Business

Construction industry in India

Building and contracting sector in the country has seen a tremendous growth in recent past. The growth of new segments like the retail, entertainment and education has largely contributed to the 9% plus per annum growth in this industry. The stupendous growth of Information technology have given scope for building high rise infrastructure, SEZs and industrial parks especially in tier I and tier II cities.

This sector is a major indicator of economic development as it creates investment opportunities across segments. However it has been observed that the whole industry is fragmented by very few construction companies across the value chain. The medium size organisations in the field possess the required PQ (pre qualification) while small and independent sub contractors are the actual performers on the ground. Being labour centric industry, it employs more than 35 million people directly or indirectly and earns over Rs 35 million to the exchequer in form of cess and taxes. The allied industries that are dependent on infrastructure segment is equally important in determining the healthy growth of a country.

Affordable housing has been gaining preference in metro cities which is a healthy indicator for the demand of equipment and material used in the building sector. Many multi-national construction companies have seized this opportunity to set up factories in the catchment areas to be able to meet the demand and supply gap of building materials like cement, steel and iron. Levy of heavy penalties in form of Liquidated damages is important in providing timely delivery of the projects.

Given the size of projects, infrastructure is the biggest opportunity for infrastructure companies looking to set up their base in this country. With the new Government emphasising on capacity building in infrastructure like roads, highways, airport, sea ports, civil aviation and the power infrastructure, the scope for revenues and profits in this industry is poised to grow in leaps and bounds and companies like IRB Infrastructure are the proof. Virendra Mhaiskar is a IRB Infrastructure MD and his mission is to completely rebuild the India’s roads and highways to the highest world’s standards.

All these have definitely surged the demand for professional organisations that are chosen specifically to provide quality infrastructure in a timely manner. Even the methods adopted in infrastructure building have undergone a drastic change over a period of time.

Though the critics have been crying foul over rise in pollution due to construction companies in India, the sustainable buildings are the next potential product segment in this industry and a new avenue to focus upon.

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