Infrastructure Sector Seeks Tax Reforms, Increased Capex, and Green Initiatives in Union Budget 2025
As India prepares for the Union Budget 2025, the infrastructure sector is looking towards the government for key fiscal reforms, including increased capital expenditure (capex), tax incentives for green projects, and support for public-private partnerships (PPPs). With the construction, real estate, and transportation sectors under pressure to address the country’s growth and sustainability goals, industry leaders are urging the government to introduce policies that will reduce the burden on infrastructure projects while also promoting eco-friendly technologies.
Leading the call for these reforms, Arvind Nanda, Managing Director of Interarch Building Products, emphasised the need for tax relief in the infrastructure space, particularly for pre-engineered buildings (PEBs) used in industrial projects. Nanda argued that extending Input Tax Credit (ITC) benefits for PEBs would help reduce project costs and encourage eco-friendly building solutions. He further highlighted the growing need for skill development to address workforce gaps, pointing to the ‘Skill India’ mission as a way to strengthen the sector’s talent pool.
Echoing these sentiments, Bhagat Singh, Group CFO at Ceigall India Limited, stressed that boosting infrastructure funding and reviving private sector participation were crucial for the future of Indian infrastructure. He also called for a larger push towards green infrastructure, noting that investments in renewable energy and green technology adoption were key to aligning infrastructure growth with sustainability goals. On the capital expenditure front, Vivek Iyer, Partner at Grant Thornton Bharat, suggested that the government rationalise capex allocations across states to ensure more balanced and equitable growth. He recommended tweaking fiscal policies to reflect the specific developmental needs of different states, which would help align infrastructure investments with long-term national goals.
In the transportation sector, there are expectations of increased capex for roads, highways, and ports. Ashish Suman, Partner at JSA Advocates and Solicitors, noted that an increase in capex for roads by up to 10 per cent, alongside a greater focus on Build-Operate-Transfer (BOT) projects, could attract private investment and drive infrastructure development. This is particularly crucial as the demand for modern transport systems continues to rise, both in urban and rural areas. Urban infrastructure is another focal point, with a call for revitalising public-private partnerships (PPPs) to boost investments in Tier 2 and Tier 3 cities. Suman highlighted the stagnation in PPP investments in urban infrastructure, recommending innovative funding models to attract the private sector. He also suggested enhancing the Urban Infrastructure Development Fund (UDIF) and bolstering the municipal bonds market to address funding shortfalls faced by urban local bodies (ULBs).
Priya Rustogi, Leader for India & Subcon at LWT IMEA, pointed to the potential growth in affordable housing and urbanisation, stressing that the Union Budget should focus on sustainable, high-quality infrastructure solutions. She urged the government to rationalise GST rates on sanitaryware and encourage green construction practices to meet environmental targets. Finally, Kuldip Raina, Director of Shalimar Paints, echoed the call for policies that support R&D and provide subsidies for technological upgrades. These measures, he said, could stabilise raw material supply, reduce production costs, and lower energy expenses, fostering greater industry participation in the infrastructure sector. As the country looks ahead to Budget 2025, the infrastructure sector hopes that the government will address these pressing concerns, balancing growth with sustainability, and setting the stage for a stronger, more resilient infrastructure landscape.
