India’s Infrastructure Spend Crosses 3% of GDP as Climate Risks Rise, Says Report

India’s infrastructure spending has now surpassed 3% of gross domestic product (GDP) and is expanding rapidly in regions vulnerable to floods, cyclones, extreme heat, landslides and other climate extremes, according to ‘Climate Risks and Insurance for India’s Infrastructure’ report published by Climate Trends.

The Climate Trends report found that while most of India remains within the limits of insurability, insurers flagged mounting concerns around assets such as hydropower projects, highways and urban infrastructure in high-risk regions.

According to the report, the frequency and severity of climate impacts in India have been steadily increasing since the mid-2010s, with a notable acceleration since then as hydro-meteorological disasters, particularly floods, have taken centre stage in the risk landscape. According to its analysis of Delhi, urban areas grew at a rate of about 1.3% annually between 1986 and 2016, but flood exposure grew at a much faster rate of about 2.46%. This divergence is predicted to widen further, leading the report to conclude that parts of the country may become uninsurable as asset concentration rises and climate risks become more predictable.

“As India seeks big investments at the World Economic Forum and plans double-digit (nominal) growth over the next five years, it would be remiss to not point out the risks to India’s infrastructure posed by climate impacts and extreme weather events,” stated Aarti Khosla, founder and director of Climate Trends in the news release. “The country’s rising exposure for its essential assets could thus lead to mounting climate-induced losses, which would be a fiscal and financial burden,” she added.

Infrastructure Under Climate Stress

According to the Climate Trends report, the biggest climate risks stem from cyclones, flooding, droughts, extreme heat, prolonged rainfall, cloudbursts, storm surges and more. These risks were ranked high to very high for urban assets, highways, ports and hydropower projects.

The report further indicated that Assam, Andhra Pradesh, Odisha, Uttarakhand, Himachal Pradesh, parts of Ladakh, Sikkim and the north-eastern states are the most vulnerable to climate risks. The total investment exposure in these regions is estimated at about ₹2.95trn, spanning ports, tunnels, highways and major hydropower projects.

Climate Resilience Urgency

According to a ‘Towards Resilient and Prosperous Cities in India’ report published by World Bank in July 2025, India’s cities will need massive investments of over $2.4trn by 2050 to meet the need for new, resilient and low-carbon infrastructure and services in cities.

Without such investment, weather-related damage could escalate sharply, with urban flooding alone already costing India about $4bn annually — projected to rise significantly by 2070 without action. The report suggested that the figure is projected to rise to $5bn by 2030 and as much as $30 billion by 2070 without remedial action.