India construction firms eye 6-8% growth in FY27

March 30, 2026

New Delhi: India’s construction sector is expected to witness steady but moderate revenue growth of 6–8 per cent in FY2026–27, reflecting stable demand conditions and continued government push on infrastructure, according to a recent industry report.

Moderate Growth Outlook for FY27

The report indicates that construction companies will maintain a stable growth trajectory, although slightly lower than the strong momentum seen in previous years. The 6–8 per cent growth projection highlights a phase of consolidation for the sector after a period of robust expansion.

Industry analysts note that while the sector remains resilient, growth is moderating due to a high base effect and evolving economic conditions. Earlier estimates suggest that growth could improve to 8–10 per cent in the following fiscal year, indicating a gradual upward trend.

Infrastructure Push Continues to Support Sector

A key driver for the sector remains the government’s continued emphasis on infrastructure development. Increased capital expenditure in roads, railways, urban infrastructure, and energy projects is expected to provide a steady pipeline of work for construction firms.

The Union Budget for 2026–27 has already earmarked record capital expenditure, reinforcing the government’s commitment to infrastructure-led economic growth. This sustained investment is likely to ensure order book visibility for major construction players in the coming years.

Segment-Wise Performance Remains Uneven

The report highlights that growth across segments will not be uniform. Companies focusing on urban infrastructure, irrigation, and energy projects are expected to perform better due to strong project inflows.

On the other hand, firms heavily dependent on road construction or specific government schemes may face relatively slower growth due to muted order inflows and tighter execution timelines.

Margins Likely to Stay Stable

Despite moderate revenue growth, operating margins in the construction sector are expected to remain stable. Analysts estimate margins to stay in the range of 10–11 per cent, supported by operating efficiencies and relatively stable commodity prices.

However, rising input costs and global supply chain uncertainties could pose risks. Recent developments, such as fluctuations in material prices, may impact project costs and profitability if not managed efficiently.

Strong Order Book Supports Growth Visibility

One of the major positives for the sector is the strong order book position of construction companies. Healthy order inflows over the past few years have ensured revenue visibility and execution continuity.

The order book-to-billing ratio remains robust, indicating that companies have sufficient projects in hand to sustain growth over the medium term.

Economic Significance of Construction Sector

The construction industry continues to play a vital role in India’s economy. It is one of the largest employment generators and contributes significantly to GDP.

With increasing urbanisation, housing demand, and infrastructure expansion, the sector is expected to remain a key pillar of economic growth despite short-term moderation.

While growth in India’s construction sector is expected to moderate to 6–8 per cent in FY2026–27, strong government spending, a healthy order pipeline, and stable margins are likely to support long-term expansion. The sector’s future trajectory will largely depend on execution efficiency, cost management, and continued policy support.