Current scenario of the Indian construction industry in 2024

Last Updated on August 7, 2024 by Admin

The Indian Construction industry is categorized into Commercial construction, Residential Construction, Industrial Construction, Infrastructure, Transportation construction, and Energy and Utility construction.

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The infrastructure sector is a crucial driver of the Indian economy. The industry is highly responsible for propelling India’s overall development and enjoys intense government focus on initiating policies that would ensure the country’s time-bound creation of world-class infrastructure. Infrastructure includes power, bridges, dams, roads, and urban infrastructure development.

Table of Contents

Market Size

As per Invest India, the Indian construction industry will reach $1.4 Trillion by 2025.

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Cities Driving Growth by 2030:

Cities expected to generate 70% of India’s GDP.
Construction industry operates across 250 sub-sectors with sector linkages.

Residential Sector:

Estimated 600 million people to live in urban centers by 2030.
Demand for 25 million additional mid-end and affordable housing units.

National Infrastructure Pipeline (NIP):

$1.4 trillion investment budget.
- 24% for renewable energy.
- 18% for roads & highways.
- 17% for urban infrastructure.
- 12% for railways.

Urban Development Schemes:

Smart City Mission targeting modernization of 100 cities.
Technology Sub-Mission under PMAY-U identifies 54 global innovative construction technologies.
Over 3,900 cities certified as ODF+ and 1,429 cities as ODF++ under SBM-U.

Multimodal Logistics Parks (MMLPs):

35 MMLPs to be developed with a total capital cost of $6.1 billion.
These parks will cater to 50% of the freight movement.

Investment in Urban Transformation:

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Since 2014, over INR 18 lakh crore invested in urban transformation.

Additional Points:

Smart City Mission: Enhancing quality of life through technology-driven urban planning and infrastructure improvements.
Renewable Energy Projects: Emphasis on sustainable development with substantial investment in renewable energy.
Public-Private Partnerships (PPPs): Encouraging collaboration between the government and private sector to leverage resources for infrastructure development.
Affordable Housing: Continuous efforts to meet the housing demand with affordable housing projects.
Skill Development: Initiatives for upskilling the workforce to meet the growing demands of the construction industry.
Infrastructure Growth: Focus on developing transportation networks, including roads, highways, and railways, to support economic growth.

For more detailed insights, refer to the Press Release.

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Highlights of Union Budget 2024-205 for the Construction Sector

The Union Budget 2024-2025 includes several significant measures to boost India’s construction sector. Here are the key highlights:

Capital Expenditure:

The budget allocates INR 11.11 lakh crore for the infrastructure sector, including significant investments in road connectivity projects (INR 26,000 crore) and power sector projects (INR 21,400 crore).

The Pradhan Mantri Awas Yojana Urban 2.0 is allocated INR 10 lakh crore to construct 3 crore additional houses for urban poor and middle-class families.

Urban Development and Industrial Growth:

The budget includes plans for creative brownfield redevelopment, promoting the revitalization of underutilized urban areas.

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Twelve new industrial corridors and numerous industrial parks are being developed to enhance industrial infrastructure and economic activity.

Regional and Rural Development:

The Pradhan Mantri Gram Sadak Yojana Phase IV will provide all-weather connectivity to 25,000 newly eligible rural habitations.

Projects like the Polavaram Irrigation Project in Andhra Pradesh are fully financed to support local agriculture.

Skilling and Employment:

A new skilling scheme aims to train 20 lakh youth over the next five years and upgrade 1,000 Industrial Training Institutes (ITIs).

The Prime Minister’s Package introduces schemes to incentivize job creation and support first-time employees and employers.

Sustainability and Climate Initiatives:

Significant investments in renewable energy, including the Solar Rooftop Mission under the Pradhan Mantri-Surya Ghar Muft Bijli Yojana, aim to promote the adoption of solar energy across residential and commercial sectors/

Developing sector-specific decarbonization roadmaps to drive investments and innovation in low-carbon alternatives for construction materials like cement and steel.

These measures are expected to stimulate growth in the construction sector, enhance infrastructure, promote sustainable practices, and address the industry’s skill gap.

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Indian Construction Industry Job Outlook 2024

The job outlook for the Indian construction industry 2024 appears promising, though several challenges accompany it. The industry is expected to witness significant growth driven by substantial government investments in infrastructure projects, such as roads, power plants, and housing initiatives. Here are some key insights:

Growth Drivers:

Infrastructure Investment: The Union Budget 2024-2025 allocates INR 11.11 lakh crore to infrastructure development, including significant funding for road connectivity projects and the power sector. This investment is expected to create numerous job opportunities across various construction segments.

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Affordable Housing: The Pradhan Mantri Awas Yojana Urban 2.0 aims to construct 3 crore additional houses, boosting employment in the housing sector.

Employment Trends:

Despite a decrease in job postings towards the end of 2023, the construction sector is expected to grow at an average annual rate of 6.3% between 2024 and 2027. Investments in transport, electricity, and renewable energy projects will support this growth.

