Over the last few years, the government has done the bulk of the heavy lifting when it comes to capital expenditure, spending massively to scale up India's infrastructure, including roads, railways, ports and airports. However, now road developers are set to witness moderation in growth rate as their order book is shrinking, according to rating agency ICRA.
It pointed out that the budgetary outlay towards ministry of roads, transport and highways has remained flattish albeit healthy at Rs 2.72 lakh crore in the Budget estimates for 2025-26. It noted that project awarding in the road segment has slowed down in the last six to eight quarters, as the focus is gradually shifting towards improving the share of private investment through BOT-toll mode.
“With road awarding projected to improve only in the second half of FY2026, the revenue growth of road developers is likely to remain subdued over the next 12-15 months, as it takes six to nine months from project awarding to on-ground execution (first billing milestone),” pointed out Ashish Modani, senior vice-president and group head, corporate ratings at ICRA.
He expects that road developers will bid aggressively for central government road projects to build the shrinking order book, and that will keep their operating profitability under pressure.
India's government has planned sizeable capital expenditure over the next few to augment its port capacity and infrastructure under the Maritime India Vision. In the near-term though, the ongoing uncertainty related to tariffs impacting trade and global economic output remain key risks to cargo volumes, according to ICRA. It sees cargo volumes growing 3-5 per cent in the current financial year ending March 2026.
Within the infrastructure space, data centre is fast emerging as a new hotspot for investments. There are now around 18 data centre operators, compared with just nine in 2019. ICRA expects significant investment of Rs 1.6-1.8 lakh crore in data centre capacity addition over the next five to six years in the country, aided by rapid digitalisation and favourable policy measures.
India will also need massive investments in its quest to reach net zero in emissions coverage by 2070 as it balances energy security, affordability and transition, according to Moody's Ratings. Over the next two decades, solar and wind power are expected to dominate new generation capacity additions, with smaller nuclear and hydropower additions, according to Abhishek Tyagi, vice-president an senior credit officer at Moody's.
In the next decade, close to 450 GW of renewable energy capacity is expected to be added by India. But, coal will still remain key, with India also expanding its coal-based power generation capacity by 32-35 per cent (around 70-75 GW), given the country's strong economic growth, according to Moody's.
"The capacity of renewable energy is going to grow significantly over the next 10 years. But in terms of generation, coal generation still will be more than 50 per cent even 10 years from now. India, we expect, will be adding close to 70 GW of coal-based capacity as well over the next 10 years and the utilisation rate for coal-based capacity is significantly higher than renewable energy projects," said Tyagi.
Securing diverse sources of capital, including foreign investments (both debt and equity), will be crucial to bridging the funding gap for energy transition-related infrastructure, according to him.
