India’s construction and infrastructure sector is facing mounting financial and operational pressure from climate-related risks, with extreme heat and flooding emerging as major threats to long-term project sustainability, according to global professional services firm Aon.
In an analysis released on April 22, Nisheeth Srivastava, President and Head of Property, Construction, Power and Infrastructure at Aon India, said climate volatility is increasingly disrupting infrastructure projects across transport, energy, housing and digital infrastructure segments. He noted that flooding continues to be one of the biggest causes of economic losses in South Asia, leading to project delays, supply chain disruptions, higher repair expenses and damage to unfinished construction sites.
The report highlighted that repeated flood exposure can reduce the lifespan of infrastructure assets, raising maintenance costs and weakening long-term returns for investors and asset owners. It also warned that rising temperatures are affecting labour productivity and worker safety, especially in labour-intensive sectors such as road construction and urban development. Heat stress is also accelerating damage to materials such as concrete, asphalt and electrical components.
Aon further pointed to a widening insurance protection gap in India, with many climate-related losses remaining uninsured. The company said underinsurance could impact financing conditions, investor confidence and capital access for large infrastructure projects.
The report called for stronger climate-risk assessments, improved building standards and targeted insurance solutions to improve resilience in the sector.