Despite the government’s emphasis on expanding the road network, the pace of awarding new road projects in 2025 remained moderate. | Photo credit: ALLEN EGENUSE J
The government has increased capital expenditure in recent years, especially in transport infrastructure. In FY26, over ₹11 lakh crore was set aside for infrastructure expenditure.
In 2025, capital spending remained robust, with the government front-loading much of its spending. The Ministry of Road Transport and Highways has spent about 65 percent of its annual capital expenditure so far, while the Ministry of Railways has utilized 72.2 percent, according to official data.
In the current fiscal, over 4,600 km of national highways have been constructed so far, while projects covering around 28,000 km are being implemented across the country, with an estimated expenditure of ₹7.7 lakh crore.
Railways remain an important pillar of the transport network. During the year, 42 railway projects worth over ₹25,000 crore were launched, dedicated to the nation. Between April 1 and November 30, 2025, Indian Railways commissioned more than 900 km of new track.
In addition to network expansion, the emphasis was on upgrading existing infrastructure to improve safety and efficiency. Last year, 15 Vande Bharat trains and 13 Amrit Bharat Express services were introduced.
India also recorded its highest-ever expansion in renewable energy, reaching a record 44.5 GW of capacity by 2025 – almost double the annual increases previously seen. The total installed capacity for renewable energy was 254 GW in November 2025, more than 23 percent more than the 205.5 GW a year earlier.
Roads
Despite the government’s emphasis on expanding the road network, the pace of awarding new road projects in 2025 remained moderate.
The allocation for roads in FY26 remained unchanged at ₹2.7 lakh crore, reflecting the slowdown in the number of project awards. “No increase in road investment implies that an increase in road premiums is unlikely,” Nuvama Research said in its annual sector review.
The share of listed developers in projects awarded by the National Highways Authority of India has fallen sharply over the year.
“Given the sluggish road rewards, road developers should focus on segmental diversification as their ability to secure adequate orders at desired margins is now in question,” Nuvama said.
Railways
The government has intensified efforts for structural reforms and capacity expansion in both passenger and freight transport.
By 2025, Indian Railways achieved a milestone of 1 billion tonnes of freight load.
It is also implementing major projects under three dedicated freight corridors, while promoting public-private partnerships (PPP) to complement budget support.
Passenger fares have been increased twice this fiscal, signaling a shift towards revenue rationalization.
“Higher passenger and freight realizations improve internal cash generation, reduce dependence on budget support and enable higher capital expenditure,” said Divyam Mour, research analyst at SAMCO Securities.
The government is expected to prioritize safety improvements in the upcoming budget, with higher allocations for modern wagons, signaling systems and expansion of the Kavach anti-collision system.
The optimism around the sector is reflected in the strong performance of railway stocks such as Indian Railway Finance Corporation, Rail Vikas Nigam, Indian Railway Tourism and Catering Corporation, RailTel and wagon manufacturers.
Renewable energy
Renewable energy has emerged as one of the strongest players, largely led by large conglomerates, although smaller players continue to contribute meaningfully to capacity expansions. India has achieved almost half of its renewable capacity target five years ahead of its 2030 target.
Solar capacity rose to 133 GW last year after the addition of 35 GW, while wind capacity reached 54 GW.
“Solar energy has firmly established itself as a core pillar of India’s energy roadmap,” said Gautam Mohanka, Managing Director, Gautam Solar.
Looking ahead to 2026, the sector is expected to see a greater emphasis on high-efficiency solar panels, integration with energy storage and stronger domestic manufacturing, Mohanka said.
There has been a shift from ambition to execution, says Gaurav Moda, partner and energy sector leader at EY-Parthenon India.
“In the coming year, the ability to capture value from investments will increasingly separate the winners from the rest,” he said, adding that while decarbonization will remain a priority, energy efficiency will gain importance as a cost-cutting lever.
Published on January 5, 2026
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