India’s Union Budget 2025: Expert Expectations on Infrastructure, Real Estate, and Sustainability for Growth and Innovation

Muskaan Kapoor

31 Jan 2025 — 7 min read

Union Budget 2025: Expert Insights on Infrastructure, Real Estate, and Sustainability for Growth and Innovation

With the Union Budget 2025-26 approaching, businesses and industries are eagerly anticipating key policy changes. The real estate sector is hoping for tax benefits, lower interest rates, and incentives to boost housing affordability. The hospitality industry seeks government support to promote tourism, improve infrastructure, and reduce operational costs. Renewable energy leaders are looking for increased investment in green technology, subsidies for sustainable projects, and better waste management policies. Similarly, startups and MSMEs are expecting simplified tax regulations and easier access to funding.

Now, let’s explore what industry experts have to share about their expectations from this year’s budget.

Strategic Infrastructure Investments and Real Estate Growth

Pradeep Misra, Chairman and Managing Director, REPL (Rudrabhishek Enterprises Ltd.) said, "In successive budgets, we have seen the emphasis on infrastructure which is most certainly going to continue in this year’s Union Budget also. With the GDP growth rate witnessing a slowdown in the current financial year, enhanced budgetary allocations for infrastructure are crucial. This will not only stimulate growth across industrial segments but also create substantial direct employment opportunities.

The investment in traditional infrastructure segments like roads and highways, railways, energy, and tourism will naturally attract increased allocations. However, the new segments must also get adequate support in the union budget. Increasing the requirement for data centers and renewable energy should be another area where adequate attention can be given to the budget. The scope of railways ‘Kavach Scheme’ must further be expanded to cover a greater length of rail tracks. It is equally important both from the point of view of passenger safety as well as its economic impact."

Misra suggests that for the real estate and housing sector, Affordable Housing must continue to be the focus in a suitable manner for the next phase of PMAY. The increasing urbanisation demands that housing needs to be addressed for overall growth. The government should look to incentivize the REIT & SM-REIT investments to create the next leap of growth in the real estate segment which has been continuously struggling to recover. This new investment class has immense potential to attract investors, developers, and retail participants. These combined with emphasis on smart industrial cities, industrial corridors, and TOD can immensely catalyse the development of urban centers and catchment areas.

"There will be a challenge to create a balance between the requirement of increasing infrastructure spending and controlling the overall fiscal deficit. The Union Budget must also come up with innovative policy measures that strengthen PPP and give greater confidence to private investments in the infrastructure sector. A long-standing expectation of ‘single window clearance’ could be one of them," Misra added.

Avinash Rao, Founder, Alt DRX highlights that, according to recent statistics, new house sales have decreased for the first time in 2024 owing to an increase in house prices, high interest rates for borrowing, and general conservative sentiment which has cropped up due to the 4 years of constant high growth. For the growth to continue and real estate to achieve the $1 trillion by 2030, there needs to be a government-led push and this budget is the appropriate time for decisions to push this industry forward to grow.

Rao's key expectations from Budget 2025-26:

Developer Led: The high cost of material and construction can not be reduced or moderated immediately, but adjustments to input tax credit will reduce the cost burden on developers and subsequently pass it on to the home buyers. Change of policies to attract domestic and international real estate funds will provide a big push for developers to raise capital and complete their projects on time.
Home Buyer Led: Changes in current tax exemptions on house loans will help reduce the cost burden on home buyers and bring relief. Subsidies on affordable housing will bring demand to a category that has not grown and caters to the larger Indian population.

Sebi Joseph, President of Otis India, underscores the remarkable growth of India’s real estate sector, fueled by transformative government initiatives such as the Pradhan Mantri Awas Yojana and the Smart Cities Mission, making India one of the world’s most dynamic real estate markets globally.

Looking ahead to the Union Budget 2025-26, he anticipates the government will continue driving this progress with progressive measures aimed at enhancing the real estate and infrastructure sectors, with a particular emphasis on localisation and sustainability.

"A budget that introduces strategic steps such as targeted investments, substantial tax reliefs, enhanced funding mechanisms, and robust infrastructure initiatives - and that pushes for sustainable developments would provide the much-needed impetus to developers for building homes across all segments, including luxury housing and affordable housing, thus ensuring a balanced growth trajectory and contributing to achieving the vision of a ‘Viksit Bharat’ by 2047, transforming India into a global leader in infrastructure and responsible urbanisation.

For the elevator and escalator industry, such a focus would present great avenues for growth in 2025 and beyond. With a surge in infrastructure projects, including smart cities, metro systems, and high-rise buildings, the vertical transportation industry is poised to be the backbone of India’s growing urban landscape. Furthermore, we are also contributing to the localisation of production and creating a self-reliant supply chain within the country," said Joseph.

