India’s infrastructure growth story remains firmly on track despite the ongoing West Asia crisis and broader global uncertainties, with multiple sectors continuing to benefit from strong policy support and domestic demand, according to Crisil Ratings. 

The agency said India’s progress toward the Viksit Bharat vision is being driven not only by traditional sectors such as renewable energy and roads, but also by emerging themes, including digitalisation through data centres and smart meters, and decarbonisation via green hydrogen and battery manufacturing. 

Investments may rise to ₹23–24 lakh crore 

Crisil said key infrastructure sectors — renewables, roads, real estate, and new-age industries — account for nearly half of India’s total infrastructure investments and remain critical to sustaining GDP growth. 

Krishnan Sitaraman, Chief Ratings Officer, Crisil Ratings, said investment growth in these sectors is likely to remain strong at 45–50% across the current and next fiscal years, in line with the pace seen over the previous two fiscals. 

As a result, investments in these sectors are expected to increase to around ₹23–24 lakh crore, supported by government initiatives and healthy corporate balance sheets. He added that while these sectors are largely insulated from the direct impact of the West Asia conflict, a prolonged crisis could create indirect inflationary pressures. 

Renewable energy remains the first pillar of infra expansion 

Renewable energy remains the first pillar of India’s infrastructure expansion, with annual capacity additions expected at 50–55 GW over the current and next fiscals, surpassing the 50 GW added last year. 

This growth is being supported by a strong project pipeline, policy support for round-the-clock power solutions, and plans to scale battery storage capacity to 208 GWh by 2030. 

Additional momentum is coming from rooftop solar adoption under the PM Surya Ghar Yojana and favourable open-access policies for commercial and industrial users. 

India’s infrastructure push is increasingly linked to digitalisation and decarbonisation. Data centre capacity is expected to grow 35–40% annually through FY28, driven by rising adoption of artificial intelligence and cloud computing. 

Meanwhile, industrial decarbonisation needs and geopolitical disruptions in natural gas markets could accelerate policy support for green hydrogen. 

Roads sector set for revival 

The roads sector, another key pillar of infrastructure growth, is expected to see a gradual recovery in project awarding after a slowdown in recent years.  

Crisil attributed this to healthy budgetary allocations and government efforts to streamline approval processes. Asset monetisation is also expected to gather pace, with the National Highways Authority of India likely to monetise assets worth ₹70,000–80,000 crore to fund future expansion. 

Real estate is witnessing mixed trends 

The real estate sector is witnessing mixed trends across segments.  

Residential demand is expected to remain flat over the current and next fiscal years due to elevated property prices, although on a high base created by strong growth in recent years. 

In contrast, commercial office demand remains healthy, with leasing expected to grow 6–7 per cent over the next two fiscals. Demand is being driven by flexible workspaces, the banking and financial services sector, and global capability centres, resulting in falling vacancy levels. 

Crisil cautioned that several challenges remain. In renewables, transmission capacity has not kept pace with project rollouts, while offtake arrangements for nearly half of previously awarded projects remain unresolved. 

In roads, a prolonged slowdown in project awards could impact developers’ order books and growth momentum. Residential real estate may face rising inventory levels, while commercial office demand could be affected by AI-led disruptions and slower global growth, particularly impacting IT sector leasing. 

Among new-age sectors, data centres face pricing pressure due to intensifying competition, while smart meter rollouts may be delayed by right-of-way issues and slower consumer adoption. 

Battery manufacturing and green hydrogen sectors also remain vulnerable to import competition and alternative technologies. 

Manish Gupta, Deputy Chief Ratings Officer, Crisil Ratings, said most established sector players remain well-positioned to handle these challenges due to strong execution capabilities, stable cash flows and prudent leverage. He said 15–20% of investments in these sectors are expected to be funded through equity. 

The report added that credit metrics for renewable energy players should remain comfortable despite rising debt, as cash flows improve alongside capacity additions.