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It is apparent that massive investment plan in various infrastructure segments, backed by government schemes and policy reforms will provide tremendous opportunity to construction industry players this year and years ahead.

The construction sector will remain buoyant due to continuous demand from the infrastructure segment. The Government of India is keen on developing the infrastructure sector in the country. This is clearly evident through the numerous initiatives announced for this sector as part of Budget 2017-18. The Rs 3.6 trillion budget allocation to the sector for 2017-18 as compared to Rs 2.2 trillion in 2015-16 is a testament to this fact. A provision of Rs 2.4 lakh crore has been set aside for the transportation sector as a whole. This includes the Indian railways, shipping and roadways. Another landmark initiative by the government was to offer infrastructure status to the affordable housing sector.

The outlook for the infrastructure sectors is promising and will be largely driven by increased investments in the roads and bridges, railways, ports, aviation and airports, power, housing, urban development and irrigation sectors. Infrastructure development is thus expected to offer significant business opportunities for contractors, technology providers, and equipment and material suppliers.

Roads and bridges

Development of Roads and Highways is one of the priority areas for the government and an ambitious target has been set to increase the length of national highways to 200,000 km. Indian road construction sector is already seeing strong momentum over the last few years with the highways awarding (46km/day) and construction (23km/day) reaching historical high levels due strong initiatives by the Government.

The Indian government plans to develop a total of 66,117 km of roads under different programmes such as National Highways Development Project (NHDP), Special Accelerated Road Development Programme in North East (SARDP-NE) and Left Wing Extremism (LWE). The government has identified development of 2,000 km of coastal roads to improve the connectivity between ports and remote villages. 

India's national highway network is expected to cover 50,000 kilometres by 2019, with around 20,000 km of works scheduled for completion in the next couple of years, according to the Ministry of Road Transport and Highways. The Government of India has planned an expenditure of Rs 11,000 crore on a programme for connecting LWE (Left Wing Extrimism) affected districts by March 2020. The Government of India will spend around Rs 1 lakh crore during FY18-20 to build roads in the country under Pradhan Mantri Gram Sadak Yojana(PMGSY).

Government of India, on the 24th of October 2017, announced the biggest road construction programme in Indian history to build a road network of 83,677 km over the next five years with a total investment of Rs 6.92 trillion (USD 107.64 billion). Among the 83,677 km of total roads, 34,800 km of National Highways will be built under 'Bharatmala Pariyojan scheme- Phase I' with a total investment of Rs 5.35 trillion (USD 83.28 billion). Government is confident about laying 7,000 km National Highway per year.

Under Bharatmala, the road transport and highways ministry will construct 9,000 km of economic corridors across the country. The project also entails constructing 6,000 km long inter corridor and feeder routes, 2,000 km of border and international connectivity roads, 5,000 km to be upgraded under the national corridor efficiency programme, 800 km of greenfield expressways, 10,000 km under the national highway development programme and 2,000 km of coastal and port connectivity roads.

Apart from Bharatmala, the Prime Minister Narendra Modi-led government has announced many big-ticket road projects such as the Setu Bharatam, the Rashtriya Rajmarg Zila Sanjoyokta Pariyojna, the Chardham Mahamarg Vikas Pariyojana and Sagarmala that will offer substantial opportunities for consultants, contractors, and technology and equipment providers in the near to medium term.

Setu Bharatam project: The Rs 50,800-crore Setu Bharatam project aims to ensure highways without railway crossings by 2019 and overhaul of 1,500 British-era bridges. Under the project, 208 railway crossings will be replaced by rail over bridges (ROBs) by 2019 at an estimated cost of Rs 20,800 crore. Also, 1,500 bridges of the British era across the country will be overhauled for around Rs 30,000 crore.

Rashtriya Rajmarg Zila Sanjoyokta Pariyojna: This project aims to connect 100 of the 676 district headquarters in the country with world-class highways. The project entails development of 6,600 km of highways at an estimated cost of about Rs 60,000 crore.

