Construction

Summary
  • Infrastructure plays a huge role in propelling other industries and India’s overall development. The government, therefore, focuses on the development of infrastructure and construction services through focused policies such as open FDI norms, large budget allocation to the infrastructure sector, smart cities mission, etc.*
  • The Construction industry in India consists of the Real estate as well as the Urban development segment.*
  • India aims to become the third largest construction market globally by 2025.*
  • The Sector is the second largest employer in India and Sixth largest FDI recipient sector for India in 2022.
Reasons to Invest
  • By 2030, more than 40% of the population is expected to live in urban India (33% today), creating a demand for 25 Mn additional mid-end and affordable units.*
  • The share of the urban population is expected to be 50% of the total population by 2050.* 
  • Under PMAY-G, the target of “Housing for All” by 2024 has been set at 2.95 crore houses. *

 

Explore more about infrastructure availability in the Construction sector >

Key Achievements
  • Jal Jeevan Mission reaches a milestone of 12 Crore rural households taps water connections.*
  • 54 global innovative construction technologies identified under a Technology Sub-Mission of PMAY-U to start a new era in Indian construction technology sector. *
  • Under NIP, India has an investment budget of $1.4 Tn on infrastructure - 24% on renewable energy, 18% on roads & highways, 17% on urban infrastructure, and 12% on railways.
  • 54 global innovative construction technologies identified under a Technology Sub-Mission of PMAY-U to start a new era in Indian construction technology sector.
Recent Announcements

4th Aug 2023: More than 7.4 lakh km of rural roads constructed @ 91 Km per day; Up from 3.8 lakh Km @ 80 Km per day; Quality of Rural Roads has improved significantly”

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27th Jul 2023: Ministry of Housing and Urban Affairs has initiated Global Housing Technology Challenge – India (GHTC-India) and undertaken six distinct construction technology for six light house projects across the country.

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24th April 2023: Infra projects worth INR 148 cr inaugurated to augment capacity in Chennai & Kamarajar Ports.

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27th March 2023: Sh. Amit Shah inaugurates and lays foundation stone of 236 development works worth INR 4500 cr at Raichur, Karnataka

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24th March 2023: PM Modi dedicates and lays the foundation stone of various projects worth more than INR 1780 cr.

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Statistics
  • Over 3,500 cities have certified as ODF+ and 1,191 cities as ODF++ under SBM-U.*
  • Cement production (weight: 5.37 per cent) increased by 9.4 per cent in June, 2023 over June, 2022. Its cumulative index increased by 12.2 per cent during the quarter April to June, 2023-24 over the corresponding period of previous year.*
  • The Average Index of Industrial Production of Infrastructure/ Construction goods in the FY 2022-23 is 157.1 and has growth rate of 7.8% over the corresponding previous year.*
Growth Drivers
  • 11 Industrial Corridors are planned to be developed across the country.
  • Real estate demand is set to increase by 15-18 Mn sq. ft. by 2025 across major cities

  • Growth in the logistics sector: Demand for warehousing stock from 287 mn sq ft (2021) to 500 mn sq ft (2030) in the top 8 Tier – 1 cities, with significant Grade A stock

  • The Geo-Portal for NCR made Public to improve decentralized planning and management in NCR region. The Portal consists of around 179 Layers presented as Line, Point & Polygon feature covering details of various sectors like Land Use, Transport, Industries, Water, Power, Health, Shelter, Heritage & Tourism, Disaster Management, etc.*
FDI Policy
  • 100% FDI through the automatic route is permitted in the following construction (development) projects: *
    • Development of townships
    • Construction of residential/commercial premises
    • Construction of roads or bridges
    • Construction of hotels, resorts
    • Construction of hospitals, educational institutions
    • Construction of recreational facilities
    • Construction of city and regional level infrastructure
  • FDI Limit for real estate projects within Special Economic Zones (SEZs) raised to 100%.
  • FDI limit for industrial parks under the automatic entry route is 100%. *
  • The cumulative FDI equality inflow in the Construction Development Projects is USD 26.35 bn during the period April 2000 to March 2023. This constitutes 4% of the total FDI inflow received across sectors. *
  • The cumulative FDI equality inflow in the Construction (Infrastructure) Activities is USD 29.68 bn during the period April 2000 to March 2023. This constitutes 4.67% of the total FDI inflow received across sectors. *
  • The cumulative FDI equality inflow in the Cement & Gypsum Products is USD 5.49 bn during the period April 2000 to March 2023 *

