Building a sustainable future

The Construction industry in India consists of the Real estate as well as the Urban development segment. The Real estate segment covers residential, office, retail, hotels and leisure parks, among others. While Urban development segment broadly consists of sub-segments such as Water supply, Sanitation, Urban transport, Schools, and Healthcare. 

  • Policy Support - In March 2021, the Parliament passed a bill to create a $ 2.5 Bn development finance institution called National Bank for Financing Infrastructure and Development (NaBFID) to fund infrastructure projects in India.
  • In FY21, infrastructure activities accounted for 13% share of the total FDI inflows. FDI in the construction development sector (townships, housing, built up infrastructure and construction development projects) and construction (infrastructure) activities stood at $ 28.64 bn and $26.22 bn respectively, between April 2000 and June 2022.
  • Cement production (weight: 5.37 %) increased by 2.1 % in July 2022 over July 2021. Its cumulative index increased by 13.3 % during April to July 2022-23 over the corresponding period of previous year.

100% Foreign direct investment in the construction industry in India under automatic route is permitted in completed projects for operations and management of townships, malls/shopping complexes, and business constructions.

100% Foreign direct investment in the construction industry is allowed under the automatic route for urban infrastructures such as urban transport, water supply, sewerage, and sewage treatment.

For further details, please refer FDI Policy

  • %

    Share in India's GDP

  • mn

    People employed

Explore Related Sub Sectors

Second largest employer in India

Second largest FDI recipient sector for India in 2020-21

Third largest construction market globally by 2025

Industry Scenario

The construction Industry in India is expected to reach $1.4 Tn by 2025

  • Cities Driving Growth - Urban population to contribute 75% of GDP (63% present), and 68 cities will have a population of more than 1 mn
  • The construction industry market in India works across 250 sub-sectors with linkages across sectors.
  • The Real Estate Industry in India is expected to reach $1 Tn by 2030 and will contribute 13% to India’s GDP
  • Residential- By 2030, more than 40% of the population is expected to live in urban India (33% today), creating a demand for 25 Mn additional mid-end and affordable units.
  • Under NIP, India has an investment budget of $1.4 Tn on infrastructure - 24% on renewable energy, 19% on roads & highways, 16% on urban infrastructure, and 13% on railways
  • Schemes such as the revolutionary Smart City Mission (target 100 cities) are expected to improve quality of life through modernized/ technology driven urban planning.


  • Smart cities

    100 smart cities currently. Mission to improve quality of life through modernized/technology driven urban planning

  • Industrial corridors

    Eleven industrial corridors planned

  • Data Centres

    Real estate demand is set to increase by 15-18 Mn sq. ft. by 2025 across major cities

  • Cold storage

    Expected to add an incremental of ~10 mn tonnes by 2023

  • Increasing demand for commercial space

    Construction of office spaces, hotels, retail, entertainment units. The net office space absorption across India's largest 6 cities stood at 31.9 Mn sqft in 2020


Industrial Land Bank Portal

GIS - based map displaying available infrastructure for setting up business operations in the state.

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Asked Questions

What is the harmonised Master List of Infrastructure Sub-sectors as notified by Government of India?

Please refer to the harmonised master list of sub-sectors at this link.

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What are the functions and duties of promoters under Real Estate (Regulation & Development) Act, 2016?

Functions and duties of promoters are clearly defined under RERA act:
1) The Act mandates that a promoter shall deposit 70% of the amount realised from the allottees, from time to time, in a separate account to be maintained in a scheduled bank. This is intended to cover the cost of construction and the land cost and the amount deposited shall be used only for the concerned project.
2) Withdrawal can only be made after it is certified by an engineer, an architect and chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project.
3) The promoter is also required to get his accounts audited within six months after the end of every financial year by a practicing chartered accountant.
He will also have to get verified during the audit that:
i) The amounts collected for a particular project have been utilised for the project
ii) The withdrawal has been in compliance with the proportion to the percentage of completion of the project.

Obligations of promoter are clearly defined under this act.
Restriction on transfer and assignment: The promoter shall not transfer or assign his majority rights and liabilities in respect of a project to a third party without obtaining prior written consent from two-thirds of the allottees, except the promoter and without the prior written approval of the Regulatory Authority.
Further details, please refer the link.

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What is Real Estate (Regulation & Development) Act, 2016?

The Real Estate (Regulation and Development) Act, 2016 is an Act of the Parliament of India which seeks to protect home-buyers as well as help boost investments in the real estate industry. The Act came into force from 1 May 2016. The key highlights of the act are:
1) Mandatory to register with Real Estate Regulatory Authority (RERA) for all commercial and residential real estate projects where the land is over 500 square metres, or eight apartments for launching a project, in order to provide greater transparency in project-marketing and execution.
2) Registration of Real estate agents who facilitate selling or purchase of properties with RERA
3) Establish state-level Real Estate Regulatory Authorities (RERAs) to regulate transactions related to both residential and commercial projects and ensure their timely completion and handover.
4) Upon receipt of an application by the promoter, the Regulator Authority shall within a period of 30 days, grant or reject the registration. If the Regulatory Authority fails to grant or reject the application of the promoter within the period of 30 days, then the project shall be deemed to have been registered.
5) The registration, if granted, will be valid until the period of completion of the project as committed by the promoter to the Regulatory Authority. Extension by one year only due to force majeure and on payment of fee.

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Who can raise money through Infrastructure Investment Trusts (InvITs)?

Following are the qualifications for Sponsor(s) of raising Infrastructure Investment Trusts (InvITs)
1) Net worth of at least $ 15.38 mn in case of body corporate or a company or net intangible assets of $ 15.38 mn in case of a Limited Liability Partnership (LLP).
2) Minimum experience of at least five years and has completed at least two projects.
For further details, please refer to this link.

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Who can raise money through Real Estate Investment Trusts (REITs)?

Following are the qualifications for Sponsor(s) of raising Real Estate Investment Trusts (REITs):
1) Minimum holding of 5% of total units of REIT with a maximum of 3 sponsors.
2) Net worth of at least $ 15.385 mn on consolidated basis and $ 3.077 mn on individual basis.
3) Minimum experience of 5 years in real estate industry for each sponsor and where sponsor is a developer, at least 2 projects of sponsor should be completed.
For further details, please refer to this link.

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Invest India Timeline

Team India Blogs
Growth of Infrastructure Sector in India
Authored By:
Strategic Investment Research Unit (SIRU)

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