India’s construction boom will require better risk management: Marsh report

India’s construction industry is expected to grow by 7.1% in 2025, one of the fastest rates in the IMEA (India, Middle East and Africa region), according to a report by Marsh, a global insurance broker and risk advisor and subsidiary of Marsh McLennan. It said India’s projected growth would bring many opportunities but also require better risk and insurance strategies.

The report, Global Construction Risk Review 2025, revealed the most pressing challenges for the global construction industry, which have direct implications for India’s rapidly growing infrastructure sector.

Big investments in energy, highways, smart cities, and industrial corridors have made India an important market for global insurers and reinsurers. Globally, the major risks include inflation and economic ups and downs (28.6%), rising material costs (16%), problems with bidding and contracts (13%), and workforce challenges such as hiring and retaining workers (10.8%), the report said. Cyber threats and supply chain problems are also growing concerns, it added.

To handle these risks, the report suggested using real-time risk checks, adjusting bids for inflation, and using predictive tools to plan projects better.

Playing catch-up

India’s insurance sector is changing quickly to keep up with this construction boom. As the project pipeline grows, the need for stronger risk engineering, contractor due diligence, and project contingency planning becomes non-negotiable. Firms worldwide use a mix of historical and real-time data to inform construction risk pricing, but this remains an untapped opportunity in India, Marsh said in its report.

By adopting global best practices in contract structuring, supplier evaluation, and risk transfer mechanisms, Indian firms can significantly boost risk management outcomes, the report said. A maturing insurance ecosystem that offers protection across surety, cyber, and delay in startup (DSU) risk would enhance investor and lender confidence, it added, while improved people management and digital resilience tools would reduce disruptions and attrition.

Sanjay Kedia, chief executive of Marsh McLennan India and president & chief executive of Marsh India, said, “The construction industry in India significantly contributes to GDP growth. 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.”

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.”