Read more about Foreign Direct Investment Policy in India >

Sector Policy
  • METRO NEO- The metro rail system being developed for mass transit corridors having a Peak Hour Peak Direction Traffic (PHPDT) upto 8000 with AW3 loading. *

Pradhan Mantri Awas Yojana-Urban (PMAY-U) *

  • Pradhan Mantri Awas Yojana-Urban (PMAY-U) was launched on 25th June, 2015 to address urban housing shortage among the EWS/ LIG and MIG category, including the slum dwellers by ensuring a pucca house to eligible urban households by the year 2022.
  • A total of 6,368 houses in Light House Projects are being constructed involving project cost of INR 790.57 crore.

PM SVANidhi Scheme *

  • The PM SVANidhi was launched to empower street vendors, making them independent and self-sustainable. Presently, over 8,486 SFVs have been onboarded and have generated sales of over INR 4.9 Crores. The Scheme is available to all street vendors across the country, including those from Dahod tribal area, who are engaged in vending in urban areas
  • To give further impetus to the digital onboarding and training of beneficiaries, Ministry of Housing & Urban Affairs (MoHUA) and Ministry of Electronics & Information Technology (MeitY) jointly launched ‘Main Bhi Digital 3.0’ from September 9 to November 30, 2021, to complement the efforts of LIs in adoption of digital transactions by the PM SVANidhi beneficiaries.
  • MoHUA has entered into MoU with Zomato, one of the largest online platforms for ordering and delivery of food in India, to onboard street food vendors on its food-tech platform. It has given street food vendors online access to thousands of consumers and help these vendors grow their businesses.
  • MoHUA launched the Mobile Application for PM SVANidhi se Samriddhi- Socio-economic profiling of PM SVANidhi beneficiaries and their families to link them to various Central Government Schemes. 
  •  The Cabinet Committee has approved the continuation of lending under the PM SVANidhi Scheme beyond March 2022 till December 2024, with focus on enhanced collateral free affordable loan corpus, increased adoption of digital transactions and holistic socio-economic development of the Street Vendors and their families. 

SVAMITVA scheme *

  • Geospatial technology along with Drones will survey all the over 6 lakh Indian villages. At the same time, pan-India 3D Maps will be prepared for 100 Indian cities, which will give a boost to the India’s future economic progress.
  • The size of the Indian Geospatial market in 2020 as per one industry estimate was INR 23,345 Crore including INR 10,595 Crore of export which is likely to grow to INR 36,300 Crore in 2025.
Projects

Smart Cities Mission

  • The objective of the Smart Cities Mission is to promote cities that provide core infrastructure and give a decent quality of life to their citizens, a clean and sustainable environment and the application of ‘Smart’ solutions. *
  • The core infrastructure elements in a smart city would include: *
    1. Adequate water supply
    2. Assured electricity supply
    3. Sanitation, including solid waste management
    4. Efficient urban mobility and public transport
    5. Affordable housing, especially for the poor
    6. Robust IT connectivity and digitalization
    7. Good governance, especially e-Governance and citizen participation
    8. Sustainable environment
    9. Safety and security of citizens, particularly women, children and the elderly
    10. Health and education
  • Global Housing Technology Challenge-India (GHTC-I) aims to bring the most innovative construction technologies to India through a competitive platform. It aims to give a boost through the development of domestic technological research, and building platforms for knowledge sharing and networking across the sector. * 
  • Under the “Smart cities and Academia Towards Action & Research (SAAR)” program, 15 premier architecture & planning institutes of the country will be working with Smart Cities to document landmark projects undertaken by the Smart Cities Mission. The documents will capture the learnings from best practices, provide opportunities for engagement on urban development projects to students, and enable real-time information flow between urban practitioners and academia. *

