Better project-capital match key for ₹680-770 trn infra need by 2047: Report

India needs ₹168-172 trn in infra investment by FY31. While ₹38-40 trn is financed, ₹78-80 trn is yet to enter the pipeline, ₹31-32 trn awaits closure and ₹21-22 trn is stalled

Financing India’s infrastructure needs of ₹680-770 trillion through 2047 will require a stronger pipeline of bankable projects and better matching of projects with sources of capital, according to a report by the National Bank for Financing Infrastructure and Development (NaBFID) and Boston Consulting Group (BCG).

 

The report, titled 'Channelising Domestic and Global Capital for Infrastructure Financing', highlights project development, commercially viable models, capital recycling and better alignment between projects and investors as key priorities for funding the country’s next phase of infrastructure expansion.

 

Large gap between infrastructure needs and project pipeline

 

India is estimated to require ₹168-172 trillion in infrastructure investment through FY31. Of this, ₹38-40 trillion has already been financed, while projects worth ₹78-80 trillion have not yet entered the announced pipeline.

  

Another ₹31-32 trillion of projects awaits financial close, while ₹21-22 trillion is classified as stalled.

 

The report said each category requires a different approach. Projects that have not yet been announced need stronger project development and preparation. Those already in the pipeline require better structuring and faster financial closure, while stalled projects need their underlying constraints resolved.

 

Urban infrastructure to drive demand

 

The nature of infrastructure demand is also changing. Urban infrastructure is expected to account for nearly half of the requirement through 2047. However, such projects are often smaller, spread across several municipal bodies and dependent on revenues from areas such as water, sanitation and public transport, the report said.

 

Greenfield projects make up 80-85 per cent of the forward pipeline, which means financiers will also need to factor in risks related to land acquisition, construction and the time taken for projects to reach stable operations.

 

Only 34-36 per cent of the FY26-47 infrastructure requirement falls in sectors with established and bankable financing models.

 

Sectors accounting for 55-57 per cent of the requirement, including metro rail, water supply, irrigation and new railway lines, do not have standalone financial viability or established financing models. However, many of these projects have significant social and economic benefits.

 

As a result, public funding will continue to play an important role. The report also called for reliable revenue sources and enforceable payment mechanisms to make more projects financially viable.

 

Rajkiran Rai G, managing director and chief executive officer, NaBFID said, “Viksit Bharat 2047 will require infrastructure to precede growth. Meeting India’s significant infrastructure requirement will require government capex to be complemented by private sector capital. Stronger project preparation, commercial bankability, risk allocation and capital recycling can enable greater participation from domestic and global capital pools across the project lifecycle.”

 

Existing capital can cover most near-term needs

 

The report said existing sources of capital, if they continue to grow at current rates and operate within existing regulations, can meet most of the infrastructure financing requirement through FY31. However, this would still leave an annual funding gap of ₹2-3 trillion.

 

The constraints vary across different sources of funding. The government faces limits on fiscal spending, while banks face issues related to loan tenures and high credit-deposit ratios. Insurers and pension funds tend to prefer highly rated operating assets, while developers face return requirements on their equity investments, the report said.

 

Domestic institutional investors also have around ₹2–3 trillion of unused investment capacity within existing regulatory limits. Unlocking this capacity would require stronger credit assessment and investment opportunities that match the risk appetite and long-term liabilities of these institutions.

 

The report said completed infrastructure assets can also be transferred to long-term investors. This would free up capital held by banks and developers, allowing them to finance new projects instead of keeping their funds tied up in operating assets.

 

Three financing routes identified

 

The report identified three financing routes that could be expanded to support infrastructure funding.

 

These include partial credit enhancement, including NaBFID's facility, to improve access to institutional bond funding; Infrastructure Investment Trusts (InvITs) to recycle mature infrastructure assets; and Alternative Investment Funds (AIFs) and private credit to bring more long-term institutional capital into the sector.

 

Global capital could also supplement domestic funding. Assets under management in global alternative infrastructure investments reached about $1.8 trillion in 2025 and are expected to grow at around 12 per cent annually through 2030.

 

The report said attracting such investors would require investment-ready projects, long-term currency hedging options and credible exit routes. Different categories of investors could participate as projects move from construction to operations.

 

Matching capital with projects

 

The report said India's infrastructure financing challenge is not only about raising more money. It is also about ensuring that projects are matched with the appropriate source of capital at each stage of their development.

 

“India requires ₹168-172 trillion of infrastructure investment through FY31, with around ₹90-92 trillion already in the announced pipeline. As the sector mix shifts toward areas such as urban infrastructure, viable commercial models, reliable revenue mechanisms and enforceable payment structures will be critical to making more projects financeable," said Ashish Garg, managing director and Senior Partner, BCG.

 

He further said that a sustained pipeline will also require capital and investor rotation across the project lifecycle, with "mature operating assets recycled to release capital for new greenfield projects".