|The construction industry is the second largest industry in India after agriculture. It accounts for about 11% of India’s GDP. It makes significant contribution to the national economy and provides employment to large number of people.|
There are mainly three segments in the construction industry like real estate construction which includes residential and commercial construction; infrastructure building which includes roads, railways, power etc; and industrial construction that consists of oil and gas refineries, pipelines, textiles etc.
According to a study by ASSOCHAM, the burgeoning Indian construction industry, currently worth $70 billion, will rise to US$120 billion by 2010.
Construction is an essential part of any country’s infrastructure and industrial development. Construction industry, with its backward and forward linkages with various other industries like cement, steel bricks etc. catalyses employment generation in the country. Construction is the second largest economic activity next to agriculture. Broadly construction can be classified into 3 segments – Infrastructure, Industrial and Real Estate.
Infrastructure segments involve construction projects in different sectors like roads, railways, ports, irrigation, power etc. Industrial construction is contributed by expansion projects from various manufacturing sectors. Real estate construction can be sub-divided into residential, commercial, malls/multiplexes etc.
The construction activity involved in different segments differs from segment to segment. Construction of houses and roads involves about 75% and 60% of civil construction respectively. Building of airports and ports has construction activity in the range of 40-50%. For industrial projects, construction component ranges between 15-20%. Within a particular sector also construction component varies from project to project.
Construction sector contributed about 11.5% to the country’s GDP in FY 08. Over past few years, growth of the construction has followed the trend of economic growth rate of the country. The multiplier factor between growth rates of construction and GDP has been about 1.5X-1.6X. Over past 3 years, construction as a percentage of GDP has increased from 8.0% in FY 06 to 8.5% in FY 08. Construction activity being labour intensive has generated employment for about 33 million people in the country.
The construction industry in India is highly fragmented. There are number of unorganised players in the industry which work on the subcontracting basis. To execute more critical projects, nowadays bids are increasing placed in consortium. But the profitability of the construction projects varies across different segments. Complex technology savvy projects can fetch higher profit margins for construction companies as compared to low technology projects like road construction. Various projects in Construction industry are working capital intensive. Working capital requirement for any company depends on the order mix of the companies.
The construction industry operates on the basis of contractual agreements. Over the years different types of contracts have been developed. It mainly depends on the magnitude and nature of work, special design needs, annual requirements of funds and complexities of job. Construction projects can be materialised through number of smaller contracts which mainly depends upon size of the project and diversified nature of activities to be carried out in the project. As a result, Subcontracting is a common phenomenon in the construction industry
So, indianconstructionindustry.com will give you more information on Indian construction industry like manufacturers, suppliers and all businesses related to construction industry.