Indian Construction Industry - Crafting The Nation
The construction and infrastructure industry plays an important role in the development of a country. The industry contributes to the development of several other sectors both directly and indirectly in a big way. In developing countries like India, the construction industry has an even bigger role to play in the overall socio-economic development of people.
Opportunities in the Indian Construction Industry
The construction industry in India is expected to become USD 738.9 billion by 2022, growing at a CAGR of 15.7%. It is expected to become the third-largest in the world by 2025 in terms of value. The Indian construction industry consists of the real estate and the urban development segments. The real estate comprises of residential, office, retail, hotels and leisure parks, etc. The urban development includes water supply, sanitation, urban transport, schools, and hospitals, etc. The construction industry is one of the largest employment generators in the country. The government’s push towards building smart cities, industrial corridors, mega ports and growing urbanization and demand for commercial space in tier 2 and tier 3 cities are some of the driving factors of the industry.
Impact of Covid-19
The Covid-19 pandemic that affected operations across every industry also hampered the activities in the construction industry. In fact, construction and real-estate are some one of the worst-affected industries by the pandemic.
The impact of the pandemic on the industry is manifold- liquidity issues, migration of labours, the reluctance of people to invest, etc. Many of the on-going projects remained unfinished for a long time during the pandemic due to the migration of labour and cash crunches. This resulted in huge losses for the investors in the industry.
Government Support & Recovery
However, the is quick in bouncing back, overcoming the unforeseen challenges posed by the pandemic. The Government of India also announced several relief measures to support the sector that was hit badly by the pandemic.
In the Union Budget 2021, the first budget presented post-covid, the government made monitory allocations to the construction sector. An amount of INR 500 billion was allocated to the Ministry of Housing and Urban Development. Several schemes such as Smart Cities Mission, Swachh Bharat Mission, Pradhan Mantri Awas Yojana, Heritage City Development and Augmentation Yojana, Atal Mission for Urban Rejuvenation and Transformation are expected to boost the growth of the sector.
Apart from these, the government also announced the National Infrastructure Pipeline (NIP) project with an estimated investment of USD 1.5 trillion for the next five years. The NIP will undertake infrastructure projects in the country through public-private partnerships, procurement contracts and various other modes across several sectors, including transport, logistics, energy, water & sanitation, communication, solar, commercial infrastructure, etc.
Future Ahead
With a population of 1.3 billion and growing, the demand for living and commercial space and other infrastructure facilities is only going to increase in India, which in turn will drive the construction industry market. The urban population in India, which is around 35% currently, is expected to be more than 50% in the next 10 years. The increase in urban population will open up tremendous investment opportunities in the Indian construction sector.