CONSTRUCTION

Investment in Construction Industry

The construction industry makes up for a major part of India’s GDP. Being a significant contributor to the GDP of India, the industry acts as a gateway for more opportunities. Investment in the construction industry in India, therefore, directly leads to the country’s economic development. The Construction industry in India consists of the real estate as well as the urban development segment. The Real estate segment covers residential, office, retail, hotels and leisure parks, among others, while urban development segment broadly consists of sub-segments such as Water supply, Sanitation, Urban transport, Schools, and Healthcare.

By 2025, Construction market in the country. is expected to emerge as the 3^rd largest globally and the construction output is expected to grow on an average of 7.1% each year. An enhancement in the construction industry will directly have a positive effect on other industries like cement, technology, steel, etc. The development of a nation is recognized through its infrastructure. FDI in the construction department in North India will bring with it new possibilities to uplift the construction industry.

100% FDI in construction development sector under automatic route is permitted in completed projects for operations and management of townships, malls/shopping complexes, and business constructions.

100% FDI in real estate in India is allowed under the automatic route for urban infrastructures such as urban transport, water supply and sewerage and sewage treatment.

9 %

Share in India's GDP
4.8 %

Industrial growth (2008-14)
$ 1 tn

Infrastructural investments (2012-17)
44 mn

People employed

1

2nd largest employer in India in 2017
2

2n largest FDI recipient sector for India in 2017
3

3rd largest construction market globally by 2025
4

2nd largest producer of cement in the world
5

2nd largest producer of cement in the world

The Construction industry in value terms is expected to record a CAGR of 15.7% to reach $738.5 bn by 2022
The industry contributes 55% share in the Steel industry, 15% in the Paint industry and 30% in the Glass industry
Cement production capacity stood at 502 million tonnes per year (MTPY) in 2018. Capacity addition of 20 million tonnes per annum (MTPA) is expected in FY19- FY 21
The activities that registered the highest growth include export cargo (10%), highway construction/widening (9.8%), power generation (6.6%), import cargo (5.8%) and cargo at major ports (5.3%)
Expected cement capacity addition of 80-100 MT per annum over next 5 years

Smart cities
100 smart cities to be developed by 2020
Industrial corridors
FIve industrial corridors planned
Railway stations/ lines
25 railway stations re-development besides 3,500 km line addition
Mega ports
6 mega ports planned
Increasing demand for commercial space
Construction of office spaces, hotels, retail, entertainment units. Annual absorption of office space in India crossed 42 mn sq ft in 2017.

The Construction industry in India is expected to grow at 5.6% during 2016-20. For this, the centre is planning to develop 100 smart cities by 2020.
25 railway stations re-development besides 3,500 km line addition and 6 mega ports planned.
Dec 2018: Oman’s Raysut Cement to invest $700 mn in India; earmarks $200 mn for two acquisitions.
Nov 2018: Dubai's restaurant chain Doner and Gyros to invest $27.7 mn in India.
Sep 2018: Vatika group to invest $1.1 bn on township project at Gurugram.
Apr 2018: Ultratech commissioned a green-field clinker plant with a capacity of 2.5 MTPA and a cement grinding facility with 1.75 MTPA capacity in Dhar, Madhya Pradesh.
Sep 2017: JK Cement is planning to invest Rs.1, 500 crore (USD $231.7 mn) over the next 3 to 4 years to increase its production capacity at its Mangrol plant from 10.5 MTPA to 14 MTPA.

$25.04 bn FDI equity Inflows in Construction Development during April 2000 – September 2018
$540 mn overseas investment in the Construction Industry In India during April 2007 – March 2018
$16.2 bn FDI in Construction Development In North India and South India in construction (infrastructure) activities during April 2000 – December 2019.