India

India’s economy has greatly benefited from the infrastructure sector, which has been a crucial driver. Realizing the importance of private investments in India’s infrastructure growth, the country has systematically rolled out a public–private partnership (PPP) program to deliver high-priority public utilities and infrastructure. By the turn of the last decade, the scale and diversity of India’s PPP program have expanded significantly. According to the Economist Intelligence Unit’s 2018 Infrascope report, among the 19 Asian countries ranked, India ranked first in overall investment and business climate and second in terms of financing environment. The country ranked third in institutional maturity, and third overall in having an ideal environment for PPP projects.1

Trends in Infrastructure Investment in India

The infrastructure of an economy plays a crucial role in driving its advancement and laying the foundation for future development opportunities. Infrastructure investment in India during fiscal year (FY) 2013 to FY2019 is estimated at ₹56.48 trillion ($688 billion).2 India’s infrastructure investment for FY2022–FY2023 was about ₹7.5 trillion ($91.48 billion) and is expected to be ₹10 trillion ($121.98 billion) for FY2024.

The National Infrastructure Pipeline (NIP) was launched with the projected infrastructure investment of ₹111 trillion ($1.35 trillion) during the period 2020–2025, with the majority of projects in the sectors like energy, roads, urban infrastructure, and railways.3 It is jointly funded by the central government, the state governments, and the private sector. The central (39%) and state (40%) governments have nearly equal contribution, while the private sector has a 21% share.

According to the 2023 Infrastructure Yearbook of CRISIL Limited (formerly Credit Rating Information Services of India Limited), India will spend nearly ₹143 trillion on infrastructure over 2024–2030, more than twice the estimated ₹67 trillion spent over 2017–2023. Of the total, about ₹36.6 trillion will be green investments, marking a rise of five times compared with FY2017 through FY2023. It also highlights that traditional sectors like roads and power are anticipated to sustain their significant roles, with emerging sectors like electric vehicles, solar, wind, and hydrogen poised to gain momentum. The below table provides an estimate of infrastructure investments lined up until 2030.4

Estimated Total Investments for the Infrastructure Sector (₹ trillion)

However, achieving this goal requires substantial investments in infrastructure and the involvement of multiple stakeholders for the overall growth of the society. In recent years, PPPs have been an important source of investment in the infrastructure sector in India. According to the World Bank’s Private Participation in Infrastructure (PPI) 2023 Half Year report, India ranked fourth in total investments made by the private sector in infrastructure sector. Much of this could be attributed to various initiatives taken by the Government of India.

Additionally, efforts are being made to improve the infrastructure development trajectory in India. In national highways, a step-up in public outlays as a response has helped increase the pace of construction. In June 2022, the Minister of Road Transport and Highways opened 15 national highway projects worth ₹135.85 billion ($1.7 billion) in Patna and Hajipur, Bihar. The proactive policy efforts have also largely contributed to unclogging stalled projects. Recalibrated PPP models, including the hybrid annuity model (HAM) and toll–operate–transfer (TOT), have since helped crowd-in private investments. Similarly, in renewable energy, supported by largely favorable government policies and market conditions, an 18-gigawatt (GW) capacity was added in 2018 alone, notwithstanding recent headwinds. The Union Minister for New and Renewable Energy and Power has informed that the installed renewable energy capacity in India has increased from 115.94 GW in March 2018 to 172.00 GW in March 2023 (i.e., an increase of about 1.48 times). According to the Central Electricity Authority, 365.60 billion units of electricity had been generated over 2022–2023 from renewable energy sources across the country. Globally, India has the fourth-largest installed capacity of renewable energy, according to the Renewable Energy Statistics 2023 released by the International Renewable Energy Agency.5

The Electricity Act introduced the franchisee model, which allowed for private sector participation in the distribution of electricity in specified areas, leading to an increase in PPPs in the power distribution sector. While the port sector has witnessed active private participation since the 1990s, the airport sector saw a strong interest in the recent decade. Through several initiatives such as Housing for All and Smart Cities, the government has been working on reducing the bottlenecks that impede growth in the urban and social infrastructure sectors.