The focus on green buildings and sustainable construction is also expected to create new job opportunities as the industry adapts to environmental standards and regulations.

Challenges:

Labor Shortages: The industry continues to face a significant shortage of skilled labor, which could impact project timelines and efficiency. Efforts to attract and retain talent and targeted skilling programs are crucial to addressing this issue.

Inflation and Material Costs: Rising materials costs and supply chain disruptions pose additional challenges. Construction companies must manage these factors effectively to maintain profitability and project viability.

Technological Advancements:

Adopting advanced construction technologies, such as Building Information Modeling (BIM) and construction automation, is expected to streamline operations and improve productivity. This shift will also create demand for tech-savvy professionals in the construction industry.

Regional Development:

Significant regional development projects, such as creating new industrial corridors and urban redevelopment initiatives, will generate localized employment opportunities and stimulate regional economies.

Overall, the Indian construction industry is poised for robust growth in 2024, with substantial job creation driven by government investment and technological advancements. However, addressing labor shortages and managing rising costs will be critical to sustaining this growth.

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The Way Forward

The way forward for the Indian construction industry beyond 2024 involves embracing technological advancements, addressing labor shortages, enhancing sustainability practices, and fostering regional development. Here are vital aspects and strategic directions for the future:

Technological Integration:

Digitalization and Automation: The construction industry is increasingly adopting technologies such as Building Information Modeling (BIM), construction automation, and robotics to improve efficiency and reduce costs. Digital platforms and integrated project management tools are expected to streamline operations and enhance productivity..

Smart Construction Materials: The development and use of advanced construction materials, such as self-healing concrete and high-performance insulation, will contribute to the longevity and sustainability of buildings.

Sustainability and Green Building:

Environmental Regulations: With the increasing focus on environmental sustainability, the construction industry will need to adhere to stricter environmental regulations and adopt green building practices. This includes energy-efficient designs, waste management, and the use of sustainable materials.

Renewable Energy Projects: The government’s emphasis on renewable energy projects, including solar and wind power, will drive the construction of related infrastructure and create opportunities for sustainable growth.

Addressing Labor Shortages:

Skilling and Training Programs: To address the labor shortage, there will be a need for targeted skilling programs and vocational training to equip workers with the necessary skills for modern construction practices. Partnerships between the government, private sector, and educational institutions can help bridge the skill gap.

Attracting Youth: Initiatives to attract younger generations to the construction industry by highlighting career opportunities and offering competitive wages and benefits will be crucial. This includes promoting construction careers as attractive and rewarding options for new entrants.

Regional and Urban Development:

Urban Redevelopment: Continued investment in urban redevelopment projects will enhance infrastructure and living standards, especially in Tier 2 and Tier 3 cities. This includes the development of smart cities, improved public transportation, and affordable housing projects.

Rural Connectivity: Projects to improve rural connectivity and infrastructure, such as the Pradhan Mantri Gram Sadak Yojana, will drive development in remote areas and stimulate economic activity.

Policy and Regulatory Framework:

Supportive Policies: The government will need to continue implementing supportive policies that encourage investment in infrastructure and construction projects. This includes favorable tax regimes, streamlined approval processes, and incentives for sustainable practices.

Public-Private Partnerships (PPPs): Strengthening public-private partnerships can accelerate the execution of large-scale infrastructure projects. Collaboration between the government and private sector can leverage resources and expertise for more effective project delivery.

Financial and Investment Strategies:

Attracting Investments: The construction industry must attract domestic and foreign investments to sustain growth. This involves creating a stable and predictable investment climate with clear regulatory frameworks and incentives for investors.

Innovative Financing: Exploring innovative financing mechanisms, such as infrastructure bonds and green finance, can provide capital for large-scale projects and sustainable initiatives.

Technological advancements, sustainable practices, a skilled labor force, regional development, supportive policies, and robust investment strategies will shape the Indian construction industry’s future beyond 2024. Addressing these areas will ensure the industry thrives and contributes significantly to India’s economic growth and development.

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Indian construction industry FAQs

What is the expected contribution of cities to India’s GDP by 2030?

By 2030, cities are expected to generate 70% of India’s GDP.

How many additional housing units will be needed in urban centers by 2030?

An estimated 25 million additional mid-end and affordable housing units will be needed to accommodate the projected 600 million people living in urban centers by 2030.

What is the National Infrastructure Pipeline (NIP) budget allocation for various sectors?

The NIP has an investment budget of $1.4 trillion, allocated as follows: 24% on renewable energy, 18% on roads and highways, 17% on urban infrastructure, and 12% on railways.

What is the Smart City Mission, and how many cities does it target?

The Smart City Mission is a scheme aimed at improving the quality of life through modernized and technology-driven urban planning. It targets the development of 100 cities.

How many Multimodal Logistics Parks (MMLPs) are planned, and what is their total capital cost?

A total of 35 Multimodal Logistics Parks (MMLPs) are planned, with a total capital cost of $6.1 billion. These parks will cater to 50% of the freight movement.