JJM 2.0 opens ₹3 lakh crore O&M market, reshapes EPC growth model: ICRA

India’s rural water infrastructure programme is entering a decisive second phase, with Jal Jeevan Mission (JJM) 2.0 expected to unlock a ₹3 lakh crore operations and maintenance (O&M) opportunity, according to an ICRA report. The transition marks a clear shift from rapid asset creation to sustained service delivery, altering the revenue mix and risk profile for EPC (engineering, procurement and construction) companies.

The total outlay under JJM has been significantly increased to ₹8.69 lakh crore from ₹3.60 lakh crore earlier, with the Centre’s share rising to ₹3.59 lakh crore. The mission timeline has also been extended to December 2028, offering a longer execution horizon.

More importantly, the programme is pivoting towards service quality—covering water supply reliability, quality monitoring, and digital tracking through platforms like Sujalam Bharat. This is expected to accelerate the shift towards O&M-led contracts, providing EPC players with stable, annuity-like cash flows, though at comparatively lower margins.

Execution gaps, payment delays remain key risks

Despite the scale-up, execution challenges persist. From FY2025 onwards, a divergence between budgeted outlay and actual expenditure has been observed, reflecting bottlenecks, quality concerns, and a policy recalibration towards sustainable delivery. Payment delays continue to strain balance sheets, with receivable cycles stretching beyond six months in several states due to administrative dependencies and milestone-based disbursements. However, ICRA expects this to improve, with receivable cycles likely to decline to under 60 days by September 2026 as execution gathers pace.

Scale-up gains, but last-mile delivery hols the key

Since its launch in 2019, the mission has driven a nearly five-fold increase in rural household tap water connections—from 323.6 lakh to 1,582.3 lakh—taking overall coverage to more than 81% as of February 2026.

While 11 states and Union Territories have achieved 100% coverage, eight remain below the 80% threshold, indicating continued headroom for expansion. The evolving focus on uptime, efficiency, and system durability is also expected to benefit organised manufacturers, particularly in PVC and HDPE segments, favouring players with strong technical capabilities and service networks.

Overall, JJM 2.0 signals a structural shift in India’s water infrastructure landscape—moving from infrastructure build-out to lifecycle management—while opening up a steady, long-term revenue stream for EPC players aligned with the new service-led paradigm.