The NITI Aayog launched the National Monetization Pipeline (NMP) comprising potential brownfield infrastructure assets. The monetization of operating public infrastructure assets has now been recognized as a key financing option for new infrastructure construction. The total value to be unlocked from the NMP is about ₹6,000 billion ($73.2 billion) for core assets of the central government. The Ministry of Finance (MOF) proposes to create an asset monetization dashboard to track progress and provide visibility to investors. Some important measures for monetization are as follows:

• The National Highways Authority of (NHAI) and the Power Grid Corporation of India Limited have each sponsored one Infrastructure Investment Trust (InvIT) to attract international and domestic institutional investors. Five operational roads, with an estimated enterprise value of ₹50 billion, are being transferred to the InvIT promoted by the National Highways Authority of India. Similarly, transmission assets valued at ₹70 billion will be transferred to the InvIT promoted by the Power Grid Corporation of India Limited.
• In October 2022, the National Highways Infra Trust (NHAI InvIT), an infrastructure investment trust sponsored by the NHAI to support the Government of India’s NMP, had raised the sum of ₹14.30 billion ($174.5 million) from domestic and international investors through the placement of its units, to partially fund the acquisition of three additional road projects from NHAI.
• Railways will monetize Dedicated Freight Corridor assets for operation and maintenance (O&M), after commissioning.
• Based on the NMP, 25 airports managed by the Airports Authority of India (AAI) have been earmarked for asset monetization over 2022–2025: Agartala, Amritsar, Bhopal, Bhubaneswar, Calicut, Chennai, Coimbatore, Dehradun, Hubli, Imphal, Indore, Jodhpur, Madurai, Nagpur, Patna, Raipur, Rajahmundry Ranchi, Surat, Tirupati, Trichy, Udaipur, Vadodara, Varanasi, and Vijayawada.6
• Other core infrastructure assets that are being rolled out under the asset monetization programme are the following: (i) NHAI operational toll roads; (ii) transmission assets of the Power Grid Corporation of India Limited; (iii) oil and gas pipelines of GAIL (India) Limited, Indian Oil Corporation Limited, and Hindustan Petroleum Corporation Limited; (iv) AAI airports in Tier II and III cities; (v) other railway infrastructure assets; (vi) warehousing assets of central public sector enterprises such as the Central Warehousing Corporation and the National Agricultural Cooperative Marketing Federation of India Limited (NAFED); and (vii) sports stadiums.7

Recent Trends in the Public–Private Partnership Landscape

In the PPP space, India has witnessed the emergence of innovative models aimed at promoting sustainable infrastructure development while addressing a diverse array of socioeconomic challenges. One notable trend involves the integration of technology-centric collaborations, leveraging advancements in digital infrastructure to enhance efficiency and accessibility across multiple sectors. Initiatives such as the Smart Cities Mission and Digital India have catalyzed the adoption of pioneering PPP frameworks, placing a strong focus on intelligent solutions for urban development, e-governance, and digital connectivity. These collaborative efforts prioritize the creation of scalable and inclusive solutions, utilizing private sector expertise and resources to effectively meet societal needs. The growth of the PPP ecosystem in the country is further supported by frameworks that facilitate private investment in critical infrastructure projects, with the goal of optimizing risk-sharing mechanisms, attracting long-term investments, and ensuring the sustainable development of vital infrastructure. As India advances its development agenda, the ongoing evolution of PPPs plays a crucial role in fostering inclusive growth, innovation, and resilience.

Some of the areas where PPPs are emerging are as follows:

• Digital agriculture. PPPs in the field of digital agriculture establish strategic collaborations aimed at utilizing technology to transform practices within the agricultural value chain. The primary goal is to grant the government access to new technologies, expertise, and innovative ideas, while also providing the private sector with access to the Agri Stack and establishing linkages with government networks in districts and villages. Ultimately, PPPs in digital agriculture aim to modernize conventional farming methods, champion sustainability, minimize environmental impact, and enhance agricultural output to meet the continually growing global demand for food.
• Urban mobility. In an effort to meet the increasing mobility demands of the expanding urban population and facilitate the transition from private to public transportation, PPPs play a crucial role in urban passenger rail projects and bus rapid transit systems, and in enhancing last-mile connectivity. These partnerships are instrumental in improving productivity and contributing to the overall social welfare by addressing the evolving transportation needs of urban dwellers.
• Monetization public–private partnerships. The NITI Aayog, Government of India has launched the NMP to monetize asset rights, ensure stable revenue streams from brownfield development across existing infrastructure in the country, and develop structured partnerships under defined contractual frameworks with strict key performance indicators and performance standards. PPPs are expected to play a significant role in implementing this strategy.
• Transit-oriented development. The transit-oriented development (TOD) through PPP in India has gained momentum with the introduction of a new TOD policy. The TOD policy provides a regulatory framework and incentives to facilitate private investment in TOD projects, seeking to address challenges associated with urbanization, congestion, and environmental sustainability. The TOD policy in India emphasizes mixed-use developments, integrating residential, commercial, and recreational spaces near public transportation hubs. By fostering such synergies, the policy aims to enhance connectivity; reduce traffic congestion; and create livable, pedestrian-friendly environments. As India experiences rapid urbanization, TOD through PPP emerges as a crucial strategy to address the growing demand for efficient and accessible urban spaces, fostering economic growth while prioritizing environmentally conscious and inclusive development.

