• Infrastructure plays a huge role in propelling other industries and India’s overall development. The government, therefore, focuses on the development of infrastructure and construction services through focused policies such as open FDI norms, large budget allocation to the infrastructure sector, smart cities mission, etc. 1
  • Investment of about INR 2 lakh cr has been proposed by 99 cities under the Smart City initiative.2
  • The government’s flagship mission Pradhan Mantri Awas Yojana (Urban) – PMAY (U) launched in June 2015 aims to provide housing for all in urban areas by the year 2022. 13
  • Second largest FDI equity recipient sector for India in 2020-21.
  • Department for Promotion of Industry and Internal Trade, Cement production increased by 2.8per cent in October 2020 over October 2019.38
  • The overall investment in Urban transformation is up by 627% during the last 6 years of 2014-2021 as compared to the period between 2004-2014.42 
Reasons to Invest
  • Construction industry in India will remain buoyant due to increased demand from real estate and infrastructure projects.
  • Indian Real Estate sector expected to reach a market size of USD 1 Tn by 2030. Its contribution to the country’s GDP is expected to be approximately 13% by 2025.4
  • The share of the urban population is expected to be 50% of the total population by 2050.5 
  • General operation guidelines for registration of units under the new central sector scheme for the industrial development of Jammu and Kashmir.
  • Construction (Infrastructure) Activities as emerged as the top sector during F.Y. 2020-21 with around 13% share of the total FDI equity inflow.
  • Eightfold increase the total expenditure on urban development as over the past six years (2015-2021), this figure is about INR 11.83 lakh cr against the INR 1.57 lakh cr from 2004 to 2014.


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Recent Announcements

8th November 2021: India is committed to build modern infrastructure for the 21st century. GOI aims to reduce logistics cost by 5%.

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20th October 2021: Commission for Air Quality Management (CAQM) is actively taking up strict compliance of dust mitigation measures at Construction and Demolition (C&D) sites in the NCR

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18th October 2021: MoU signed between J&K and Government of Dubai for Real Estate development, industrial parks, super specialty hospitals

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13th October 2021: PM launches Gati Shakti Master Plan to integrate different modes of transportation and increase the speed of infrastructure development in India

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01st October 2021: PM launched the 2nd phases of Swachh Bharat Mission-Urban (SBM-U) and AMRUT with an outlay of about INR 4.4 Lakh Crore, to adopt ‘Universal Approach’ and make a move towards ‘Saturation’ in sanitation and water availability in all Urban Local Bodies (ULBs), making the cities ‘Aatmanirbhar’.

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  • The Gross Value Added (GVA at Current Prices) by the Construction Sector in India is estimated to be about USD 192 Bn in 2019-20 as compared to USD 183.5 Bn in 2018-19.6
  • Investments valued at USD 965.5 Mn will be required by the infrastructure sector by 2040.7
  • Cement production (weight: 5.37 per cent) increased by 10.8 per cent in September 2021 over September 2020. Its cumulative index increased by 37.7 per cent during April to September 2021-22 over the corresponding period of previous year.
Growth Drivers
  • In the Virtual Global Investor Roundtable, the Hon'ble Prime Minister expressed that India has an ambitious plan to invest USD 1.5 tn under the  National Infrastructure Pipeline.
  • A project has been sanctioned by Union Minister of Power amounting to INR 22.5 Crores for the reconstruction/restoration work in 478 schools in 8 districts (i. Bageshwar, ii. Nanital, iii. Udham Singh Nagar, iv. Pauri, v. Chamoli, vi. Almora, vii. Champawat, & viii. Pithoragarh) and 28  health Centres in 5 districts (i. Almora, ii. Champawat, iii. Udham Singh Nagar, iv. Nanital, & v. Pithoragarh) of Uttarakhand.
FDI Policy
  • 100% FDI through the automatic route is permitted in the following construction (development) projects:8
    • Development of townships
    • Construction of residential/commercial premises
    • Construction of roads or bridges
    • Construction of hotels, resorts
    • Construction of hospitals, educational institutions
    • Construction of recreational facilities
    • Construction of city and regional level infrastructure
  • FDI Limit for real estate projects within Special Economic Zones (SEZs) raised to 100%.
  • FDI limit for industrial parks under the automatic entry route is 100%. 9
  • The cumulative FDI equity inflow in the Construction industry is USD 26,143.67 mn during the period April 2000 to June 2021. This constitutes 4.78% of the total FDI inflow received across sectors.
  • The construction (Infrastructure) sector has a total FDI equity inflow of (13.37%).

