Development Watch – Week #1 Feb’26

Development News

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70 MW solar project for Bhutan

India Power Corporation Limited (IPCL) on Friday said it has entered into a strategic partnership with Bhutan’s Green Energy Power Private Limited to develop a 70 MW solar power project in the neighbouring country’s Paro district. The project is part of the West Bengal-headquartered power utility’s plan to add 1.5 GW of solar capacity in Bhutan over the next five years, the company said in a release. Bhutan’s power demand is expected to more than double over the next two years, driven by projects such as the Gelephu Mindful City, expansion of energy-intensive industries, including ferrosilicon, and rising demand from digital infrastructure and crypto-mining activities. While hydropower continues to dominate Bhutan’s energy mix, the country has set a target of achieving 25,000 MW of installed power capacity by 2034, including 5,000 MW from solar energy.

7 new bullet train corridors in Budget 2026

The budget has announced 7 new bullet train corridors will be set up. High speed rail corridors will be developed between Mumbai-Pune, Pune-Hyderabad, Hyderabad-Chennai, Chennai- Bengaluru, Delhi-Varanasi, and Varanasi-Siliguri. East-West dedicated freight corridor will be set up and run from Dankuni (Odisha) to Surat (Gujarat). India is evaluating the use of E5 variants of Japanese-made bullet trains for trials and then buy the newest E10 variant ones for full blown commercial operations. This also means E10 trains will be introduced simultaneously in India and Japan, around 2030. The country has already started work on a home-built bullet train that will exceed 250 kilometres per hour (kmph). These are being built on the Vande Bharat platform that can already clock a maximum speed of 220 kmph.

Global partnerships for Indian aviation

At the Wings India aviation summit, the Prime Minister said India’s aviation sector has undergone a “historic transformation” over the last decade, driven by policy stability, infrastructure expansion, and a shift towards inclusive air travel. India is now the world’s third-largest domestic aviation market, with growing passenger traffic and airline fleets. Indian airlines have placed orders for more than 1,500 aircraft in recent years, reflecting strong long-term demand. Connectivity is expanding rapidly beyond major metros to Tier-2 and Tier-3 cities. Reforms in air cargo, including regulatory changes, digital cargo platforms, off-airport processing, and modern warehousing, are aimed at lowering logistics costs and positioning India as a competitive transshipment hub. On the international collaboration front, Hindustan Aeronautics Limited is joining forces with Russia’s United Aircraft Corporation. They will manufacture Sukhoi SJ-100 superjets in India. This move aims to boost regional air travel. India needs over 200 jets in the coming decade. The SJ-100 will enhance short-haul connectivity. HAL will also get rights for local certification and sales. UAC will provide technical support for HAL’s facilities. Strategic partnership between Embraer and Adani Group aims to establish a final assembly line for regional transport aircraft in India.

Budget allocations for roads and waterways

India plans to launch 20 inland waterways and boost local container manufacturing. A new scheme will support coastal cargo movement. This aims to reduce empty container imports and promote domestic production. Initiatives will also incentivize shifting cargo from road and rail to waterways. Rs. 10,000 Crore scheme has been announced for container manufacturing. The government has also announced a significant boost for road infrastructure. For the fiscal year 2026-27, the road transport and highways ministry will receive Rs 3.09 lakh crore. This represents an increase of approximately 8 percent from the previous year’s allocation. The National Highways Authority of India, or NHAI, will also see its funding rise to Rs 1.87 lakh crore.

20-year spatial-economic plans for million-plus cities

Economic Survey for 2025-06 has proposed that Every Indian city with a population of above a million should prepare a 20-year City Spatial and Economic Plan that will be updated every five years. India’s towns and cities will house 600 million people in 2036 as per World Bank’s estimate. Urban areas contribute 70% of GDP by 2036. The plan needs to be prepared with three non-negotiable elements including a transport network plan, a housing supply plan with annual unit targets, and a land-value capture framework linked to infrastructure corridors. India’s cities are not merely places of residence but function as critical economic infrastructure. Density and proximity generate agglomeration economies that raise productivity, deepen labour markets, and enable innovation. PM e-Bus Sewa scheme, under which 7,293 e-buses have been approved across 14 States and four Union Territories during 2025–26, supported by Rs 20,000 crore of central assistance and a Payment Security Mechanism. Under the Smart Cities Mission, over 90% of the roughly 8,067 projects have been completed as of May 2025 and nearly Rs 1.64 lakh crore invested. These include smart roads, command and control centres, upgraded water and sewerage networks, and public spaces.

Focus on critical minerals, EVs, next-gen mobility

The focus in the Union Budget 2026-27 on scaling manufacturing in strategic sectors, building value chain in critical minerals and rare earths will be vital enablers for the future of electric vehicles, electronics and next-generation mobility. The budget has proposed dedicated corridors in mineral-rich states like Odisha and Tamil Nadu and import duty exemption on capital goods needed for processing critical minerals to boost mining and processing activities. By launching India Semiconductor Mission (ISM) 2.0 with a fortified Rs 40,000-crore outlay for electronics manufacturing, the government has transitioned the ecosystem from assembly-led growth to high-value, full-stack IP and component sovereignty. Key proposals focus on clean energy, industrial growth, and regional development. Incentives are planned for lithium-ion cell manufacturing and solar glass production. Biogas-blended CNG will see excise duty relief. An East Coast Industrial Corridor is proposed. Investments will boost the Northeast with e-buses and tourism development.

$175 Billion boost to Infrastructure with Budget 2026

India’s budget prioritizes infrastructure, signaling stability for long-term investors. Public capital expenditure is rising, creating a predictable environment. This focus is attracting global capital to sectors beyond roads and renewables. Opportunities are expanding into digital infrastructure, energy transition, and urban development. India’s growth model, driven by domestic demand and sustained investment, offers a stable outlook for infrastructure projects. It is estimated there will be incremental commercially attractive equity investment opportunities of $175 billion over the next 7 years. $125 billion will be directed towards established infrastructure sectors and $50 billion towards emerging infrastructure spanning digital, energy transition, urban and social infrastructure.