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Construction sector in India

The construction industry is broadly divided into two segments in India- the real estate sector and the urban development sector. Real estate sector includes: residential and commercial which further includes offices, retail stores, hotels, leisure parks, etc. The urban development sector includes schools, healthcare, urban transport, water supply, sanitation, etc.

FDI:

100% FDI under automatic route is permitted in completed projects for operations and management of townships, malls/shopping complexes, and business constructions as well as in urban infrastructures such as urban transport, water supply and sewage treatment.


Forecast:

· By 2025, Construction market in India is expected to emerge as the third largest globally.

· By 2025, Construction output is expected to grow on average by 7.1% each year.

· By 2020, Construction equipment industry’s revenue is estimated to reach $ 5 bn.

· India will be the third largest construction market globally by 2025.


Statistics:

· 8% Share in India's GDP.

· 9,829 km Highway construction in India (2017-18).

· $16.6 bn New investment in road infrastructure.

· 51 million People employed.

· Second largest employer in India in 2017.

· Second largest FDI recipient sector for India in 2017.

POLICIES & SCHEMES:

The construction industry is growing at a rapid rate and is expected to grow at a CAGR of 15.7%. This will lead its size to US$ 738.5 billion by 2022. Compared to a meagre 2.9% growth during 2011-2015, the construction sector is estimated to grow at almost double of that at 5.6% during 2016-2020. This will require additional investments and India will be required to spend US$ 454.8 bn. on infrastructure development over the period of five years (2015-20), with 70% of funds needed for power, roads and urban infrastructure segments.

According to GlobalData, the Indian construction industry’s output value has increased from US$ 464.9 billion in 2017, to US$ 505.7 billion in 2018.

The government’s ‘Housing for All’ initiative aims to build 20 million affordable homes for the urban poor by 2022. This will provide a significant boost to residential construction (the market’s largest category), which will account for a third of the industry’s total value by 2023. It is also predicted that greater demand for residential construction will be created over the forecast period, due to the country’s rising population, urbanisation, and positive developments in regional economic conditions.


2020-2021 Budget:

In the 2020-2021 budget, Finance Minister, Nirmala Sitharaman has allocated Rupees 1.7 lakh crores for transport infrastructure. Some of the key takeaways includes:

· NHAI to monetise 12 highway bundles

· 2,500 km highway development proposed

· 9,000 km of economic corridors targeted

· 2,000 km of coastal roads targeted

· 2,000 km highways targeted

· Delhi-Mumbai Expressway to be completed by 2023

· High-speed train between Mumbai, Ahmedabad to be actively pursued

· New Tejas-type trains proposed

· Mulls setting up large solar power capacity alongside rail track

· Rs 18,600 crore Bangalore local train project proposed with 20% central equity

· Govt plans to set up 100 new airports in the country to boost tourism

· Consideration to corporatizing one major port

To augment India's infrastructure and create jobs, the government has launched Rs. 103 trillion infra projects besides providing about Rs. 1.70 trillion for transport infrastructure.

The main focus is on infrastructure for economic development and 6,500 projects across sectors under National Infrastructure Pipeline (NIP). This will revive industrial production and generate employment opportunities, creating more than 2 crore jobs. These new projects will include housing, safe drinking water, access to clean and affordable energy, health-care, educational institutes, railway stations, airports, bus terminals, metro and railway transportation, logistics and warehousing, irrigation projects, etc. About air traffic, she said 100 more airports would be developed by 2024 to support Udaan scheme and it is expected that the air fleet number shall go up from the present 600 to 1,200 during this time. Nirmala Sitharaman proposed "about Rs 22,000 crore to power and renewable energy sector in 2020-21."


© AGENCY 2017