Chardham-Highway Project: The Chardham Mahamarg Vikas Pariyojna, or the Chardham highway development project, is an ambitious initiative to improve connectivity to the Char Dham pilgrimage centres in the Himalayas. The project's main objective is to develop around 900 km of national highways. These highways will be built in Uttarakhand at an approximate cost of Rs 12,000 crore.

Railways

Indian Railways has started to become far more attractive and bigger opportunities as projects have started to flow in. In its recent report prepared by the global consultancy firm McKinsey, the firm estimates Indian Railways to invest around Rs 8.5 trillion over the next five years, which is about four times the investment in the last five years.

Indian Railways (IR) plans to undertake investment for network decongestion and expansion, safety, rolling stock, logistics parks and station redevelopment works, which will primarily be met through gross budgetary support and debt. At the same time, institutional financing, PPPs, state joint ventures, internal generation and rolling stock lease will also aid IR in raising funds.

For 2017-18, the total capital and development expenditure of Indian Railways has been pegged at Rs 1,31,000 crore. This includes Rs 55,000 crore provided by the government through budgetary allocation as against Rs 46,155 crore in the previous year. Under Budget 2017-18, railway lines of 3,500 km are to be commissioned and at least 25 stations are to be awarded for station redevelopment during the year.

As per the sources, the Indian Railways' ambitious project of reducing travel time by interconnecting four major metros - Delhi, Mumbai, Chennai and Kolkata - with high-speed network of trains running at 160 kmph is looking at an August 2022 launch. While the Delhi-Mumbai and Delhi-Howrah routes were included in Budget 2017-2018 at a cost of Rs 11,189 crore and Rs 6,975 crore respectively, the estimates for the other four routes are under process for inclusion in the works programme 2018-2019.

In order to develop three new arms of Dedicated Freight Corridor (DFC) in the various regions of the country, Indian government is planning to invest Rs 3,30,000 crores (USD 50.98 billion). Also, Indian Railways is planning to invest in order to adopt European Train Control Systems (ETCS) which will help in the development of the infrastructural facilities.

In collaboration with the Government of Japan, a high speed passenger corridor project between Ahmedabad to Mumbai was undertaken in Railway Budget 2016-17. Construction work has already begun and the total cost of the project is estimated at US$ 14.52 billion. The project is estimated to be operational by 2022.

The Railway Minister of India has launched the first phase of station redevelopment programme, covering commercial redevelopment of 23 out of 400 A1 and A category stations across the country.

Union Ministry of Railways plan to cover the length and breadth of Arunachal Pradesh by rail network requiring an initial investment of around Rs 50,000–70,000 crore at an elevation range of 500 to 9,000 feet.

The Expert Group on Railways has recommended the modernisation of 19,000 km of existing tracks, strengthening of 11,250 bridges (to sustain higher axle loads at higher speeds) and the elimination of all level crossings. Further, over 30,000 km of routes will be constructed on double/multiple lines, 33,000 km will be electrified and 25,000 km of new lines will be added to the network by 2019-20.

Sea Ports & Inland Waterways

Increasing investments and cargo traffic, backed by series of government initiatives taken in the recent past point towards a healthy outlook for the Indian ports sector. The capacity addition at ports is expected to grow at a CAGR of 5-6 per cent till 2022, thereby adding 275-325 MT of capacity.

Within the ports sector, projects worth an investment of Rs. 65,000 crore have been identified and will be awarded over the coming five years. The Ministry of Shipping, Government of India, has announced plans to execute 199 residual maritime projects worth Rs 800,000 crore (US$ 124 billion) over the next two years, via government funding.