Read more about Foreign Direct Investment Policy in India >

Sector Policy
  •  METRO NEO- The metro rail system being developed for mass transit corridors having a Peak Hour Peak Direction Traffic (PHPDT) upto 8000 with AW3 loading.37
  • On 18th November 2020, under the Special Micro-Credit Facility Scheme more than 12 lakh loans were sanctioned and about 5.35 lakh loans disbursed.
  • A sum of Rs 18000 cr is being provided for PMAY- Urban. This will help ground 12 Lakh houses and complete 18 Lakh houses, create additional 78 Lakh jobs.39
  • Around 1.1 cr houses approved and the construction of 1,68,606 new houses approved under PMAY(U) that focuses on completion & delivery of houses to beneficiaries.
  • MOHUA launches Socio-Economic Profiling of PM SVANidhi beneficiaries. Under PM Street Vendor's AtmaNirbhar Nidhi (PM SVANidhi) INR 66.55 cr has been released till 30th September 2020.42 

Smart Cities Mission

  • The objective of the Smart Cities Mission is to promote cities that provide core infrastructure and give a decent quality of life to their citizens, a clean and sustainable environment and the application of ‘Smart’ solutions.10
  • 2,781 projects worth INR 48,150 cr have been completed under Smart Cities Mission.
  • The core infrastructure elements in a smart city would include:11
    1. Adequate water supply
    2. Assured electricity supply
    3. Sanitation, including solid waste management
    4. Efficient urban mobility and public transport
    5. Affordable housing, especially for the poor
    6. Robust IT connectivity and digitalization
    7. Good governance, especially e-Governance and citizen participation
    8. Sustainable environment
    9. Safety and security of citizens, particularly women, children and the elderly
    10. Health and education
  • Global Housing Technology Challenge-India (GHTC-I) aims to bring the most innovative construction technologies to India through a competitive platform. It aims to give a boost through the development of domestic technological research, and building platforms for knowledge sharing and networking across the sector.12 
  • Of the total proposed projects under SCM, 5,924 projects (115% by number) worth INR 1,78,500 cr (87% by value) have been tendered so far, work orders have been issued for 5,236 projects (101% by number) worth INR1,46,125 cr (71% by value). 2,665 projects (52% by number) worth INR 45,080 cr (22% by value) have also been fully completed and are operational (as on 23 June 2021).

Swachh Bharat Mission

  • The Swachh Bharat Mission (SBM) is a cleanliness campaign by the Government of India.14
  • The objectives of the SBM are:
    1. Elimination of open defecation
    2. Eradication of Manual Scavenging
    3. Modern and Scientific Municipal Solid Waste Management
    4. To effect behavioral change regarding healthy sanitation practices
    5. Generate awareness about sanitation and its linkage with public health
    6. Capacity augmentation for Urban Local Bodies (ULBs)
    7. Create an enabling environment for private sector participation in Capex (capital expenditure) and Opex (operation and maintenance).15
  • The SBM has been divided into two categories – Urban and Gramin (rural). The Ministry of Housing and Urban Affairs implements it in urban areas and the Ministry of Drinking Water and Sanitation implements it in rural areas. The above-mentioned ministries work with all other union ministries, state governments, local institutions, NGOs, faith organizations, media and other stakeholders to ensure the wide and proper implementation of the SBM.16
  • Rural sanitation coverage has increased from 38.7% in 2014 to 96.9% as of 5 December 2018.17 On the urban front, 3,574 cities have been declared defection free, 5.4 mn plus individual toilets have been constructed, 464,250 community & public toilets have been constructed and 88.4 MW of waste has been converted to energy.18
  • In a big boost to the SBM (Gramin), the World Bank, in December 2015, approved a USD 1.5 Bn loan for the SBM Support Operation project. The World Bank is also providing parallel assistance of USD 25 Mn as technical assistance to build the capacity of select state governments in implementing community-led behavioural change programmes targeting social norms to help ensure widespread usage of toilets by rural households.19

