"The present lull will continue as labor laws are not changing," adds Nanda.

As such, Indian companies are increasingly moving out of the country to invest. With major infrastructure companies like GVK Power and Infrastructure and GMR Infrastructure pulling out through termination of contracts with National Road Authority of India (NHAI) in January for building highways in Madhya Pradesh, Rajasthan and Gujarat, a decision to establish a road regulatory authority was made to address financial stress, construction risk and contract management in the road sector.

This tack has received mixed reviews. Hemal Zobalia, partner of KPMG India, calls it a welcome move, but Nanda counters that "another regulator will be a bottleneck."

Ajit Gulabchand, chairman of Hindustan Construction Ltd., adds that India's procurement processes are antiquated. "There is not enough clarity, transparency, and drafts are vague," he says.

Though many firms' executives applaud the new budget, they recognize that much work was left on the table from previous allocations.

"It's a good budget for infrastructure" and may ensure that the Delhi- Mumbai corridor "gets de-clogged of permissions," says Dinesh Kanabar, deputy CEO, global consultancy, KPMG.

Still, he adds, the last budget increased highway spending by 14% with a target length of 8,800 km roads under National Highways Development Project (NHDP). Only 2,000 km were awarded by Dec. 2012. Many companies pulled out of road projects due to financial constraints.

The renewable energy sector has been flagging as well. The government is targeting 4,125 MW of grid-connected renewable energy capacity this year, yet only 2,005 MW has been installed.

Incentives for wind energy and waste-to-energy projects were offered, but there was nothing available for the solar energy sector. Some industry insiders speculate this is due to India's trade disputes with the U.S., China, Taiwan and Malaysia over anti-dumping issues related to solar modules. The U.S. is in a similar conflict with China, having last year imposed heavy import duties on Chinese solar cells.

Despite the lack of enthusiasm, signs of revival are apparent. Mumbai-based Kotak Mahindra Bank Ltd. says recently it has raised $90 million for its infrastructure private equity fund and targets raising $160 million by next year for investment in companies in power generation and transmission; transportation; water treatment and supply; waste management; and gas transmission, distribution and storage in India.