The Government of India has launched several initiatives to harness the natural advantages of India and tap the vast growth potential of the maritime sector. One of the government's flagship initiatives is Sagarmala, a programme under the Ministry of Shipping. The Indian government plans to develop 10 coastal economic regions as part of plans to revive the country's Sagarmala (string of ports) project. Under the Sagarmala Programme, the government has envisioned a total of 189 projects for modernisation of ports involving an investment of Rs 1.42 trillion (US$ 22 billion by the year 2035.

The government is also looking to develop the inland waterway sector as an alternative to road and rail routes to transport goods to the nation's ports. India has an extensive network of inland waterways and of the total navigable length of 14,500 km, 5,200 km of the rivers and 4,000 km of canals can be used by mechanised crafts. India has declared a plan to develop 111 national waterways. Of this, 32 new national waterways and 5 existing national waterways are to be developed in the next three years.

In October 2017, foundation stone for the Phase-I for development of Krishna River (National Waterway -4) was also laid. In the first phase of the project, the stretch between Muktayala to Vijayawada will be developed for transportation. The total project cost is Rs. 7,015 crore and the length of the waterway is 315 km.

Aviation and Airports

The civil aviation industry in India has emerged as one of the fastest growing industries in the country during the last three years. There has been double-digit growth in the Indian aviation sector and the momentum is expected to get stronger in the coming years, driven by active government participation, rising economic activity and tourism, changing demographics and growth in business and leisure travel. India is currently considered the third largest domestic civil aviation market in the world.

The civil aviation industry has ushered in a new era of expansion, driven by factors such as low-cost carriers (LCCs), modern airports, Foreign Direct Investment (FDI) in domestic airlines, advanced information technology (IT) interventions and growing emphasis on regional connectivity.

India is estimated to see an investment of US $25 billion in the next decade in the airports sector, a demand for 935 more planes and traffic growth of 13 per cent, according to Morgan Stanley. According to them, the share of air travel in air and rail travel combined in India will grow to 15.2 per cent by 2027 from 7.9 per cent now.

Capex plans to the tune of Rs 65,000 crore (US$ 10.08 billion) have been finalised by the Airports Authority of India (Rs 17,500 crore (US$ 27.13 billion) for the next five years) and around Rs 22,000 crore (US$ 3.41 billion) for brownfield expansion in Delhi, Mumbai, Hyderabad and Bengaluru by private operators and around Rs 21,000 crore (US$ 32.55 billion) for greenfield airports.

Airport building and modernization projects worth over Rs 19,300 crore (US$ 2.99 billion) have been recommended green clearance, in line with the Government of India's focus on improvement in regional air connectivity.

The Government of India has approved the construction of 18 Greenfield airports in the country, which would be executed and financed by the respective airport promoters, and are estimated to require an investment of Rs 30,000 crore (US$ 4.66 billion).

The Cabinet Committee on Economic Affairs, Government of India, has approved the proposal to revive 50 un-served and under-served airstrips in three financial years starting from 2017-18 at an estimated cost of Rs 4500 crore (US$ 698.7 million).

Real Estate & Housing

The Indian real estate sector, which had been facing tough times, is now poised for recovery due to the introduction of new government policies. The implementation of a number of reforms in the sector including demonetisation, RERA, GST, home loan rate cut, and affordable housing has breathed life into the real estate industry.

It is expected that the policy reforms highlighted above, would lead to higher accountability and transparency, and increase efficiency in the sector. With these reforms, the government has opened up plethora of opportunities for growth in the real estate and construction sector. It is estimated that India would require investments of over USD 4 trillion (Rs 260 trillion) over the next five to seven years to meet the several development goals such as 'Housing for All'; 100 Smart Cities, Delhi Mumbai Industrial Corridors (DMIC) and for creating support urban infrastructure. 

Budget 2017 has proposed infrastructure status for affordable housing, a long-standing demand of developers, and also increased the allocation for the Prime Minister Awas Yojana from Rs 15,000 crore to Rs 23,000 crore, bringing the country closer to realising the Housing for All mission by 2022.  Under this one crore houses are to be built by 2019 in rural India for the homeless and those living in 'kaccha' houses.

