Construction Industry
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CONSTRUCTION SECTOR OVERVIEW
Statistics, news & updates: everything you need to know about the Construction Industry in India
Growth Drivers
- 100 Smart Cities Project planned.
- Construction of 8,500 km of road by March 2022.
- 11 Industrial corridors planned.
- Population growth, urbanization, industrialization and rise in disposable income
Sub industries
- Building Equipment
- Glass & glazing products
- Highways, Street & Bridge Construction
- Mechanical, Electrical & Plumbing equipment
- Residential remodelers
- Structural steel & pre-cast steel contractors
- Roofing & Flooring products
- Engineered wood & equipment
Opportunities
- Highways: 24% of the national highway network in India is four-lane, with immense scope for improvement.
- Airports: Upgrading and constructing new airports under Regional Connectivity Scheme.
- Housing: India will need to construct 43,000 houses every day to achieve the vision of Housing for All by 2022.
- Seaports: $82 billion planned investment in 574 projects by 2035.
- There are 1291 project opportunities worth $12.89 billion in this sector.
Challenges
- High quality, high specification products cannot compete in a price-sensitive market like India.
- Foreign companies rarely want to localize their offerings.
- India has low-cost manpower, thus contractors and builders hesitate in investing in automated equipment.
How we can help you:
– Product-Pricing analysis
– Strategies for – product/service localization
– Market research to sell effectively
Summary/Snapshot
The construction industry consists of real estate and infrastructure construction and contributes around 9% to India’s GDP.
It is the second-largest employer after agriculture, employing more than 51 million people.
Sustainable development: India plans to spend $1.4 trillion on infrastructure 2019-23.
There are huge opportunities in railways, energy, urban infrastructure, roadways and highways under the umbrella of the National Infrastructure Pipeline (NIP) with a budget allocation of $1.4 trillion on infrastructure under the next five years
The Construction sector allows 100% Foreign Direct Investment under the automatic route. The countries investing in India’s construction industry are Singapore, Netherlands and USA.
Indian Railways has the highest-ever planned CAPEX of $29.52 billion.
The overall investment in Urban transformation increased by 627% between 2014-2021 (when compared to 2004-2014).
$2.5 bn is being provided for PMAY- Urban [Pradhan Mantri Awaas Yojna (“Affordable Housing for All”)]. This will help lay the foundations for 1.56 million new houses and complete 1.8 million existing houses, creating additional 7.8 million jobs.
Key Investment Opportunities
- Construction development in residential, retail, commercial and hospitality sectors, development of townships.
- Construction of roads, bridges, hotels, resorts.
- Technologies and solutions for smart, sustainable and connected cities and integrated townships.
- Technologies for the promotion of low cost and affordable housing.
- Green building solutions.
- Sustainable and environmentally friendly building materials.
- Training and skill development of construction sector workers.
- Urban water supply, urban sewage and treatment plants.
COVID Impact
How has COVID affected the industry?
- Increase in Digitalisation: 66% of the construction firms in India are eyeing digitalization by learning the best practices from the developed markets, e.g. Building Information Modelling (BIM) and its benefits.
- Delays in projects because of labour shortage: Due to Covid, many urban projects were disrupted as up to 8.5 million workers were impacted by lockdowns.
- Supply Chain Disruption: The projects dependent on specialised equipment, electronics and specialised materials are likely to be hit by the supply chain disruptions due to the enforcement of Force Majeure clauses in contracts.
- Decrease in the industry output: Construction output dropped by 10% from 2020 levels.
Outlook for the Construction industry post-Covid
- Increase in labour cost: The labour cost for skilled workers is expected to rise by 20-25% while for semi-skilled and unskilled workers the cost is expected to increase by 10-15%.
- Revised SOP’s that take into account new health and sanitary norms: Standard operating procedures require social distancing, personal protective equipment and hygiene will drive up the project cost in short term.
- Companies are considering hybrid arrangements: The work-from-home approach seems likely to continue throughout 2021 after India’s experienced a dreadful second wave of the pandemic. People have turned their home spaces into temporary home offices. We can expect a surge in demand for the home renovation, maintenance, and interior designing sector.
Key Players in India
National
- L&T Engineering Construction & Contracts Division (ECC)
- Larsen & Toubro Infrastructure Development Projects Limited (L&T IDPL)
- Reliance Infrastructure Limited
- Tata Projects Limited
- AFCONS Infrastructure Limited
- NBCC
- IRCON International Limited
- Shapoorji Pallonji & CO. Ltd.
- GMR Infrastructure Limited
- Jaiprakash Associates Limited
- Nagarjuna Construction Company Limited
- Hindustan Construction Company
- DLF Limited
International
- Leighton Welspun Contractors
- The Trump Organization
- EMAAR
- Strabag
- Bouygues
- Power Construction Corp. of China
- TOYO Engineering
- Ascendas
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