SEIZE the OPPORTUNITIES

As the Indian construction industry entering another year of hopes and expectations, there are ample opportunities for industry to grow leaps and bounds, in spite of many challenges. Construction Times explores the way forward for the construction industry in the year ahead.

India has witnessed a considerable increase in the infrastructure construction activities in 2024 with many landmark projects becoming operational. According to ICRA, the Indian infrastructure sector is poised to sustain its healthy growth momentum over the medium term, supported by healthy capex outlay across various infrastructure sub-segments. India’s construction sector is evolving rapidly with the government investing heavily on infrastructure projects, majorly roads, railways, ports, airports and energy. While the record Budget allocation of Rs 11.11 lakh crore for infrastructure capex is supporting the growth of infrastructure developments in the country, government-sponsored schemes such as the National Infrastructure Pipeline, PM Gati Shakti and Housing for All are boosting the development. Sector-specific programmes such as Bharatmala Pariyojana, Sagar Mala, Jal Jeevan Mission, UDAN, etc are promoting the development of respective sectors in infrastructure growth of the country.

Roads & Highways: Smooth ride ahead

The Union Budget 2024-25 allocated Rs 2.78 lakh crore for the development of roads and highways network across the country. According to Suprio Banerjee, Vice President and & Co-Group Head – Corporate Ratings, ICRA, the pace of road execution improved by ~20% in FY2024 to 12,349 km from 10,331 km in FY2023 owing to the government’s focus on execution and higher allocation to the Road Ministry. “However, the execution has declined by 9% to 4,761 km in 8M FY2025 from 5,248 km in 8M FY2024 on account of the slowdown in construction activity due to the General Elections in Q1 FY2025 and higher-than-average rainfall across the country in Q2 FY2025,” he adds. Despite this, ICRA expects the road execution to pick up in the rest of the fiscal with construction in the range of 10,000-10,500 km (~27-29 km/day) in FY2025 (a marginal decline from FY2024). Despite the muted YoY trend for road construction in terms of km/day, the increasing share of 4-lanes, 6-lanes, and 8-lanes in project awards will result in healthy YoY growth in terms of lane-km.

The delay in execution in the Bharatmala phase 1 and the decline in awarding road projects in the first three quarters of FY 2024-25 will indirectly provide more order book to contractors as these will add to the coming quarters along with the set targets for the period.

Meanwhile, the participation of private sector has gained traction in the recent times, driven by government’s forward-looking initiatives. Sanjay Kumar Sinha, Founder and Managing Director, Chaitanya Projects Consultancy Ltd, explains, “Private sector participation saw an uptick in 2024, driven by innovative financing models like Hybrid Annuity Models (HAM) and Infrastructure Investment Trusts (InvITs). In the roads and highways segment, partnerships between public entities and private developers unlocked capital and brought in specialized expertise. The diversification of funding sources, including green bonds and international financial institutions, also played a pivotal role in ensuring project viability.”

Transformation in Railways & Metro Rail

The year 2024 has witnessed has seen increased project awarding and executions in railways. The overall railways capital outlay has been on an increasing trend over the years with the same reaching Rs. 2.65 trillion (including internal and extra Budgetary allocation) in FY2025 BE, according to ICRA. Although the YoY growth is modest at 2%, it has expanded by 80% in the last five years, indicating the Government’s focus on the railway sector. The investments in rolling stock and modernising railway stations shows government’s intent on the complete transformation of railways.

The increased developments and modernization activities helped improve the prospects of the stakeholders of the railway sector. For eg, Jupiter Wagons reported a consolidated revenue of Rs 2,022.3 crore for the first half of FY25, reflecting a robust 13.1% increase compared to the previous fiscal year. Sanjiv Keshri, CFO, Jupiter Wagons, elaborates, “With increased demand in the railway and mobility sectors, the overall performance has exceeded expectations, with strategic acquisitions and expansions that have positioned the company for long-term success. The sector itself also experienced growth, with strong government support for infrastructure projects and a growing demand for green and efficient transportation solutions, all of which created a favourable environment for the company’s progress.” 

Metro rail network has seen a spurt in growth this year with the total operational network touching 1,000-km mark. India now has become the third-largest metro network in the world behind China and the US. With a slew of projects under execution, the country is set to become the second-largest soon. The metro rail system in the country has set many milestones over the years covering greater distances and currently serve over one crore passengers daily. In 2024, PM Modi inaugurated India’s first under-water metro tunnel in Kolkata, where the Esplanade-Howrah Maidan section passes beneath the Hooghly River. This remarkable feat showcases India’s engineering capabilities. Kochi, Kerala, became the first city in India to launch a water metro project, connecting 10 islands around the city with electric hybrid boats. From under-river tunnels to driverless trains and water metros, India is setting new standards in modern urban mobility.

