Construction Sector in India: 2013

Construction industry of India plays an essential role in the economic growth of the country as it is the second largest contributor to the GDP (9 per cent), after agriculture. Currently, incited by the boom in Indian real-estate sector, the growing construction sector in India is attracting a large number of global players. Adding to the growth are innovative construction technologies and sustainable building materials in the building-construction process.

Real-estate and Infrastructure:

The construction sector in India comprises of two segments: real estate and infrastructure.

While the real-estate sector comprises of residential (housing and development), industrial (industrial parks, factories and plants), corporate (offices and research centers) and commercial (malls, shops, showrooms and hotels); construction sector comprises of roads, railways, urban infrastructure (water supply, sanitation, schools, hospitals, universities and security), ports, airports and power.

Indian real-estate sector accounts for nearly 43 per cent of the construction spend.

Growth:

With the consistent attention given to infrastructure development and the increasing demand of housing in the country, building-construction process is increasing. As a result, the construction sector in India is growing at a CAGR (Compounded Annual Growth Rate) of around 11.1 per cent since the last eight years.

The construction sector of India has strong linkages with various industries such as steel, cement, paints, chemicals, fittings, fixtures and tiles. While in the short term it serves as a demand-enhancer; in the long run, it contributes towards boosting the infrastructure capacity. This is also evident from the fact that infrastructure construction accounts for the maximum share of 54.0 per cent of all construction and building activities. Industrial-expansion contributes to 36.0 per cent of overall construction activity, and residential and commercial 5.0 per cent each. As India goes aboard upon an accelerated drive for infrastructure formation, it becomes critical to enhance the capacity and capability of the construction sector.

Growth of the construction sector of India will give a boost to many other economic activities. It will stimulate substantial growth in the construction equipment industry as well as a host of other down-stream industries like steel, cement, paints, chemicals, fixtures and fittings, bricks and tiles, non-ferrous metals/ plastics/ glass, timber and wood-based products.

Employment:

The Construction sector provides direct/indirect employment to about 35 million people and is expected to employ about 92 million persons by 2022. Accordingly, almost 50 million additional jobs may be created in Construction in the next 10 years.

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