Heritage City Development and Augmentation Yojana (HRIDAY)

  • The National Heritage City Development and Augmentation Yojana (HRIDAY) has been launched to preserve and revitalise the soul of Indian heritage cities to reflect the city’s unique character by encouraging aesthetically appealing, accessible, informative and a secure environment.12 cities have been identified to implement the program – Amjer, Amaravati, Amritsar, Badami, Dwaraka, Gaya, Kancheepuram, Mathura, Puri, Varanasi, Velankanni and Warangal. 20
  • As of December 2018, 20 projects amounting to USD 20 Mn have been completed in in Ajmer, Amaravati, Amritsar, Badami, Dwaraka, Puri and Varanasi.22  For more details, please refer to HRIDAY.
  • GST Regime Implications - Under the GST regime (revised), promoters are to pay 1% (without input tax credit) GST in case of affordable houses and 5% (without input tax credit) on construction of houses other than affordable houses.23 Commercial properties will continue at the same GST rate of 12% with input tax credit.
  • GST is not applicable to completed and ready-to-move-in projects, as there are no indirect taxes applicable in the sale of such properties.
  • The Real Estate Regulation and Development Act (RERA), 2016, set up in November 2016, aims to reform the real estate sector in India by encouraging greater transparency, citizen centricity, accountability and financial discipline.24 The act will also protect consumers by creating an online system for information sharing so that mutual trust can develop between developers and buyers and facilitate the timely completion of projects.

Pradhan Mantri Awas Yojana (Urban – Housing for All)45

  • The Pradhan Mantra Awas Yojana (PMAY) aims to provide housing for all by 2022 and is being implemented from June 2015.
  • So far, about 1.12 cr houses have been sanctioned for its beneficiaries, out of which more than 83 lakh houses are grounded and more than 50 lakh completed.
  • The houses sanctioned so far under the Mission involve an investment of INR 7.35 lakh cr with Central Assistance of INR 1.81 lakh cr.
  • As of now, over INR 100,000 cr of Central Assistance has already been released. Affordable Housing Fund INR 20,000 cr are being utilized in the last 3 years.
  • Around 18,500 ANGIKAAR Resource Persons were trained by about 2,200 specialists of City Level Technical Cells (CLTCs) working in 4,427 cities of PMAY (U). They acted as foot soldiers and helped propagate the message of the campaign.

Atal Mission for Rejuvenation and Urban Transformation (AMRUT)

  • The purpose of the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) is to:
    1. Ensure that every household has access to a tap with an assured supply of water and a sewerage connection
    2. Increase the amenity value of cities by developing greenery and well maintained open spaces (e.g. parks)
    3. Reduce pollution by switching to public transport or constructing facilities for non-motorized transport
  • Overall Mission allocation is INR 1 lakh cr including a central share of INR 50,000 cr. State action plans amounting to INR 77,640 cr for basic infrastructure projects were approved, against which projects worth INR 79,772 cr have been grounded.
  • So far, work worth INR 52,477 cr (66%) has been carried out. So far, 105 lakh household water tap connections and 78 lakh sewer/ septage connections have been provided under Mission and in convergence with other schemes. Credit rating work has been awarded for 485 cities and completed in 470 cities. 164 cities have received an Investible Grade Rating (IGR), including 36 cities with ratings of A- or above. Ten ULBs namely Ahmedabad, Amravati, Bhopal, Ghaziabad, Hyderabad, Indore, Lucknow Pune, Surat and Visakhapatnam have raised INR 3,840 cr through the issuance of municipal bonds.
  • Under AMRUT, 1,831 parks over 3,700 acres have been developed, and 85 lakh street lights have been replaced, resulting in energy savings of 185.33 crore units (kWh).