Swachh Bharat Mission

  • The Swachh Bharat Mission (SBM) is a cleanliness campaign by the Government of India. *
  • The objectives of the SBM are: *
    1. Elimination of open defecation
    2. Eradication of Manual Scavenging
    3. Modern and Scientific Municipal Solid Waste Management
    4. To effect behavioral change regarding healthy sanitation practices
    5. Generate awareness about sanitation and its linkage with public health
    6. Capacity augmentation for Urban Local Bodies (ULBs)
    7. Create an enabling environment for private sector participation in Capex (capital expenditure) and Opex (operation and maintenance).
  • The SBM has been divided into two categories – Urban and Gramin (rural). The Ministry of Housing and Urban Affairs implements it in urban areas and the Ministry of Drinking Water and Sanitation implements it in rural areas. The above-mentioned ministries work with all other union ministries, state governments, local institutions, NGOs, faith organizations, media and other stakeholders to ensure the wide and proper implementation of the SBM. *
  • In a big boost to the SBM (Gramin), the World Bank, in December 2015, approved a USD 1.5 Bn loan for the SBM Support Operation project. The World Bank is also providing parallel assistance of USD 25 Mn as technical assistance to build the capacity of select state governments in implementing community-led behavioural change programmes targeting social norms to help ensure widespread usage of toilets by rural households. *
  • Swachh Bharat Mission–Urban (SBM-U) 2.0 was launched on 1st October 2021 for a Mission period of five years. 
  • It involves urban-rural convergence, whereby infrastructure projects can be taken up on cluster basis to groups of neighboring Urban Local Bodies (ULBs) and rural areas, so that common waste processing facilities are utilized efficiently.

Heritage City Development and Augmentation Yojana (HRIDAY)

  • The National Heritage City Development and Augmentation Yojana (HRIDAY) has been launched to preserve and revitalise the soul of Indian heritage cities to reflect the city’s unique character by encouraging aesthetically appealing, accessible, informative and a secure environment.12 cities have been identified to implement the program – Amjer, Amaravati, Amritsar, Badami, Dwaraka, Gaya, Kancheepuram, Mathura, Puri, Varanasi, Velankanni and Warangal. *
  • GST Regime Implications - Under the GST regime (revised), promoters are to pay 1% (without input tax credit) GST in case of affordable houses and 5% (without input tax credit) on construction of houses other than affordable houses. Commercial properties will continue at the same GST rate of 12% with input tax credit. * 
  • GST is not applicable to completed and ready-to-move-in projects, as there are no indirect taxes applicable in the sale of such properties. *
  • The Real Estate Regulation and Development Act (RERA), 2016, set up in November 2016, aims to reform the real estate sector in India by encouraging greater transparency, citizen centricity, accountability and financial discipline. The act will also protect consumers by creating an online system for information sharing so that mutual trust can develop between developers and buyers and facilitate the timely completion of projects. *

Atal Mission for Rejuvenation and Urban Transformation (AMRUT) *

  • The purpose of the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) is to:
    1. Ensure that every household has access to a tap with an assured supply of water and a sewerage connection
    2. Increase the amenity value of cities by developing greenery and well maintained open spaces (e.g. parks)
    3. Reduce pollution by switching to public transport or constructing facilities for non-motorized transport
  • Overall Mission allocation is INR 1 lakh cr including a central share of INR 50,000 cr. State action plans amounting to INR 77,640 cr for basic infrastructure projects were approved, against which projects worth INR 79,772 cr have been grounded.
  • So far, work worth INR 52,477 cr (66%) has been carried out. So far, 105 lakh household water tap connections and 78 lakh sewer/ septage connections have been provided under Mission and in convergence with other schemes. Credit rating work has been awarded for 485 cities and completed in 470 cities. 164 cities have received an Investible Grade Rating (IGR), including 36 cities with ratings of A- or above. Ten ULBs namely Ahmedabad, Amravati, Bhopal, Ghaziabad, Hyderabad, Indore, Lucknow Pune, Surat and Visakhapatnam have raised INR 3,840 cr through the issuance of municipal bonds.
  • Under AMRUT, 1,831 parks over 3,700 acres have been developed, and 85 lakh street lights have been replaced, resulting in energy savings of 185.33 crore units (kWh).
  • AMRUT 2.0 rural-urban synergy will be affected whereby water markets for reuse of treated used water shall be ascertained in rural urban continuum.
  • Co-treatment of sewage/ seepage from nearby villages in spare capacities of Sewage Treatment Plants (STPs) will be explored by ULBs.
Financial Support