The real estate sector comprises four sub sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodations.

The Indian real estate market is expected to touch US$ 180 billion by 2020.

Power

Indian power sector is undergoing a significant change that has redefined the industry outlook. Sustained economic growth continues to drive electricity demand in India. The Government of India's focus on attaining 'Power for all' has accelerated capacity addition in the country.

The Indian power sector has an investment potential of Rs 15 trillion (US$ 225 billion) in the next “5 years, thereby providing immense opportunities in power generation, distribution, transmission, and equipment, according to Union Minister of Power.

It is estimated that the power sector projects, thermal power & large hydro power, will offer the construction opportunities to the tune of Rs 7,400 billion.

The government's immediate goal is to generate two trillion units (kilowatt hours) of energy by 2019. This means doubling the current production capacity to provide 24x7electricity for residential, industrial, commercial and agriculture use. The government has electrified 13,000 villages so far out of the total 18,452 villages and is targeting electrification of all villages by 2019, within the targeted 1,000 days.

In order to fulfill the target of Power for All by March 2019, the central government launched the Pradhan Mantri Sahaj Bijli Har Ghar Yojana, also known as Saubhagya. With an outlay of Rs 16,320 crore (US$ 2.51 billion), Saubhagya essentially aims for providing electricity access to over 40 million families in the country by December 2018.

India's power sector is one of the most diversified in the world. Sources of power generation range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power to viable non-conventional sources such as wind, solar, and agricultural and domestic waste. Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required.

Although the central government's policy focus is skewed towards renewables at present, thermal power, particularly coal based will be required to meet base load demand. Therefore, the outlook for thermal power is still strong, especially in the near to medium term. With the increase in renewable capacity addition, the requirement of hydro plants to balance the grid will increase even more. 

Irrigation

Water supply and irrigation sectors have a positive outlook and offer huge opportunities for construction players. Government schemes such as the Pradhan Mantri Krishi Sinchai Yojana (PMKSY) and its motto of Har Khet ko Paani and More Crop per Drop is likely to enable the continued growth of the irrigation sector.

PMKSY has been approved for implementation across the country with an outlay of Rs. 50,000 crore in five years (2015-16 to 2019-20) to develop complete irrigation supply chain, water resources, distribution network and farm-level application solutions to achieve the target of water for every farm.

The Government of India proposed to complete 99 prioritised Major & Medium Irrigation  AIBP Projects, having irrigation potential of 76.03 lakh hectares, in 18 States along with their CAD works by December 2019 under Pradhan Mantri Krishi Sinchayee Yojana (PMKSY). To cater to the large fund requirement and ensure completion of these projects, the Union Cabinet gave its approval for raising Extra Budgetary Resources of up to Rs, 9,020 crore for Long Term Irrigation Fund (LTIF) for year 2018-19 through issuance of bonds by National Bank for Agriculture and Rural Development (NABARD). 

In October, speaking at the inaugural session of  India Water Week -2017, Union Minister of Water Resources, River Development and Ganga Rejuvenation, Road Transport & Highways and Shipping Shri Nitin Gadkari said that 285 new irrigation projects will be taken up by next year to provide irrigation for 1 crore 88 lakh hectare of land. Shri Gadkari also said that 30 projects for river linking have been approved out of which work on three projects namely Ken- Betwa, Par- Tapi Narmada and Daman Ganga Pinjal will start within three months.

Maharashtra got the approval for 107 irrigation projects worth Rs 10,686 crores in Vidarbha, Marathwada and other drought and suicide prone regions of Maharashtra, which, on completion, would enhance irrigation potential by 1.46 lakh hectares. Out of these 107 projects, it is estimated that 86 minor and medium irrigation projects worth Rs 6,000 crore would be completed by 2018-end. The remaining would be completed by 2019-2020.