result, the construction output in India is anticipated to reach INR 66,954.8 billion by 2027.

Government’s Investment in Infrastructure
Although construction costs have increased, the government’s investment in infrastructure projects has remained robust in 2022, and this trend is expected to persist in 2023. The growth of the construction industry will be supported over the next three to four years by continued spending on commercial projects, including establishing new data centres throughout the country.

Here is a deep dive into the upcoming projects to watch out for this fiscal year.

• Roads and Highways
The Indian government signed a loan agreement with a value of US$1.2 billion in January 2023 to finance the development of infrastructure in India. The loan agreement will cover several projects, including developing highways in the Northeastern states of Assam and Tripura. The government has allocated US$300 million to upgrade state highways and district roads in Assam, covering a distance of
300 kilometres.

The Bharatmala program, a significant undertaking by the government, involves building 22 brand-new expressways that are environmentally friendly, such as the Delhi-Mumbai Expressway. Additionally, it will include the construction of 23 bridges and tunnels, as well as 35 logistics parks that can accommodate various modes of transportation.

• Railways
For the fiscal year 2023, there is a budgetary allocation of INR 1.4 lakh crore for the Railways. Additionally, the government aims to raise the Railways’ freight transportation from its current level of 26-27% to 45% and fully electrify the Railways by 2023. The government also plans to invest US$350 million to enhance the connectivity of the metro rail system in Chennai and an equal amount of US$350 million to improve connectivity with vital economic areas in Maharashtra.

The government has plans to revamp 400 railway stations due to the evident infrastructure deficit caused by outdated and overburdened systems. For the fiscal year 2022-23, the government intends to grant projects for 40 railway stations, with work already in progress in Ayodhya, Bijwasan, Safdarjung, and Gomti Nagar.

• Ports
The current capacity for cargo traffic is insufficient, as it is predicted to reach 2,500 MTPA in 2025. To address this, the Indian government has planned to invest US$82 billion in port projects and upgrade port infrastructure. They have identified 92 non-major ports for expansion, which will add 712 MTPA to the existing capacity. Additionally, two new major greenfield ports are planned in Maharashtra and Odisha.

To fully realise the potential of ports, it is important to have connectivity to the hinterland, dry ports, inland waterways, and multi-modal transport hubs. The Sagarmala program, with an investment of INR 6.5 lakh crore, aims to address this need by undertaking projects such as national waterways, last-mile road and rail connectivity, construction of multi-modal logistics parks, and connecting ports to freight corridors. The focus is also on inland waterways, which will use the network of rivers, canals, backwaters, and creeks for cargo movement. As India upgrades its port infrastructure and modernises its multi-modal transport networks, there will be significant growth in the logistics sector.

• Airports
Airports in India face capacity challenges due to the growing passenger traffic and increasing congestion, affecting service delivery quality. To address this issue, the government is planning to increase the number of airports from 140 in 2022 to 220 by 2024-24, including the addition of helipads and water aerodromes. This rapid expansion is necessary to accommodate the estimated growth in passenger traffic to INR 520 million by 2037, which will require 1,100 additional aircraft and appropriate infrastructure.

In January 2022, the government approved the construction of 21 new airport projects, such as the Jewar airport near Delhi, and plans to build airports in Tier 2 and 3 cities. These new airports will be managed by the Airport Authority of India under the Asset Monetisation Scheme. Additionally, the government has leased six airports to private companies like the Adani Group for 50 years, and these companies will also invest in the airport’s upgrading.

Going forward, the government is implementing more advanced and eco-friendly technologies in infrastructure construction. The Green National Highway Corridor Project is an example of an initiative that utilises cleaner technologies with reduced environmental impact during construction. The government is also embracing digitization to modernise construction activities. Construction equipment equipped with advanced technologies such as automation and IoT for data monitoring and predictive maintenance is becoming more prevalent, encouraged by the “Digital India” initiative.

About NICMAR
As India’s most progressive Built Environment University, NICMAR, is synonymous with discovery, knowledge, and innovation of the highest order. Since its inception in 1983, NICMAR has been diligently pursuing its mission to advance education, refine skills, and provide unparalleled training in the built environment domain as a distinguished society and public trust, steered by esteemed academicians and industry leaders.

NICMAR leads the way in cultivating and fostering the future leaders in multidisciplinary domains of sustainable energy, architecture, infrastructure, construction, real estate, project, and business management with a comprehensive range of niche undergraduate, postgraduate, and doctoral programs. With an unwavering commitment to producing industry-ready graduates, NICMAR is poised to empower the built environment sector with the next generation of forward- thinking and visionary youth.