India’s infrastructure sector has undergone a dramatic transformation between 2023 and 2025, shifting from a traditionally defensive pocket to one of the market’s highest-beta, highest-alpha opportunities, shows a recent report by Smallcase.

According to investment managers on smallcase, the Nifty Infrastructure Index has consistently outperformed the Nifty50 over the past 1, 3 and 5 years. In the last year, Nifty Infra delivered a 14.5% return compared with the Nifty50’s 10.5%. Over a three-year period, the gap widened significantly, with Nifty Infra rising 82.8% versus the Nifty50’s 41.5%. The trend continued over five years as well, where Nifty Infra gained 181.2% while the Nifty50 returned 100.3%.

“The Nifty Infrastructure Index returned nearly 2x the Nifty50 over the past three years. Each ₹1 of capex deployed in infra is estimated to have a ₹2.5–₹3.0 impact on GDP,” Smallcase said in its report.

Multi-year infra super-cycle taking shape

The report noted that India is entering a “multi-year infra super-cycle”, saying that while government spending remains the anchor, private capex revival—helped by PLI schemes, global supply-chain shifts, and manufacturing incentives—is adding strength to infrastructure sector growth.

Managers expect infrastructure-linked sectors to deliver robust growth over FY26–FY30, supported by healthy order books and strong free-cash-flow generation across the sector. They recommend that investors maintain meaningful exposure to infrastructure, viewing it as a key long-duration thematic opportunity.

“Infrastructure investment in India is expected to grow substantially in the coming years, with InvITs likely to manage close to ₹25 lakh crore in assets by 2030. This expansion is underpinned by predictable, contract-based revenue streams that usually provide pre-tax yields of around 10–12% and post-tax returns of roughly 7–9%, generally higher than many conventional fixed-income instruments,” said Abhishek Banerjee, investment manager on smallcase and founder of LotusDew.

“Although these assets can experience temporary fluctuations during periods of market uncertainty, their historical volatility of about 10.2% is well below the equity market’s 15.4%, resulting in comparatively steadier performance. With a correlation of only 0.42 to equities, infrastructure platforms tend to behave similarly to utilities, producing consistent, inflation-linked income that is largely unaffected by economic swings,” he added.

Govt capex fuelling infra growth

Echoing the same, Rakesh Pujara, investment manager on smallcase and Founder and Managing Partner at Compounding Wealth Advisors LLP, said India is currently witnessing an “Infrastructure Supercycle”, powered by a record ₹11.11 lakh crore government capital expenditure (capex) budgeted for FY25 and further supported by FY26 capex guidance of ₹11.21 lakh crore.

“The country is transitioning from basic connectivity creation to building advanced, integrated logistics ecosystems supported by digital infrastructure, advanced mobility networks, and sustainable energy corridors,” he said.

The report highlighted that India's infrastructure sector stands at a pivotal moment in 2025, with government spending on capital projects topping ₹11.21 lakh crore, or 3.1% of GDP, alongside policy pushes like the National Infrastructure Pipeline and growing private-sector involvement through Infrastructure Investment Trusts.

This momentum spans traditional and new areas, setting the stage for a market valued at ₹16.87 lakh crore in 2025 to expand to ₹24.82 lakh crore by 2030 at an 8% compound annual growth rate.

Structural theme for equity markets for decades

For investors, these developments signal opportunities in construction, logistics, and energy stocks, while lifting broader market confidence through job creation and economic multipliers, as per the report.

Pankaj Singh, investment manager on smallcase and Founder & Principal Researcher – SmartWealth.ai, said India’s infrastructure ecosystem is at a historic inflection point, powered by record government capex, a decisive revival in private investment, and forward-looking reforms.

“Traditional assets—roads, ports, airports, power—are scaling rapidly, while new-age sectors such as green hydrogen and data centres are emerging as strategic national priorities.”

For equity markets, infrastructure has transitioned from a cyclical opportunity to a structural, long-duration growth theme aligned with India’s ambition of becoming a top-three global economy by 2047. “We can expect infra to remain a dominant market theme for the rest of the decade,” he added.

Momentum strong across key infra segments

As per the report, India’s infrastructure expansion is being powered by momentum across key sectors—from highways, where the national network has reached 146,342 km with annual construction consistently above 10,000–11,000 km.

Similarly, India’s aviation ecosystem is expanding at one of the fastest global rates, with operational airports rising from 74 in 2014 to over 163 in 2025 amid rising passenger traffic, backed by UDAN, greenfield expansions and AAI asset monetisation.

Maritime and logistics sectors are also strengthening through Sagarmala reforms, with major ports handling 795 metric tonnes (MT) in FY24 and logistics projected to grow from $317 billion in 2024 to $484 billion by 2029.

The energy sector is undergoing a transformational shift, with installed capacity at 476 GW, including 180 GW+ of renewables, and a 2030 target of 500 GW non-fossil.

Rapid digitalisation is driving data-centre capacity from 350 MW in 2019 to a projected 1,700 MW by 2025, while green hydrogen is emerging as a strategic frontier with 158 projects already in the pipeline under the National Green Hydrogen Mission.

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