Positive developments in economic conditions, improvement in investor confidence and investments in transport infrastructure, energy and housing projects have helped the Indian construction industry regain growth momentum in 2018, with output value increasing from US$464.9bn in 2017 to US$505.7bn, says GlobalData, a leading data and analytics company.
The company’s report: ‘Construction in India – Key Trends and Opportunities to 2023’ reveals that the India’s construction industry, which registered an output growth of 8.8%, up from 1.9% in 2017, is further expected to grow at a compounded annual average rate of 6.44% to *US$690.9bn in 2023.
Dhananjay Sharma, Construction Analyst at GlobalData, comments: “India’s construction industry is expected to continue to expand over the forecast period (2019–2023), driven by the government’s efforts to develop the country’s infrastructure and improve housing sector.”
The government’s ‘Housing for All’ initiative – ‘Pradhan Mantri Awas Yojana’ (PMAY) – aims to build 20 million affordable houses for the urban poor by 2022. This will provide a significant boost to residential construction – the markets largest category – which will account for a third of the industry’s total value by 2023.
In the 2018–2019 budget, the government increased its expenditure towards infrastructure development by 20.9% from INR4.9 trillion (US$75.9bn) in the Financial Year (FY) 2017–2018 to INR6.0 trillion (US$89.2bn).
Residential construction is expected to remain the largest market over the forecast period, accounting for 30.1% of the industry’s total value in 2023. The country’s rising population, urbanization and positive developments in regional economic conditions are also expected to create greater demand for residential construction over the forecast period.
Sharma concludes: “GlobalData’s latest estimate of India’s total construction project pipeline including all mega projects with a value above US$25m, stands at INR82.5 trillion (US$1.2 trillion). The pipeline, which includes all projects from pre-planning to execution, is skewed towards early-stage projects, with 60.7% of the pipeline value being in projects in the pre-planning and planning stages as of February 2019.”
‘*’ measured at constant 2017 US dollar exchange rates