India all set to become a big Infrastructure giant in the years to follow

Madhav Patil, Founder, Sangam Project Consultants, provides his views on India’s aggressive infrastructure push to become a Infrastructure giant. Madhav Patil has over 30 years experience and has successfully competed Hospitality, Healthcare, Educational / Institutional. Retail, Commercial, Villas, Residential & Infrastructure projects. Madhav Patil holds qualification of B.E. (Civil), MCM (NICMAR).

The Economic Survey 2025 articulates the importance of infrastructure development for achieving India’s target of Viksit Bharat by 2047. In the past major initiatives, Gati Shakti, fuelled a shift within the India’s Infrastructure segment. In recent years India’s infrastructure capacity has made phenomenal gains in the highways, seaports, airports and railway sectors. The Capital spending to GDP Ratio has doubled to 3.2% of GDP in FY 23-24, a whopping achievement. The World Bank’s Logistics Performance Index by country 2024 which ranks national efficiency and performance through LPI Total Score, has increased to 3.4 and India is now ranked 38 amongst 139 countries. In-fact in terms of international shipments, India’s score of 3.5 is much higher than many European countries and is a shade better than even USA.

With a substantial spending on Infrastructure, the major push has come in building roads, highways and railways including upgrading the railway’s infrastructure and amenities etc.. Additionally, India has seen an increase in the average availability of Power across both rural and urban areas, an accelerated pace of highways and rural roads construction, railway line electrification, improvement in port cargo handling capacities, increase in number of airports and domestic passenger traffic.

The governments on central and state levels are bringing in policies to facilitate the planning and execution of projects relating to power, roads and infrastructure needed for urban development, such as public transport and e-vehicles. The National Infrastructure Pipeline (NIP) and National Investment and Infrastructure Fund (NIIF) are intended to serve as a platform for co-investment by global and domestic investors and multilateral development banks (MDBs). The Japan International Cooperation Agency (JICA), which attempts to support a freight corridor project and projects for climate change response and enhancement of ecosystem services in specific areas within India, is propelling the desired push.

Several Government initiatives in the past through various Programs as under have only aided the Infrastructure development:

• National Infrastructure Pipeline (NIP): A program that aims to invest in energy, roads, railways, and urban development
• PM Gati Shakti Scheme: A program that aims to improve the efficiency and reliability of infrastructure projects
• Bharatmala: A program that aims to develop highways
• Sagarmala Project: A program that aims to develop port infrastructure along India’s coastline
• Ude Desh Ka Aam Nagrik (UDAN): A program that aims to improve air connectivity to remote areas of India

In the recent past several noticeable achievements include:

• The Atal Tunnel, the world’s longest highway tunnel
• The Chenab Bridge, the world’s highest railway bridge
• The Statue of Unity, the world’s tallest statue
• The Zojila Tunnel, Asia’s longest tunnel

The Union Budget 2025 presented by the FM Nirmala Sitaraman initiates the big push to Infrastructure through:

A modified UDAN scheme to enhance regional connectivity to 120 new destinations is proposed to be launched.

Facilitating Green field Airports in Bihar to meet the future needs of the State. In addition, the Patna and Bihta Airports shall be upgraded.

• An outlay of Rs.1.5 lakh crore for providing 50-year interest free loans to States for capital expenditure and incentives for enabling participation by States in the infrastructure development.
• Rs.1 lakh Crores for setting up various urban development proposals such as ‘Cities as Growth Hubs’, ‘Creative Redevelopment of Cities’ and ‘Water and Sanitation’.
• Setting up of partial credit enhancement facility for corporate bonds for infrastructure.
• Support clean tech manufacturing and improve the value addition in areas such as solar PV cells, EV batteries, electrolysers, wind turbines, very high voltage transmission equipment’s, etc.
• Directing infrastructure related ministries to prepare a three-year pipeline of projects which can be implemented in PPP mode. States will also be encouraged to do so and seek support from the India Infrastructure Project Development Fund (IIPDF) scheme to prepare PPP proposals.
• Facilitating Upgradation of Infrastructure and Warehousing for Air Cargo including High Value perishable Horticulture produce.
• Streamlining and making user friendly the Cargo screening and customs protocols.
• Facilitating the Shipbuilding Clusters to increase the range, categories and capacity of ships including additional infrastructure facilities, skilling and technology to develop the entire ecosystem.
• Rs.20,000 crore allocation to promote development of small nuclear reactors, with an aim to generate 100 GW of nuclear energy.
• Creation of additional Infrastructure in the 5 IIT’s started after 2014 to facilitate education for 6500 more students.
• Expansion of Patna IIT campus.
• Developing top 50 tourist destinations in India in association with States.

In addition, Budget 2025 paves the way for funding into infrastructure projects through:

• Extending the last date to make eligible investments by Sovereign Wealth Funds (SWF) and Pensions Funds (PFs) in infrastructure sector for claiming tax exemption to 31 March 2030. This will effectively permit investors to invest with a long-term investment horizon and facilitate patient investment in the infrastructure sector.
• Extending the tax exemption to Capital Gains arising on transfer of unlisted debentures if other conditions of tax exemption are satisfied. This proposal essentially eliminates the unintended tax which was fastened on SWF / PFs.
• Customs Duty Exemption of 35 capital goods/machinery for use in the manufacture of lithium-ion battery of EVs and 28 capital goods/machinery for use in the manufacture of lithium-ion battery of mobile phones.
• Customs duty on Solar cells reducion from 25% (+2.5% SWS) to 20% (+7.5% AIDC)
• Speedy approval of company mergers, revamping of bilateral investment treaties, committee for regulatory reforms, new simplified income tax code, removal of civil liability for nuclear power, etc. All these steps are in the right direction of attracting foreign investments and increasing investments by private sector.

The estimated capex outlay of Rs.11.21 lakh crores for FY 25-26 (10.1% increase as compared to the revised downward estimate of Rs.10.18 lakh crore for FY 24-25) also shall drive the infrastructure growth.

All these key measures including supporting State Governments, focus on boosting Infrastructure, Driving Regional Development, Attracting Private Investment and most importantly driving the much needed economic growth for making India a 5 Trillion US Dollar economy.

A major push for India’s manufacturing sector including a strong focus on Green Manufacturing is initiated through the launch of National Manufacturing Mission. This initiative shall further the “Make In India” vision.

The Sectors like Health, Education & Housing that are still critically way behind the targets, needs a relook in terms of investments and growth e.g. India is far behind with 1.3 Beds / 1000 patients as against the WHO standards of 3 Beds / 1000 patients. Another critical reality that needs to be addressed is devising a course correction integrating environmental resilience into urban planning viz., Correcting worsening Air Pollution, arresting depleting water resources and mitigating mounting climate risks. There is a need to allocate specific financial commitments to meet Environmental concerns. Additionally, without efficient last mile connectivity, massive Budgetary support for Metro Rail systems face the risk of turning into white elephants as is the case with Bengaluru, Jaipur and Lucknow Metros. Except Ahmedabad, Pune and Pimpri Chinchwad municipal bodies who enjoy high credit ratings, it remains to be seen to what extent the Challenge Fund can induce the state governments to improve the creditworthiness of their Urban Local Bodies through accounting reforms and financial empowerment.

All said and done, India’s infrastructure sector is set for robust growth paving way to India becoming a big Infrastructure giant in the years to follow.