India's Infrastructure Boom: 45-50% Investment Surge Expected in 2 Years

The key infrastructure sectors include renewables, roads, real estate and the new-age ones, and they account for around half of India's total infrastructure investments and provide strong support to India's GDP growth trajectory.

"Investment growth is likely to remain strong at 45-50% over the current and next fiscals... Consequently, investments in these sectors should rise to ~Rs 23-24 lakh crore," said Krishnan Sitaraman, Chief Ratings Officer, Crisil Ratings.

However, while largely insulated from the direct impact of the West Asia conflict, they do face indirect inflationary pressure if the conflict is prolonged.

The report highlighted that sectors such as renewables, roads, real estate, and emerging areas like data centres and green hydrogen together account for around half of India's total infrastructure investments.

It noted that while these sectors remain "largely insulated from the direct impact of the West Asia conflict," they could face "indirect inflationary pressure if the conflict prolongs."

On the renewable energy front, capacity addition is expected to remain strong, with "50-55 giga-watt (GW) annually over the current and next fiscals," backed by a robust project pipeline and policy support.

The report also pointed to strong growth in digital infrastructure, stating that "data centre capacity is seen increasing 35-40% annually through fiscal 2028," driven by rising artificial intelligence and cloud adoption.

However, it flagged some risks across sectors, including delays in renewable energy offtake, slowdown in road project awarding, and rising inventories in residential real estate.

Despite these challenges, Crisil said infrastructure players remain financially resilient. "Most of the players in the established sectors are well-positioned to overcome them, given their strong track records and execution capabilities... their healthy credit profiles... provide support," said Manish Gupta, Deputy Chief Ratings Officer, Crisil Ratings.

The report added that around "15-20% of investments in these sectors will be funded through equity," while new-age sectors may require higher upfront capital depending on their maturity.

Overall, the report emphasised that timely execution and prudent financial management will remain key as infrastructure investment momentum continues amid global uncertainties.

- ANI