Infrastructure development is one of the key economic growth engines of a country, and India is no exception. With a large demand-supply gap in infrastructure, the scope in this regard is immense. It is estimated that India needs to spend $4.5 trillion on infrastructure by 2030 to realise the vision of a $5 trillion economy by 2025, and to continue the growth trajectory until 2030. The investment targets laid out under the government’s National Infrastructure Pipeline (NIP) are also set to create major opportunities in the construction sector.
Indian Infrastructure takes a look at the upcoming opportunities across various sectors…
The road sector continues to be relatively well placed to offer opportunities to stakeholders. As per the report released by the Task Force on NIP, a total capital investment of Rs 20.34 trillion has been planned for the roads and bridges sector for 2020-25. Special focus is being placed on the construction of new expressways such as the Delhi-Mumbai expressway, the Bengaluru-Chennai expressway and the Delhi-Amritsar-Katra expressway.
The National Highways Authority of India has finalised a plan to build 22 expressways, spanning about 7,800 km, by March 2025, with an investment of Rs 3.3 trillion. The majority of these projects are expected to be awarded by 2022-23. While the Bharatmala Pariyojana is already in progress, the authority has also identified about 5,000 km to be built under Phase II of the programme. Besides, the Ministry of Road Transport and Highways has firmed up plans to execute Rs 15 trillion worth of national highway projects within the next two years. Even at the state level, some of the major upcoming expressway projects, such as the Ganga expressway in Uttar Pradesh and the Chirle-Patradevi expressway in Maharashtra, will provide lucrative opportunities for contractors and developers.
Indian Railways (IR) has decided to invest in the highly utilised Golden Quadrilateral-Golden Diagonal route between the four metropolises of Delhi, Kolkata, Mumbai and Chennai, and 11 other routes wherein the last-mile connectivity for much of the traffic occurs. Three new dedicated freight corridors – the East Coast Corridor, the East-West Corridor, and the North-South Sub-Corridor – have been planned, and seven new high speed rail corridors have been identified. Further, it aims to achieve multi-tracking (doubling, tripling and quadrupling) of nearly 12,000 route km of track length by 2024. Besides, the upcoming Delhi-Panipat-Karnal, Delhi-Gurugram-SNB, and Delhi-Ghaziabad-Meerut Rapid Regional Transit System corridors will offer major construction opportunities. IR has also drawn up an ambitious plan for station redevelopment that aims at opening up about 20 million square feet of real estate, attracting Rs 500 billion in investment.
The government plans to have 200 operational airports by 2025, and add a capacity of over 300 million passengers per annum in the next five years. According to India Infrastructure Research, there are about 44 greenfield airport projects in the pipeline, and the majority of them (about 70 per cent) are still at the planning stage. Dholera airport in Gujarat, Purandar airport in Maharashtra and Bhiwadi airport in Rajasthan are some examples. There are huge opportunities for construction companies, contractors, consultants and investors in these greenfield airport projects.
As a part of the NextGen Airports for Bharat Nirman initiative, the government has proposed to increase the capacity of airports by four to five times to handle more than a billion passenger trips per year, over the next 10 to 15 years. To meet this demand, the Airports Authority of India (AAI) has embarked on a capex plan of Rs 250 billion for the next four years for the development, modernisation and upgradation of AAI airports in the country. These include major airports such as those at Guwahati, Pune, Lucknow, Patna, Trichy, Vijayawada and Chennai.
With growing trade, the demand for ports and trade infrastructure is increasingly continuously. Some of the major programmes initiated by the government to meet this demand are Sagarmala, the modernisation and revival of inland waterways, and the National Maritime Development Programme. Under the Sagarmala programme, about 500 projects have been identified across four pillars, entailing an investment of Rs 3.5 trillion. Over 60 per cent of the projects are still at the planning stage and are set to generate significant opportunities for players in the construction sector. Meanwhile, the coastal shipping and inland waterways segments have received considerable interest from the government, and are two of the priority areas going ahead.
The deployment of smart meters has received a significant policy push in recent years under various government schemes such as the Integrated Power Development Scheme, the Ujwal Discom Assurance Yojana, and the Smart Meter National Programme. The government has urged the states to replace electricity meters with smart prepaid meters over the next three years. This is expected to create a demand for around 300 million smart prepaid meters in the coming years. Besides, under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME II) scheme, an investment of Rs 10 billion has been earmarked to develop charging infrastructure during 2020-22.
The government is also focusing on developing flexible, resilient and intelligent grids, and is launching significant initiatives for the development of smart grids. As per the NIP report, all three segments of power – generation, transmission and distribution – are expected to incur a capex of Rs 3 trillion-Rs 3.2 trillion during the period 2020 to 2025.
The renewable energy sector has come a long way over the past five years. According to India Infrastructure Research, about Rs 7.7 trillion worth of projects are coming up in the renewable energy sector. About 50 per cent of the upcoming capacity is still at the announced/ approved stage. Solar power will contribute the largest share to the upcoming capacity addition. The solar segment has attained a competitive advantage vis-à-vis all other sources of energy.
Over the past few years, there has been an unprecedented rise in the modes of urban transportation, especially mass rapid transit systems. Civil construction contributes to a major portion of the total cost of urban transport projects. Besides, alternative systems such as Metrolite and Metroneo have been proposed in some cities with lower expected ridership. Upcoming projects include the Visakhapatnam Metro, Bengaluru Metro Phase III, Ghaziabad Metro, and Kirti Nagar-Dwarka Sector 25 Metroneo.
According to the NIP Task Force Vision 2025, a total capex of Rs 5.73 trillion is estimated to be incurred on the urban transport sector by the central and state governments by 2024-25. The growing government impetus on providing metro connectivity across the country is set to bring in a number of opportunities in the civil construction sector.
Water and waste
The government’s strong commitment and support for the waste management sector, through programmes such as the Atal Mission for Rejuvenation and Urban Transformation, the Smart Cities Mission, Swachh Bharat Urban, and the Namami Gange programme, are expected to attract greater investments in the sector and offer opportunities for construction companies. Decentralised sewage treatment plants (STPs) are being promoted to reduce the exploitation of groundwater and reduce the burden on centralised STPs. These plants are being developed on a large scale under various government programmes.
The infrastructure sector offers huge opportunities for construction companies in the medium term owing to big-ticket projects as well as the large number of projects coming up across sectors. Sector-specific programmes and higher public sector awards augur well for the construction segment.