Way Forward

As India's economy continues to grow rapidly, there is a need for robust physical and social infrastructure to support its development. With a population expected to reach 1.52 billion by 2036, and 70% of them residing in urban areas, there are opportunities to enhance infrastructure services to meet the evolving needs of its dynamic population.8 To achieve the $5 trillion gross domestic product (GDP) by FY2025, India needs to spend $1.4 trillion on infrastructure, according to an economic survey.9 It is estimated that India needs to invest $840 billion over the next 15 years into urban infrastructure to meet the needs of its fast-growing population.10 Scaling up investment in infrastructure, enhancing allocative efficiency of productive inputs like water, making cities more livable, and stemming the long-term effects of climate change are urgent imperatives for India.

Infrastructure investments in India have shown steady growth. For instance, India is expected to spend nearly ₹143 trillion on infrastructure over FY2024 to FY2030, more than twice the ₹67 trillion spent over FY2017 to FY2023.

The infrastructure sector has become the biggest focus area for the Government of India. India plans to spend $1.4 trillion (₹114.8 trillion) on infrastructure during 2019–2023. The government has proposed an investment of ₹50 trillion ($610 billion) for railways infrastructure over 2018–2030.11 Several other government initiatives like PM Gati Shakti, National Logistics Policy (NLP), the National Infrastructure Pipeline (NIP), and NMP will help India achieve its economic growth target of $5 trillion by 2025.

The PM Gati Shakti program, launched by the Government of India with an outlay of ₹100 trillion in 2021, aimed at improving infrastructure development and enhancing the efficiency of transportation and logistics networks in the country. It focuses on integrated and multimodal connectivity to boost economic growth and sustainable development driven by seven engines—roads, railways, ports, airports, waterways, mass transport, and logistics infrastructure. These engines are further supported by the complementary roles of energy transmission, ICT, bulk water and sewerage, and social infrastructure.

Also, to complement the PM Gakti Shakti plan, the NLP was launched on 17 September 2022 to drive economic growth and business competitiveness of the country through an integrated, seamless, efficient, reliable, green, sustainable, and cost-effective logistics network by leveraging best in class technology, processes, and skilled labor. This will reduce logistics costs and improve performance. The targets of the NLP are to (i) reduce cost of logistics in India, (ii) improve the Logistics Performance Index ranking (target is to be among the top 25 countries by 2030), and (iii) create data-driven decision support mechanism for an efficient logistics ecosystem. To achieve these targets, the Comprehensive Logistics Action Plan was launched.

Given India's significant infrastructure financing requirements, there is an emphasis on enhancing investments by proactively addressing upstream policy or structural considerations and establishing alternative nonbank financing mechanisms. It presents an opportunity to overcome both financial and nonfinancial barriers to commercial infrastructure financing, paving the way for financing solutions that effectively leverage limited public funding to accelerate the provision of high-quality infrastructure. Additionally, exploring local-level financing and balance street strengthening present promising avenues for further advancement.

• 1Economist Intelligence Unit. 2018. Infrascope—India Country Report
• 2Government of India, Ministry of Finance (MOF), Department of Economic Affairs (DEA). 2019. National Infrastructure Pipeline. Volume 1.
• 3Government of India, MOF, Press Information Bureau. 2021. A Strong V-Shaped Recovery of Economic Activity. Press release. 29 January.
• 4CRISIL. 2023. India’s Infrastructure Spending to Double to ₹143 trillion between Fiscals 2024 and 2030, Compared with 2017-2023. Press release. 17 October.
• 5International Renewable Energy Agency. 2023. Renewable Energy Statistics 2023. July.
• 6Government of India, Ministry of Civil Aviation, Press Information Bureau. 2021. 25 AAI Airports Earmarked for Asset Monetization under National Monetization Pipeline; AAI Has Identified 13 Airports for Operations, Management and Development of the Airports through PPP Mode. Press release. 9 December.
• 7Government of India, MOF, Press Information Bureau. 2021. Launch of National Monetization Pipeline for Monetizing Operating Public Infrastructure Assets. Press release. 1 February.
• 8Government of India, Ministry of Health and Family Welfare, National Commission on Population. 2020. Population Projections for India and States 2011–2036. Census of India 2011.
• 9The Economic Times. 2022. To Achieve $5 Trillion GDP by FY25, India Needs to Spend about $1.4 Trillion on Infra: Eco Survey. 31 January.
• 10World Bank. 2022. India’s Urban Infrastructure Needs to Cross $840 Billion Over Next 15 Years: New World Bank Report. Press release. 14 November.
• 11India Brand Equity Foundation. Infrastructure Sector in India.