Construction & Engineering

The Construction Industry In India Is Expected To Grow To US$ 738.5 Billion By 2022.

Infrastructure development market was US$ 224 billion in 2019

This sector contributes 9% to India’s GDP and employs 51 million people

The CAGR is estimated to be a steady 15.7% till 2024

55% to the Steel industry, 15% to the Paint industry and 30% to the Glass industry

Industry’s revenue is estimated to reach US$ 5 billion

The construction industry is the second largest industry in India after agriculture. It is expected to emerge as the third-largest in the world by 2025. The industry can be segmented into real estate and urban development. Residential and office space, retail, hotels and leisure parks constitute the former while water supply, sanitation, public transport, schools, and healthcare constitute the latter.

In 2020, Indian real estate attracted institutional investments worth US$ 5 billion. The CAGR of the Indian Construction Engineering industry is estimated to be a steady 15.7% by 2024. The demand for commercial space has shot through the roof in recent times with economic expansion and spurt in business activities, with the annual absorption of constructed offices having crossed 42 million square ft.

The Construction Industry contributes 55% to the Steel industry, 15% to the Paint industry and 30% to the Glass industry. A growing economy and the demand for housing is expected to trigger a notable growth in the Construction Technology (ConTech) industry as well.

By 2025 the Construction equipment industry’s revenue is estimated to reach US$ 5 billion.

Headquartered in New Delhi, the Coalition for Disaster Resilient Infrastructure (CDRI) is a platform that aims to promote the resilience of new and existing infrastructure systems to climate and disaster risks, while supporting sustainable development. It was launched by India in 2019 at the UN Climate Change Summit. Composed of 20 nations plus the EU, CDRI involves the public and private sector to achieve its goals.

Recognizing the exponential growth that lies on the horizon for the construction industry, the government and the industry stakeholders have been pushing hard to increase the floorspace for growth:

  • The Indian Government has planned 100 smart cities to be developed by 2025. These smart cities are expected to drive economic growth and improve the quality of life of people by enabling local area development and harnessing technology.
  • 100% FDI under automatic route is permitted in completed projects for operations and management of townships, malls/shopping complexes, and business constructions. Over US$ 2 billion have already been brought in as FDI in the Indian Construction Engineering sector. The Indian Government is now considering permitting FDI for LLPs in the given sector.
  • An integrated industrial zone over 2,518 acres has been developed at Nanguneri in Tirunelveli district of Tamil Nadu by AMRL SEZ, to enable both global and national manufacturers to establish and expand their manufacturing facilities in India.
  • Realty developer M3M has acquired a 25-acre land parcel for US$ 35 million in Gurugram, Haryana, to develop a low-rise housing society.
  • Xandar Group has secured a takeaway of US$ 100 million from Rustomjee projects.
  • The Asian Development Bank (ADB) has approved US$ 270 million as a loan for the construction of water supply and integrated stormwater and sewage management infrastructure in Madhya Pradesh.
  • 63 of 136 projects worth nearly US$ 100 million have been completed under the Atal Mission for Rejuvenation and Urban Transformation (AMRUT). The scheme in the state of Haryana. Five hundred cities will be taken up under the AMRUT scheme.
  • KPMG International’s Infrastructure 100: World Markets Report has selected six Indian projects such as the Delhi-Metro, Yamuna Expressway and the Interceptor Sewage System, all based in Delhi-NCR and Gujarat International Finance Tec-City (GIFT), Mundra Ultra Mega Power Project and Narmada Canal Solar Project, all based in Gujarat.

India’s ConTech startups are developing rapidly to innovate every phase of the real estate and construction value chain. As a result, the Indian startup community creates a strong ecosystem. Startups are working on alternative building solutions, such as honeycomb-styled panels. They are far cheaper in production than bricks but have similar stability in urban housing. In this solution, a paper honeycomb core is sandwiched between two concrete face panels to make a new age construction material. The construction is faster than traditional building techniques, the building is waterproof and soundproof, it is thermally isolated, and the panels are extremely light. An alternative way of construction is building with 3D printing technologies which have proved to be cost and time effective. 

Based on a stable foundation of institutional support, an ever-expanding economy and strong forward and backward linkages, the Indian construction industry is an enormous edifice that houses numerous sectors. With new floors being added every other day, new windows of opportunity remain open to anyone who chooses to enter it.