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 affect 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. 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. The pace in the Indian construction sector on the ground, however, does not reflect what lies in store for the future. For example, technological advancements will soon begin increasing the pace and potential of this sector, and act as a growth catalyst. Among its many 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.
Apart from the Smart Cities project, the Government's ‘Housing for All by 2022’ will be a major game changer for the industry. Increased impetus to the creation of affordable housing mission, along with quicker approvals and other supportive policy changes will soon result in an increase in construction activity. Likewise, the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) will bring in increased activity in 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 for these sectors and the larger economy. The introduction of GST will ease 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 currently is a buffer period, in which various policy changes and other growth drivers are still loading into the system. It is only a matter of time before we will see renewed growth and vibrancy.
The writer isManaging Director - Pride Group
