Budget 2025-26: Key Takeaways for the Infrastructure Sector

04 Feb 2025 CW Team

The infrastructure sector is a key driver of India's social and economic growth as the nation advances toward Viksit Bharat. To boost this progress, the Union Government of India has introduced various measures to foster infrastructure investments in the Union Budget 2025 presented on 01 February 2025. Here are the key points with respect to the infrastructure sector:

Highlights:

Capital expenditure budgeted at Rs 11.21 lakh crore for FY26. Continued outlay of Rs 1.5 lakh crore for interest free long-term loans to states towards capital expenditure.
Infrastructure related ministries to come up with 3-year pipeline of projects that can be implemented in public private partnership mode.
An outlay of Rs 1.5 lakh crore for the 50-year interest free loans to states for capital expenditure and incentives for reforms.
The second asset monetisation plan for 2025-30 to be launched for generating capital of Rs 10 lakh crore for new projects.
Set up and allocate Rs 10,000 crore for an Urban Challenge Fund to finance up to 25 per cent of the cost provided at least 50 per cent is funded from bonds, bank loans, and PPPs.
NaBFID to set up a ‘Partial Credit Enhancement Facility’ for corporate bonds in infrastructure.
The Jal Jeevan Mission was extended till 2028 with focus on the quality of infrastructure and Operation & Maintenance of rural piped water supply schemes through “Jan Bhagidhari”.
Finance Minister proposed National Geospatial Mission to develop foundational geospatial infrastructure and data which will benefit urban planning.
The government will facilitate upgradation of infrastructure and warehousing for air cargo including high value perishable horticulture produce.
A digital public infrastructure, ‘BharatTradeNet’ (BTN) for international trade to be set-up as a unified platform for trade documentation and financing solutions.
To promote funding from Sovereign Wealth Funds and Pension Funds to the infrastructure sector, special tax exemptions available to them is extended by five more years, to March 31, 2030.

NaBFID will set up a ‘Partial Credit Enhancement Facility’ for corporate bonds for infrastructure.

Talking about how the budget will shape the infrastructure sector, Dheeraj Panda – Managing Director of Ammann India said, “The Union Budget 2025-26 lays a strong foundation for India’s infrastructure growth. The government’s focus on Public-Private Partnerships (PPP) and a Rs 1.5 lakh crore capital expenditure outlay for states will accelerate highway expansion and modernization. The new Asset Monetization Plan, reinvesting Rs 10 lakh crore into infrastructure, will further enhance funding availability for road projects. We welcome the emphasis on digitalisation through PM Gati Shakti and BharatTradeNet, which will improve logistics efficiency and streamline project execution. Additionally, the plan to boost tourism infrastructure will drive demand for better road connectivity, reinforcing the role of highways in economic growth. With regulatory reforms simplifying project approvals, we are optimistic about a more seamless and rapid implementation of road construction projects. We believe that this will not only strengthen India’s infrastructure ecosystem which is a crucial contributor to achieve the desired GDP growth, trade, and generate employment, ensuring inclusive and sustainable development."

The Union Budget 2025 is a decisive step towards strengthening India’s urban infrastructure and fostering business-friendly environments. Ramesh Nair, CEO, Mindspace Business Parks REIT said, “The Rs 1 lakh crore Urban Challenge Fund and incentivised urban reforms will enhance governance, municipal services, and city planning, key enablers for sustained commercial growth. The national framework for Global Capability Centers (GCCs) is particularly encouraging, as we have seen GCCs emerge as some of the largest occupiers of Grade A office spaces. Strategic infrastructure upgrades in emerging cities will unlock new opportunities for businesses and further India’s position as a global services hub."

For the full speech, please visit: https://www.indiabudget.gov.in/doc/Budget_Speech.pdf

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