Infra capex growth normalising, private investments edging up

India's infrastructure sector stands at a pivotal juncture, shaped by a renewed emphasis on crowding in private investment in infrastructure, following several years of strong budgetary support from the central government.

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In financial year 2025-2026 (FY26), infrastructure capital expenditure (capex) is expected to grow 6-8 per cent year-onyear (Y-o-Y), thereby normalising to the average growth of 8 per cent Y-o-Y.

In FY26, the roads sector, which is expected to grow 5-6 per cent Y-o-Y, will dominate the capex share despite a decline in total kilometres of national highways to be constructed. Capex will be driven by a pipeline of wider four and six-lane highways, six and eight-lane expressways and high-speed corridor projects.

Between FY26 and FY30, infrastructure capex is expected to rise to ₹90-100 trillion, up 60 per cent from ₹59 trillion over FY21 and FY25. This time, the private sector is expected to dominate the capex on the back of favourable amendments by the government on development models. During FY21-25, central and state capex formed 90 per cent of the overall infrastructure capex.

Four key sectors-roads, railways, power, and irrigation-account for 75-80 per cent of the country's total infrastructure capex. Over the past few financial years, roads and railways have been the primary drivers of capex, collectively accounting for 45-50 per cent of the total capex, indicating significant focus on transportation-related projects.

The Railways have a robust capital allocation of 2.7 trillion for this financial year. With new corridors, dedicated freight corridors and station modernisation, the total expected opportunity is expected to be ₹13.5-14 trillion over the next 5-7 financial years.