In 2001, about 286 Million were living in urban areas across India. It had the second largest urban population in the world. As per the Indian Census, 2011, the urban population had increased to 377 Million, thereby registering a growth of around 32%. As per recent estimates, nearly 590 Million people will live in Indian cities by 2030.
Construction as an activity is undertaken by general contractors, who are experts in one type of construction which is either residential or commercial. The cost part of the construction industry is ruled by raw material cost and subcontracting cost.
Raw material cost which is the major cost constitutes for 30 – 50% of the total cost and subcontracting cost constitutes for about 20 – 40%. The raw material used up by the Construction Industry in any country primarily includes cement and steel. The Consumption of steel by construction industry has grown to almost 16.1% over the past 5 years but cement consumption is only 9.6%. An Extraordinary rise in prices of these two raw materials has a direct effect on the cost of the project, which in turn affects the margins of construction companies. Productivity also depends upon the range of the projects a company can implement. Companies having a strong existence in segments like power and industry find it difficult to accomplish to enjoy higher margins.
India accounts for an estimated urban housing shortage of 18.8 Million dwelling units and the housing shortage in rural India is estimated at 47.4 Million units, in 2012. Construction activities contribute more than 10% of India’s GDP. The requirements of the existing population are huge and the current levels of infrastructure are insufficient to meet these demands. A re-generation in the existing places and the creation of new and smart cities would cater to the ever-increasing demands.
More than half of the demand for construction services in India comes from the infrastructure sector, the remaining comes from industrial activities, residential and commercial development. The Indian construction industry is valued at over USD 126 Billion. The construction industry is the second largest employer and contributing to the economy after the agriculture sector. The construction sector adds to the second highest inflow of FDI after the services sector and provides employment to millions of people. The Government of India is initiating a new urban development mission, which will help develop many cities with a population of more than 100,000 and some cities of religious and tourist importance. The urban local bodies must enter into partnership agreements with foreign players to sustain to the need of the hour and maintain the equilibrium of the demand and the necessary supply for the same.
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