Bright Prospects for Construction Industry in India

Tuesday 8 March 2016, Amsterdam

Increasing investments in residential construction and transport infrastructure will drive growth in India’s construction industry over the forecast period (2016–2020), according to a study, now available on ASDReports, Construction Intelligence Center (CIC). Consequently, the average annual growth in real terms is expected to improve from of 2.95% in 2011–2015 to 5.65% during the coming five years.

The key player forecasts the industry to rise from a value of US$428.1 billion in 2015 to US$563.4 billion in 2020, measured at constant 2010 US dollar exchange rates. Due to industrialization, urbanization, a rise in disposable income and population growth the demand for construction services is set to rise. Government efforts to improve India’s residential and transport infrastructure will also play a vital role in supporting the growth.

Infrastructure construction to pick up

Infrastructure construction accounted for 23.0% of the total industry’s value in 2015. According to the key player, it will continue to expand over the forecast period, driven by public and private sector investments in public transport infrastructure. Consequently, infrastructure construction is anticipated to be the industry’s fastest-growing market over the forecast period, with a CAGR of 9.94% in nominal terms, to value INR9.5 trillion (US$140.1 billion) in 2020.

“The country’s expanding population and urbanization will continue to generate a need for infrastructure development. To improve trade competitiveness and cope with the population growth, the government is focusing more on infrastructure development, which is expected to result in regular investments in the maintenance and expansion of road infrastructure in the near future,” comments Danny Richards.

Residential construction to dominate the industry

Residential construction was the largest market in the Indian construction industry during 2011-2015, and is anticipated to remain relatively sizable over the next five years, with a 30.6% share of the industry’s total value in 2020. Construction activity in the residential market will be supported by rapid urbanization, population growth, and positive developments in regional economic conditions. Government efforts to clear slum areas by 2022 and reduce the country’s housing deficit will also help the market grow.