Under the Pradhan Mantri Gram Sadak Yojana (PMGSY), in October 2020, a total of 355 roads works of 2267km and 71 bridges works have been completed under various verticles of PMGSY. 40

Investment Opportunities

Key Highlights from Union Budget 2020-21 

  • Total allocation to the Ministry of Housing and Urban Development stands at INR 50,039 cr. 29
  • Total budget allocation towards major centrally sponsored schemes is as follows: 30
    • Pradhan Mantri Awas Yojana (PMUY): INR 27,500 cr.
    • Urban Rejuvenation Mission (AMRUT and Smart Cities Mission): INR 13,750 cr.
    • Swachh Bharat Mission (Urban): INR 2,300 cr.
    • Swachh Bharat Mission (Gramin): INR 9,994 cr.

Central sector schemes providing financial assistance

  • Atmanirbhar Bharat Schemes
    • Affordable Rental Housing Complexes (ARHCs): In order to cater to the housing needs for migrant workers which arose due to the COVID-19 pandemic, the Ministry of Housing & Urban Affairs has initiated the Affordable Rental Housing Complexes (ARHCs) scheme. It is a sub-scheme under Pradhan Mantri AWAS Yojana- Urban (PMAY-U) that will ensure a decent living environment to migrant workers in urban cities. 31
    • PM Street Vendor's AtmaNirbhar Nidhi (PM SVANidhi): To provide financial assistance to various street vendors hit by the COVID-19 pandemic, the Ministry of Housing & Urban Affairs has launched the PM SVANidhi scheme. The scheme will provide working capital to street vendors, incentivize regular repayments and reward digital transactions. 32
  • North Eastern Region Urban Development Programme (NERUDP): The central sector programme is being implemented by the Ministry of Urban Development (MoUD). Financial aid (70% of the cost) is being provided by the Asian Development Bank in the form of loan to the government for development of infrastructure in north eastern cities. 33, 34


Explore Government policies/schemes in Construction sector >

Investment Opportunities
  • Construction development in residential, retail, commercial and hospitality sectors, development of townships
  • Construction of roads, bridges, hotels, resorts
  • Technologies and solutions for smart, sustainable and connected cities and integrated townships
  • Technologies for the promotion of low cost and affordable housing
  • Green building solutions
  • Sustainable and environmentally friendly building materials.
  • Training and skill development of construction sector workers
  • Urban water supply, urban sewerage and sewage treatment. 


