Timely project execution will be crucial amid geopolitical uncertainties, and prudent leveraging by players will remain a key watchpoint, the advisory emphasised.
India’s infrastructure growth story is set to sustain through FY2026‑27, with investments in key sectors such as roads, renewables, real estate, and emerging new‑age industries projected to rise by up to 50 per cent, according to advisory Crisil Ratings.
From clean energy diversification (renewables) and logistical debottlenecking (roads), the narrative is now expanding to digitalisation (data centres and smart meters) and decarbonisation (green hydrogen and battery). This blend of investments will continue to support real estate growth, driving healthy absorption of commercial office spaces and steady residential demand.
Challenges remain: delayed offtake and transmission bottlenecks in renewables, slowdown in road project awarding, elevated capital values in residential real estate, and slowing demand for commercial spaces by the IT sector. Yet, government policy support and strong balance sheets are expected to keep infrastructure players well‑positioned.
Krishnan Sitaraman, Chief Ratings Officer at Crisil Ratings, noted that while sectors are insulated from the direct impact of the West Asia conflict, prolonged tensions could trigger inflationary pressures. “Nevertheless, investment growth is likely to remain strong at 45‑50 per cent over the current and next fiscals, akin to the growth seen in the preceding two fiscals. Consequently, investments in these sectors should rise to nearly ₹23‑24 trillion, benefiting from strong government policy support and domestic demand.”
Renewable energy capacities—the first pillar of growth—are tracking clean energy targets for 2030, with 50‑55 GW expected annually, surpassing last year’s record 50 GW. Battery storage capacity is targeted to scale up to 208 GWh by 2030, supported by rooftop solar adoption under the PM Surya Ghar Yojana initiative and favourable open access policies.
Data centres—the second pillar—are projected to grow 35‑40 per cent annually through FY2027-28, driven by AI and cloud adoption. Decarbonisation efforts, coupled with geopolitical pressures on natural gas, may catalyse policy support for green hydrogen.
Roads—the third pillar—are expected to see revival in project awarding, supported by budgetary allocations and streamlined approvals. Asset monetisation is set to gain momentum, with ₹700‑800 billion worth of assets estimated to be monetised by the National Highways Authority of India (NHAI).
Real estate—the fourth pillar—shows divergent trends. Residential demand is expected to remain flattish amid elevated capital values, while commercial office demand is buoyed by flexible workspaces, BFSI, and global capability centres, driving leasing growth of 6‑7 per cent and lowering vacancy levels.
Sectoral Challenges Ahead
While sectors are poised for growth, developers face hurdles. Renewables struggle with transmission capacity and untied offtake arrangements. Road developers face prolonged awarding slowdowns, while residential inventories rise and commercial leasing risks emerge from AI disruptions and global slowdown.
New‑age sectors face execution and pricing risks: data centres from competitive intensity, smart meters from right‑of‑way issues, and batteries and green hydrogen from import competition and policy uncertainty.
Manish Gupta, Deputy Chief Ratings Officer at Crisil Ratings, remains optimistic. “Healthy credit profiles, backed by stable cash flows, strong operating performance and prudent leveraging, provide support. Around 15‑20 per cent of investments will be funded through equity. Mature new‑age sectors will benefit from easier access to capital, while nascent ones may require higher upfront equity.”
Credit metrics are expected to remain resilient across renewables, roads, and real estate, with commercial office players demonstrating stability. Among new‑age sectors, data centres and smart meters show greater bankability, while battery manufacturing and green hydrogen will need stronger policy support.
Timely project execution will be crucial amid geopolitical uncertainties, while continued prudent leveraging by players will remain a key watchpoint, Crisil Ratings emphasised.