As India races toward becoming the world’s third-largest construction market with a $600 billion infrastructure pipeline, Marsh warns that unmitigated economic, digital, and sustainability risks could undercut its growth story.India’s construction sector is poised for a breakout year. With a forecasted 7.1% growth rate in 2025, an all-time high infrastructure budget of ₹50.7 trillion ($603 billion), and mega projects in transport, green energy, housing, and urban development underway, India is attracting the attention of global investors, insurers, and developers alike.
But alongside this optimism, a clear and urgent warning has emerged.
According to Marsh’s Global Construction Risk Review 2025, the sector is facing a complex and evolving risk environment, and India is particularly exposed. From volatile markets and soaring input costs to cybersecurity threats and climate shocks, the very forces driving India’s infrastructure boom are now demanding a major reset in how risks are managed, priced, and insured.The Five Biggest Construction Risks in 2025Drawing on a global survey of over 230 construction leaders, Marsh’s report identifies the most pressing challenges the sector is grappling with, many of which have direct implications for India’s rapidly expanding pipeline.
Economic Volatility (28.6%): Inflation, interest rate instability, and macroeconomic uncertainty continue to disrupt budgets and financing cycles.
Rising Material Costs (16%): Input prices—steel, cement, imports—remain volatile, hitting bottom lines and pushing project margins thinner.
Bidding and Contract Complexities (13%): Contractual ambiguities, legal disputes, and inflation-linked pricing gaps are growing flashpoints.
Workforce-Related Challenges (10.8%): Talent shortages, attrition, and site-level disruptions are delaying deliveries and raising costs.
Cybersecurity and Supply Chain Disruptions: Digitisation has exposed firms to data breaches, while global logistics remain fragile post-pandemic.
India: Growth Magnet, Risk HotspotWith its scale and momentum, India stands out in the report as a country of immense opportunity—and equally immense risk. The infrastructure pipeline is deep and diversified: industrial corridors, renewable parks, high-speed rail, expressways, inland ports, and smart cities. But the risk culture has not kept pace with the scale of ambition.Also Read: India eyes $1 billion in leather and footwear exports to UK in 3 years under new FTA”The construction industry in India significantly contributes to GDP growth. The trends we are seeing—financial, climate, and cyber—emphasise the need for tailored, data-driven risk strategies,” said Sanjay Kedia, President & CEO, Marsh India and CEO, Marsh McLennan India.As insurers and reinsurers worldwide turn their focus to India, Marsh’s report highlights a glaring opportunity: India’s insurance and risk frameworks need rapid modernisation.Where Indian Construction Firms Must Catch UpMarsh outlines a blueprint of strategic responses that Indian firms can adopt to improve resilience and capitalise on global investor confidence:
Real-time Risk Monitoring: Construction timelines are shrinking while risk windows widen. Using analytics to detect disruption patterns early can prevent cascading failures.
Inflation-adjusted Bidding: Many firms still bid without factoring in long-term input cost escalation. That needs urgent correction.
Stronger Contract Structuring: Clauses covering delays, liability, dispute resolution, and inflation adjustments are often underdeveloped.
Surety & Delay in Start-Up (DSU) Cover: Indian developers underutilise tools like DSU insurance and surety bonds—commonplace globally—to manage delivery risk and unlock financing.
Digital & Cyber Resilience: With project workflows moving to BIM, drones, remote monitoring, and cloud tools, the absence of strong cyber protection can invite catastrophic breaches.
Abhishek Shankar, Senior Vice President & Practice Leader Construction, Marsh India, said: “The Indian construction industry stands at a transformative moment, with unprecedented opportunities for growth driven by ambitious infrastructure development and a burgeoning economy. However, this growth is intertwined with a complex web of risks, from economic uncertainties, climate and sustainability and supply chain vulnerabilities, which eventually may impact project profitability and timely completion and return on investments. To navigate this landscape successfully, construction firms must adopt a proactive and data-driven approach to risk management, ensuring they are well-positioned to capitalise on the opportunities while safeguarding their projects and investments.”Climate & Sustainability: The Next Risk FrontierBeyond the traditional risks, Marsh’s report also raises red flags on climate-related risks, which remain vastly under-addressed in the Indian market:
Most Indian firms lack formal sustainability or climate risk frameworks, despite rising regulatory pressure and physical disruptions from extreme weather.
Climate impacts such as floods, heatwaves, and supply chain interruptions are already inflating costs and delaying timelines, but mitigation remains ad hoc.
Globally, developers are turning to tools like Marsh’s Sentrisk to model and de-risk environmental and social exposures—India’s uptake is negligible.
Also Read: Indian cities could face $30 billion annual losses without climate resilient infrastructure: World BankWorkforce Risks and Talent FragilityAnother understated risk is workforce-related. Construction sites today face high attrition, low retention, and shrinking pools of skilled labour. In parallel, mental health, workplace safety, and digital skill gaps are emerging as constraints on project continuity.The report recommends that companies invest in upskilling, safety culture, and mental health support to minimise on-site disruptions and delays.Marsh’s Recommendations: Building Resilience in a High-Risk Era
Embed predictive risk tools into planning and procurement
Use smarter insurance programs to cover cyber, climate, DSU, and contractual liabilities
Enhance pre-construction diligence with better contractor vetting and supplier scoring
Collaborate with insurers and advisors to optimise pricing and capital access
Strengthen ESG disclosure and compliance to attract sustainable capital
A Boom at Risk of Bust Without ProtectionIndia’s infrastructure transformation is unprecedented in its ambition, but equally, in its exposure. Marsh’s Global Construction Risk Review 2025 is both a mirror and a map: it reflects the volatility threatening long-term infrastructure success, while offering a clear path forward for those willing to embrace smarter, tech-led, globally aligned risk management.Without a proactive risk strategy, the cost of inaction could be far greater than any cost escalation.Sanjay Kedia, Chief Executive Officer, Marsh McLennan India, President & CEO, Marsh India, said: “The construction industry in India significantly contributes to GDP growth. This sector’s contribution is crucial for overall economic development, generating investment opportunities across various related sectors. The trends we are seeing in managing financial risk, surety, climate and sustainability and cyber risk emphasise the importance of working with a trusted risk advisor who can provide tailored solutions and strategic guidance. By building upon data-driven insights and a deep understanding of the Indian market, we can help construction firms make informed decisions, optimise their insurance programs, and build resilience against emerging threats.”Lastly, as Marsh puts it: “The next big disruption won’t be steel or concrete—it will be data, risk, and resilience.”Also Read: Exclusive: AIIB targets $17 billion annual lending, sees India as key growth pillar, says VP Ajay Bhushan Pandey
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