Investment in road, renewables and realty will be Rs 15 lakh cr in two years

Chennai: Investments in renewables, roads and realty may rise 38 per cent over two fiscals to Rs 15 lakh crore in FY25 and FY26. India’s need for creation of sustainable infrastructure by adding more green power to the energy mix, improving physical connectivity through a denser road network, as well as rising demand for residential and commercial real estate will ride this surge in investments.

In FY23 and FY24, the total investments in the three sectors were close to Rs 11 lakh crore and Crisil expects this to go up to Rs 15 lakh crore in this fiscal and the next.

The underlying demand drivers in these three sectors remain strong, with regular policy interventions fuelling investor interest, said Krishnan Sitaraman, Senior Director and Chief Ratings Officer, CRISIL Ratings.

For renewables, the key growth driver is demand for sustainable energy transition. The government target is driving up auctions, which has created a strong pipeline. India saw auctions of 35 GW in fiscal 2024, the highest ever in a single fiscal, resulting in a strong pipeline of 75 GW. This will primarily drive implementation of 50 GW capacity over the next two fiscals.

In the roads sector, the need for improved physical connectivity has driven healthy awarding over the past few fiscal years, except the last one. Strengthened order books of road developers, at 2.5 times of revenue, will support 11 per cent growth in highway construction, which is seen at 12,500 km per year over the next two fiscal years.

As for real estate, net leasing of commercial office space will see demand growth of 8-10 per cent this fiscal and the next. The primary drivers of the same will be global capability centres eyeing India’s large talent pool and competitive rentals, as well as healthy demand from domestic sectors. Demand growth for residential real estate will sustain at 8-12 per cent this fiscal and the next.