The government’s various initiatives to improve the country’s infrastructure is likely to result in Indian infrastructure market witnessing growth in future, with increasing demand for investment in roads, railways, ports, power transmission and water utilities. The Fitch group company, BMI Research in its latest report has forecasted that the infrastructure market of India, which is the third-largest in Asia may surpass Japan’s market in nominal value terms in next five years.
The research agency has said that even if the construction activity got hampered due to a negative impact of demonetization, robust growth will return in 2017 as work resumes on the large pipeline of infrastructure, residential and non-residential projects in the country. Though, it also stated that the industry remains immensely challenging on account of delay and cost overrun of infrastructure projects and remains relatively risky owing to the slow pace of reform.
BMI Research pointed that the government has made some progress in addressing underlying issues in the sector, such as streamlining the land-acquisition process in some states. Furthermore, it said that the several programmes aimed at improving logistics, stimulating investment in manufacturing and building affordable housing will contribute to growth in the construction industry over the next 10 years, noting that reforms to foreign investment laws under Make in India initiative have made it easier for international companies to invest and participate in India's infrastructure projects.