India's Infrastructure Boom: Rs 15 Lakh Crore Investments Expected in Renewable Energy, Roads, and Realty
India is poised to witness a significant surge in investments in renewable energy, roads, and realty, with total investments expected to reach Rs 15 lakh crore in FY25 and FY26.
Renewable EnergyRoadsRealtyInfrastructureInvestmentsReal EstateJun 18, 2024
According to Crisil Ratings, the total investments in these three sectors were close to Rs 11 lakh crore in FY23 and FY24, and are expected to rise by 38% in FY25 and FY26. The strong underlying demand drivers in these sectors, coupled with regular policy interventions, are fuelling investor interest.
In the renewable energy sector, the demand for sustainable energy transition is driving growth, with the government's target of achieving 40% of the country's energy mix from non-fossil fuel sources by 2030 propelling auctions. India saw auctions of 35 GW in fiscal 2024, the highest ever in a single fiscal, resulting in a strong pipeline of 75 GW. This is expected to drive the implementation of 50 GW capacity over the next two fiscals.
In the roads sector, the need for improved physical connectivity has driven healthy awarding over the past few fiscal years, except the last one. Strengthened order books of road developers, at 2.5 times of revenue, will support 11% growth in highway construction, which is seen at 12,500 km per year over the next two fiscal years.
As for real estate, net leasing of commercial office space is expected to see demand growth of 8-10% this fiscal and the next. The primary drivers of this growth will be global capability centres eyeing India's large talent pool and competitive rentals, as well as healthy demand from domestic sectors. Demand growth for residential real estate is expected to sustain at 8-12% this fiscal and the next.
Crisil Ratings' Senior Director and Chief Ratings Officer, Krishnan Sitaraman, believes that the underlying demand drivers in these three sectors remain strong, with regular policy interventions fuelling investor interest.
In addition to the growth drivers mentioned above, India's real estate sector is also expected to benefit from the government's initiatives to promote affordable housing and the development of smart cities.
Information Crisil Ratings is a leading credit rating agency in India, providing ratings and research to inform investment decisions.
Crisil Ratings is a subsidiary of S&P Global, a leading provider of transparent and independent ratings, benchmarks, analytics, and data to the capital markets.
Frequently Asked Questions
What is the expected investment in renewable energy, roads, and realty in FY25 and FY26?
Rs 15 lakh crore
What is driving growth in the renewable energy sector?
Demand for sustainable energy transition and government targets
What is the expected growth rate in highway construction over the next two fiscal years?
11%
What is driving demand growth in commercial office space?
Global capability centres and healthy demand from domestic sectors
What is the expected demand growth rate for residential real estate over the next two fiscal years?
8-12%
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