Rapid Growth Ahead For India’s Construction Sector
The construction industry is a major contributor towards India’s GDP, both directly and indirectly. It employs 33 million people, and any improvements in the construction sector bring progress to a number of associated industries such as cement, steel, technology, skill-enhancement, etc.
Despite many positive signs, activity in the construction sector appears to be quite slow currently. On the one hand, the prolonged real estate market slowdown has resulted in a lot of unsold housing projects across India. Simultaneously, the construction sector is reeling under a severe shortage of skilled workforce, and in many areas of the country, shortage of construction sand, raw materials and political disturbances are also acting as growth deterrents.
However, the pace in the Indian construction sector being seen on the ground does not reflect what lies in store for the future. For example, technological advancements in the sector will soon begin increasing the pace and potential of this sector, and act as a major growth catalyst. Among its many other positive influences, the arrival of new construction technology and the entry of international infrastructure players into India is generating employment across a vast array of different skill sets.
The Modi Government’s determined focus on developing infrastructure across the country is also helping to generate increasing employment in the construction sector. Some of the cities recently announced under the Government’s ambitious Smart Cities scheme have tied up with large international players for funding as well as technology provision. It should be remembered that the Government’s contribution in each of the Smart Cities accounts for a relatively small part of the overall funding required, and that a lot depends on such collaborations.
Apart from the Smart Cities project, the Government’s ‘Housing for All by 2022’ will be a major game changer for the Indian construction industry. Increased impetus to the creation of affordable housing mission, along with quicker approvals and other supportive policy changes, will soon result in a lot of forward impetus in construction activity. Likewise, the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) will bring significantly increased activity in the infrastructure and related sectors.
Norms for FDI in 15 sectors including real estate and construction development have now been eased, and this has very positive implications both for these sectors and the larger economy. The introduction of GST – which is expected in the forthcoming Union Budget – will ease out tax-related complexities in the construction sector and bring with it a major spurt in activity and growth.
Township housing and infrastructure will also become major drivers for the construction sector in the immediate future. In most cases, the development of townships and their associated infrastructure happens in new corridors of our cities, and the Government is extending a lot of support for developing untapped areas.
All in all, better times lie ahead for India’s construction sector. What we are witnessing at the current time is a buffer period, in which various policy changes and other growth drivers are still loading into the system. However, it is only a matter of time before we will see renewed growth and vibrancy.