Productivity refers to the efficiency of an organization or individual. It is one of the most important performance assessment tools. This paper presents a risk associated with low labour productivity in the Indian construction industry as it leads to cost and time escalation. An extensive literature survey has been conducted to identify different parameters affecting Labour Productivity (LP) and categorize them into six groups’ namely human-related parameters, technical parameters, organizational parameters, material and equipment-related parameters, health and safety parameters, and external parameters. Further, a questionnaire survey is conducted to find the critical parameters affecting LP in the Indian construction industry. A survey considered the 41 most common parameters identified from the literature, and a five-point Likert scale was used to collect the responses. The results were analyzed using Principal Component Analysis, revealing that the top five critical factors affecting LP are a shortage of workers, lack of work experience, salary payment delays, inadequate material availability on-site, and undisciplined labour. This study will allow researchers and construction professionals to identify the areas requiring special attention to improve performance. Indian construction professionals will be able to come up with effective solutions by referring to the findings of this study, which will lead to increased task work. The study findings and generated insights inform urban policymakers, managers, and planners on their policy, planning, and practice decisions concerning labour employed on smart city projects.