Explore projects to invest in Construction sector >

Foreign Investors
  • Hines (USA)
  • Veolia (France)
  • Ascendas (Singapore)
  • Aqualyng (Norway)
  • The Trump Organization (USA)
  • Alstom (France)
  • GIZ (Germany)
Key Achievements
  • Hon’ble Minister Shri Hardeep Singh Puri launched three initiatives, namely, the Nurturing Neighborhoods Challenge focusing on shaping cities for young children and their families; the Data Maturity Assessment Framework to evaluate data ecosystems of cities, and an online training programme for City Data Officers (CDOs) of 100 Smart Cities.35
  • In the last five years, the construction sector, as a part of manufacturing contributed an average of 8 per cent to the overall Gross Value Added (GVA).36 
  • During the month of October 2020, about 23.53 lakh households have been provided with a tap water connection.41 
  • Jal Jeevan Mission reaches a milestone of 3.5 Crore rural households taps water connections.
  • The government has increased year-on-year infrastructure Capex by 34 % to INR 5.54 lakh crores, such increased investment in infrastructure would revive the economy and create employment in near future.
  1. "India Services Portal, Department of Commerce, Ministry of Commerce & Industry”, Sector Overview - Construction and Related Engineering Services, 
  2. "Ministry of Housing and Urban Affairs", Schemes/ Programmes, Smart Cities,
  3. Factsheet on FDI - April 2000 to June 2021Department for Promotion of Industry and Internal Trade,
  4. “India Services Portal, Department of Commerce, Ministry of Commerce & Industry”, Sector Overview - Construction and Related Engineering Services,
  5. “Ministry of Housing and Urban Affairs”, Standard Operating Procedures for Cleaning Sewers and Septic Tanks,
  6. “First Advance Estimates of National Income, 2019-20” Ministry of Statistics & Programme Implementation, PIB website,
  7. India Infrastructure Sector 2019-23, EMIS,
  8. “Department for Promotion of Industry and Internal Trade”, Consolidated FDI Policy,
  9. “Department for Promotion of Industry and Internal Trade”, Consolidated FDI Policy,
  10. “Smart Cities Mission”, Ministry of Housing and Urban Affairs,  What is Smart City,
  11. “Smart Cities Mission”, Ministry of Housing and Urban Affairs,  What is Smart City,
  12. ”Ministry of Housing and Urban Affairs”, Global Housing Technology Challenge -India,
  13. PMAY,
  14. “PM India”, Major Initiatives, Swachh Bharat Abhiyan,
  15. “Ministry of Housing and Urban Affairs”, Swachh Bharat Mission,
  16. “Ministry of Drinking Water and Sanitation”, Year End Review-2018: Ministry of Drinking Water and Sanitation Swachh Bharat Mission,
  17. “Ministry of Drinking Water and Sanitation”, Year End Review-2018: Ministry of Drinking Water and Sanitation Swachh Bharat Mission,
  18. “Ministry of Housing and Urban Affairs”, Smart Bharat Mission Urban,
  19. “World Bank”, World Bank Approves USD 1.5 Bn to Support India’s Universal Sanitation Initiatives,
  20. “Ministry of Housing and Urban Affairs”, HRIDAY,
  21. "5th Anniversary of Urban Missions", Ministry of Housing and Urban Affairs, PIB, 
  22. “Ministry of Housing and Urban Affairs”, HRIDAY,
  23. “Ministry of Finance”, Decisions taken by the GST Council in the 34th meeting held on 19th March, 2019 regarding GST rate on real estate sector,
  24. “Ministry of Housing and Urban Development”, Real Estate Regulation and Development Act -2016,
  25. “Ministry of Housing and Urban Poverty Alleviation”, Year Ender-6-PMAY-Ministry of Housing & Urban Affairs,
  26. “Ministry of Housing and Urban Poverty Alleviation”, Year Ender-6-PMAY-Ministry of Housing & Urban Affairs,
  27. ”Ministry of Housing and Urban Poverty Alleviation”, Rs 41,765 crores allocated for MOHUA for 2018-19 – An Increase of Nearly 3% over las5 year’s budget,
  28. “Ministry of Housing and Urban Affairs” Convergence,
  29. Expenditure Budget Profile - Ministry of Housing and Urban Affairs, Union Budget website,
  30. Expenditure Budget Profile - Centrally Sponsored Schemes, Union Budget website,
  31. ARHC, Ministry of Housing and Urban Affairs,
  32. PM SVANidhi, Ministry of Housing and Urban Affairs,
  33. NERUDP, Ministry of Housing and Urban Affairs,
  34. NERUDP,
  36. Monthly Economic Review, Department of Economic affairs,
  37. “Ministry of Housing and Urban Affairs”,
  38. PIB Release,
  39. PIB Release,
  40. Monthly Report,
  41. Monthly Report,
  42. “Ministry of Housing and Urban Affairs”,
  43. PIB Release,
  44. PIB Release,
  45. PIB Release,

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