Construction In India - Key Trends And Opportunities

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Summary

This growth was supported by the country’s expanding economy, increased government spending on public infrastructure, high urbanization and a supportive foreign direct investment (FDI) system. Construction industry growth is expected to remain strong over the forecast period, as a result of the government’s commitment to improving the country’s infrastructure. The infrastructure, industrial and commercial construction markets collectively accounted for 74.2% of the total Indian construction industry in 2012. Consequently, the contribution of these three markets will be significant to the overall Indian construction industry growth over the forecast period. The Indian construction industry’s output is expected to record a CAGR of 15.45% over the forecast period. The general outlook for construction activity during the five-year forecast period is positive. Construction activity in the residential market will be driven by demand side factors, such as the growth in nuclear families and the rising urbanization rate, as well as government support and state investment in affordable housing schemes.

Scope

This ...
... report provides a comprehensive analysis of the construction industry in India:
• Historical (2008-2012) and forecast (2013-2017) valuations of the construction market in India using the construction output and value-add methods
• Segmentation by sector (commercial, industrial, infrastructure, institutional and residential) and by project type
• Breakdown of values within each project type, by type of activity (new construction, repair and maintenance, refurbishment and demolition) and by type of cost (materials, equipment and services)
• Analysis of key construction industry issues, including regulation, cost management, funding and pricing
• Assessment of the competitive environment using Porter’s Five Forces
• Detailed profiles of the leading construction companies in India

Reasons To Buy

• Identify and evaluate market opportunities using our standardized valuation and forecasting methodologies
• Assess market growth potential at a micro-level via 600+ time series data forecasts
• Understand the latest industry and market trends
• Formulate and validate business strategies by leveraging our critical and actionable insight
• Assess business risks, including cost, regulatory and competitive pressures
• Evaluate competitive risk and success factors

Key Highlights

• India’s economic growth is estimated to have slowed to 5.1% in 2012-2013, the lowest rate in a decade. This was caused by inadequate infrastructure, sluggish investment growth and policy paralysis. It is expected to improve marginally in 2013-2014. However, with a possibility of recovery in global economic growth and an expected improvement in business sentiment, India’s GDP growth is expected to improve in the following three years and will expand to between 6% and 7.5% a year.
• The government’s budget deficit widened from the equivalent of 5.1% of GDP in 2010-2011 to 6.1% in 2011-2012, as revenue receipts contracted by 4.5%. Despite a significant shortfall in revenue collection and sustained growth in expenditure, the government is optimistic about achieving a fiscal deficit target of 5.2% of GDP in 2012-2013 and aims to reduce the deficit to 4.8% of GDP in 2014-2015. However, Timetric forecasts that government expenditure growth will remain high and the sluggish economic performance will act as a drag on revenue growth.
• Construction activity has been unstable in recent quarters, with annual growth increasing to 10.9% in the second quarter of 2012 before dropping to 5.8% in the fourth quarter of the year. As overall economic growth has been fairly weak, slipping to a low of 4.5% on an annual basis in the fourth quarter of 2012, there are still concerns over the short-term prospects for the Indian construction industry, with developers in the commercial and residential property space likely to continue to struggle. Other problems, such as difficulties in land acquisition and securing environment clearances, could impact negatively on construction growth.
• In order to meet the long term need of infrastructure construction funding, a Memorandum of Understanding (MOU) for setting up India’s first infrastructure debt fund (IDF) was signed by ICICI Group, Bank of Baroda, Citicorp Finance India and Life Insurance Corporation in 2012. IDF will provide an alternative source of finance for investors and allow more investment in the infrastructure construction market. It aims to attract private investment to finance the majority of infrastructure projects. Major investments will be made in public-private projects on highways, railways, ports, roads and other infrastructure projects.

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