CONSTRUCTION SECTOR OVERVIEW-2020

Statistics, news & updates: everything you need to know about the Construction Industry in India

Snapshot

  • Summary
  • COVID-19 Impact
  • Industry Clusters
  • Growth Drivers
  • Key Players
  • Market Stats
Construction Industry Expertise in India

Summary

Due to continuous urbanization, upcoming infrastructure projects and a growing population base, the construction industry in India is booming. With huge ongoing project opportunities, it is the third largest contributor to economic growth. Moreover, the industry employs more than 40 million people and has a large pool of low-cost workers. Besides, various governmental flagship programs like ‘Smart Cities’, ‘Housing for All’, ‘Make in India’ and ‘Atal Mission for Urban Rejuvenation and Transformation’ (AMRUT) will further drive growth. Owing to these efforts and government’s will to increase public private partnerships with foreign companies, it is expected to attract more foreign investment.

COVID Impact

For the major part of 2020, the construction sector in India was overcoming the labor shortage and supply chain disruptions of their raw material. The construction sector is one of the largest employers of the workforce in India. COVID crisis-affected 8.5 million jobs in this sector. The sector was battling previously from the liquidity crunch in the wake of the fallout of the NBFC’s in the financial sector in 2019.

The situation started to improve in 2021 as the industrial operations were getting back on track. There is a pressing need for the home construction and maintenance industry to renovate the existing spaces. The work-from-home format seems to stretch for the entire 2021, as India faces a dreadful second wave of the pandemic. People are turning their temporary spaces to meet the needs of a home office. We can expect a surge in demand for the home renovation, maintenance, and interior designing sector.

66% of the construction firms in India are eyeing digitalization by learning the best practices from the developed markets. Union Government identified the pandemic as a Force Majeure incident. This will help real estate developers to extend the registration and completion date for all registered projects by six months. It will also provide time to developers to raise new financing or debt for completing their pending projects

The statistics below are taken from Industry data available pre-Corona virus impact.

Map – Industry Clusters

Map- Clusters - Construction Industry

Growth Drivers

  • Population growth, urbanization, industrialization and rise in disposable income are key growth drivers of the industry.
  • It is expected to be the world’s 3rd largest construction market by 2025.
  • 100% FDI under the automatic route is allowed in the construction development sector.
  • Cement capacity addition of 80-100 MT per annum is expected over the next five years.
  • The government has made tremendous efforts to improve residential and transport infrastructure.
  • The government has increased its expenditure on infrastructure development by 20.9%. It was INR 4.9 trillion (US$ 75.9 billion) in the Financial Year FY 2017-2018 which is increased to INR 6 trillion (US$ 89.2 billion) in FY 2018-2019.
  • Investments valued around US$ 965.5 Mn are expected to be required by the infrastructure sector by 2040.
  • Development of 100 smart cities by 2020.

Market Stats

  • The construction industry GVA share accounts for 7.3% in FY18.
  • Share of infrastructure spending in the construction sector as a part of India’s GDP rose to 9% in 2017.
  • India stands as the second largest employer, employing more than 49 million people in the sector.
  • The Indian real estate sector is expected to reach a market size of $ 180 billion by 2020.
  • The Construction industry is expected to record a CAGR of 15.7% to reach $ 738.5 billion by 2022.
  • Foreign Direct Investment (FDI) received in the Construction Development sector (townships, housing, built-up infrastructure and construction development projects) from April 2000 to March 2019 stands at US$ 25.05 billion.
  • Institutional investments in Indian realty touch $ 4 billion in 2018.
  • Construction output is expected to grow on average by 7.1% each year.

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

Sub-Industries

  • Building Equipment
  • Doors and Windows
  • Engineered wood & equipment
  • Glass & glazing products
  • Highways, Street & Bridge Construction
  • Material & allied products
  • Mechanical, Electrical & Plumbing equipment (including pipes for construction)
  • Residential remodelers
  • Roofing & Flooring products
  • Structural steel & pre-cast steel contractors
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