Airports: Flying high

India is home to the world’s fastest growing air passenger market and is poised to become the third-largest aviation market after China and the US. The government has earmarked around $11 billion to build new airports and refurbish existing ones. India’s domestic air passenger traffic is expected to double in the next six years, reaching 300 million by the end of 2030. Over the past decade, 75 new airports have been built, increasing the total
number to 148. The government plans to raise this number to 200 in the next four years. Recently, 15 new airport projects were inaugurated, including new terminal buildings at 12 airports. Two major international airports in Navi Mumbai (Maharashtra) and Noida (Uttar Pradesh) are getting ready, with the operations scheduled to start this year.

RCS-UDAN, introduced for building regional airports, celebrated its 8th anniversary, with 619 routes and 88 airports operationalized since the launch of the scheme, exemplifying the government’s commitment to affordable air travel. 

New developments in ports

India’s ports sector is going through a transformation under the Sagarmala plans. Currently the cargo handling capacity at Indian ports (including Major Ports and non-Major Ports) is 2,690 MMTPA. The Maritime India Vision 2030 and Amrit Kal Vision 2047 envision it to increase to >3,500 MMTPA by 2030 and 10,000 MTPA by 2047. In the current financial year (April-November 2024), the Indian major ports have already handled around 549.47 million tonnes of cargo as compared to 535.61 million tonnes during the same period of previous year i.e. an increase of 2.59%. As many as 98 port modernisation projects costing over Rs 32,000 crores have been completed so far which have increased the annual port capacity by more than 230 MTPA, according to the ministry.

July 2024 witnessed Kerala’s long-cherished dream coming true when Chief Minister Pinarayi Vijayan inaugurated the trial run at Vizhinjam International Sea Port. This terminal will act as a major transhiment hub for the country catering to international cargo and huge mother ships can easily berth at this deep-water port for transshipment of cargo. After a five-month trial, the Vizhinjam International Sea Port was commissioned for commercial operations on December 3, 2024. By the end of year 2024, the port has already handled 100 commercial vessels.

Another major step taken in 2024 was laying the foundation for setting up the country’s 13^th major port at Vadhavan near Dahanu in Maharashtra. Prime Minister Narendra Modi laid the foundation stone for the news Vadhvan Port marking a significant milestone in India's maritime and port infrastructure development.

Renewable Energy

India’s renewable energy sector continued its remarkable journey toward transforming India’s energy landscape in 2024. This progress is in line with India’s commitment to achieving its 500 GW of non-fossil fuel energy. India crossed the 200 GW milestone of total installed Renewable Energy capacity in September 2024. The total installed non-fossil fuel capacity has further increased to 214 GW in November 2024 which is an increase of over 14% as compared to the 187.05 GW in the same period last year. As of November 2024, India’s cumulative installed solar energy capacity has reached 94.17 GW. India's cumulative wind power capacity stands at 47.96 GW during the period. 

Challenges and Opportunities in new year

As we are stepping into the new year, many opportunities and surprises are going to welcome the industry, of course with certain challenges. When it comes to roads and highways, the sector continues to grapple with challenges like land acquisition delays, regulatory bottlenecks, and rising input costs. 

In the Railways sector, its journey of modernization and growth could face several challenges that must be addressed to achieve its ambitious goals. These challenges include high logistics cost, rail infrastructure gap, slower adoption of cutting-edge technologies that delay modernisation, inadequate renewable energy integration to meet sustainability goals, competition from roads sector to meet freight share goals, regulatory challenges, skill gaps, and lack of passenger comfort and connectivity. However, the government is bullish on overcoming these challenges through right measures. As Rahul Agarwal, Chief Financial Officer, Patel Engineering Ltd, highlights, “While these challenges are real, they are also catalysts for progress. At Patel Engineering, we are committed to turning them into opportunities, driving innovation, and delivering high-quality, sustainable infrastructure solutions that support long-term growth and value.”

Construction equipment sector plays a major role in providing the right products and solutions to overcome the challenges in the execution of projects. “The government's increased focus on infrastructure development, including highways, metro systems, and smart cities, presents a robust growth avenue,” points out Manish Mathur, CEO – Cranes, Action Construction Equipment Ltd.

As the government aims big on infrastructure development in the long term, it is imperative for the stakeholders to be at their best in contributing to this goal. There will be no dearth of opportunities as long as the country is aiming to become ‘Viksit Bharat’, and every coming year is accountable in this growth journey!