Hospitality Industry Growth and Innovation in 2025

Sandeep Singh, Founder of Rubystone Hospitality emphasises that in 2025, the hospitality industry is expected to develop significantly due to rising travel demand, new technology, and a renewed emphasis on the visitor experience. The hospitality sector is anticipated to make a substantial economic contribution as the world economy stabilizes and travel restrictions loosen.

Government budgets are likely to prioritise the hospitality industry, funding workforce development, sustainable tourism projects, and infrastructure improvements. To satisfy changing visitor expectations, they must adapt their strategy to these changes by making investments in digital transformation, green technologies, and individualized services. Enhancing operational efficiency, using AI-driven solutions, and upholding strict safety and hygienic standards are also anticipated to be prioritized in budget allocations."

In Singh's opinion, the tourism industry will probably rebound to pre-pandemic levels as global spending increases, offering enormous development potential. But there are difficulties such as inflation, growing operating expenses, and competitive challenges will call for creative company concepts and careful financial planning. To guarantee a flourishing hospitality environment, governments and stakeholders must work together.

In 2025, they can play a key role in attaining sustainable development and economic resilience by utilizing financial support and encouraging innovation. The hospitality industry has the chance to rethink its mission and position itself as a key component of the world economy's recovery this year.

Budget 2025: Focus on Sustainability, Local Manufacturing, and Startup Support

Rahul Nainani, CEO and Co-Founder, ReCircle, highlights, "As we look toward Budget 2025, we anticipate strong policy support and strategic incentives to accelerate India’s transition to a greener, more sustainable future. With a focus on green energy, infrastructure, and circular economy models—especially in waste management—we hope to see increased investment in plastic recycling projects. This will help reduce environmental impact, create new business opportunities, and drive the adoption of green technologies.

Initiatives like Swachh Bharat Abhiyan, Extended Producer Responsibility (EPR), and sustainability commitments have already propelled the sector forward. The plastic waste industry, which plays a crucial role in India's GDP and supports the nation’s $5 trillion growth trajectory, stands to benefit from tax reforms, lower GST rates on recycled products, and machinery subsidies, particularly for MSMEs.

Continued emphasis on infrastructure development, digitization, and EPR compliance will drive long-term growth and innovation. We are eager to see the government’s ongoing commitment to sustainability and are excited to contribute to this transformative journey."

Vinay Thadani, CEO & Director, Grew Energy (Solar) Private Limited, shares his insights, "The Indian domestic manufacturing industry is poised to play a crucial role in the country's economic landscape, particularly as India seeks to reduce its dependence on imports from foreign markets. This strategic shift was bolstered by the Indian government's implementation of a variety of incentives aimed at supporting domestic manufacturing. These measures include a combination of tariffs designed to protect local manufacturers and non-tariff barriers that aim to create a more favourable environment for Indian businesses.

In the past year, numerous companies have commissioned and announced the establishment of large-scale solar manufacturing facilities throughout the country. This surge in activity is a direct response to the government’s initiatives, which include supportive regulatory frameworks designed to attract investment and facilitate growth in the solar sector."

"Looking ahead, to position India as a global hub for solar manufacturing, we anticipate that the government will emphasize the importance of research and development (R&D) by offering full-time grants to companies that dedicate themselves to the creation of efficient and innovative solar technologies. Engaging in deep-scale research and fostering innovation will be essential for India to gain a competitive edge over China, enabling it to provide high-efficiency solar solutions to domestic as well as global markets," Thadani added

Satyam Vyas, Founder, Arthan and Climate Asia highlights key challenges, "There are several pressing challenges startups face in India's social impact sector. These include a burdensome tax compliance system that requires over 1,200 annual filings, resulting in valuable resources being diverted from business growth. Additionally, many startups experience significant cash flow issues due to delays of over six months in receiving GST refunds.

Furthermore, the taxation of Employee Stock Ownership Plans (ESOPs) at vesting can impose financial burdens on employees. The current three-year tax holiday, often failing to accommodate the longer growth cycles of many startups, is a significant issue that needs to be urgently addressed."

Vyas's proposals are not just suggestions, but urgent calls for action. He advocates for the implementation of a centralized digital platform for streamlined tax compliance, aligning ESOP taxation with liquidity events, and extending the tax holiday for DPIIT-registered startups from three to five years.

He also recommends establishing a 30-day deadline for GST refunds with penalties for delays, offering government tax advisory services to support startups, increasing R&D deductions to 200% for high-impact sectors, providing up to 10% tax rebates for sustainable startups, and lowering TDS rates to enhance cash flow for new ventures. These measures, if implemented promptly, could significantly alleviate the challenges faced by startups in India's social impact sector.