Union Budget 2023-24

  • The total budgetary allocation for FY 2023-24 towards the  Ministry of Housing and Urban Affairs is INR 76,431.60 cr.*
  • The total budgetary allocation for FY 2023-24 towards the Department of Drinking Water and Sanitation is INR 77,223 cr.*

Central sector schemes providing financial assistance

  • Atmanirbhar Bharat Schemes

    • Affordable Rental Housing Complexes (ARHCs): In order to cater to the housing needs for migrant workers which arose due to the COVID-19 pandemic, the Ministry of Housing & Urban Affairs has initiated the Affordable Rental Housing Complexes (ARHCs) scheme. It is a sub-scheme under Pradhan Mantri AWAS Yojana- Urban (PMAY-U) that will ensure a decent living environment to migrant workers in urban cities. *

    • PM Street Vendor's AtmaNirbhar Nidhi (PM SVANidhi): To provide financial assistance to various street vendors hit by the COVID-19 pandemic, the Ministry of Housing & Urban Affairs has launched the PM SVANidhi scheme. The scheme will provide working capital to street vendors, incentivize regular repayments and reward digital transactions. *

  • North Eastern Region Urban Development Programme (NERUDP): The central sector programme is being implemented by the Ministry of Urban Development (MoUD). Financial aid (70% of the cost) is being provided by the Asian Development Bank in the form of loan to the government for development of infrastructure in north eastern cities. *

Explore Government policies/schemes in Construction sector >

Investment Opportunities
  • Construction development in residential, retail, commercial and hospitality sectors, development of townships
  • Construction of roads, bridges, hotels, resorts
  • Technologies and solutions for smart, sustainable and connected cities and integrated townships
  • Technologies for the promotion of low cost and affordable housing
  • Green building solutions
  • Sustainable and environmentally friendly building materials.
  • Training and skill development of construction sector workers
  • Urban water supply, urban sewerage and sewage treatment. 

 

Explore projects to invest in Construction sector >

Sector Reports
  1. Year End Review 2022: Ministry of Rural Development
  2. Year End Review 2022: Ministry of Housing & Urban Affairs
Foreign Investors
  • Hines (USA)
  • Veolia (France)
  • Ascendas (Singapore)
  • Aqualyng (Norway)
  • The Trump Organization (USA)
  • Alstom (France)
  • GIZ (Germany)
Agencies
  1. Housing and Urban Development Corporation ltd.
  2. Ministry of Drinking Water and Sanitation
  3. Ministry of Housing and Urban Affairs
  4. Ministry of Rural Development
  5. National Building Construction Corporation (NBCC) Ltd.
Sources
  1. "India Services Portal, Department of Commerce, Ministry of Commerce & Industry”, Sector Overview - Construction and Related Engineering Services, https://www.indiaservices.in/construction 
  2. "Ministry of Housing and Urban Affairs", Schemes/ Programmes, Smart Cities, http://mohua.gov.in/cms/smart-cities.php
  3. Factsheet on FDI - April 2000 to December 2021, Department for Promotion of Industry and Internal Trade, https://dpiit.gov.in/sites/default/files/FDI%20Factsheet%20December%2C%202021.pdf
  4. “India Services Portal, Department of Commerce, Ministry of Commerce & Industry”, Sector Overview - Construction and Related Engineering Services, https://www.indiaservices.in/construction
  5. “Ministry of Housing and Urban Affairs”, Standard Operating Procedures for Cleaning Sewers and Septic Tanks, http://mohua.gov.in/upload/uploadfiles/files/AMRUT%20SOP%20Book%20Final.pdf
  6. “First Advance Estimates of National Income, 2019-20” Ministry of Statistics & Programme Implementation, PIB website, https://pib.gov.in/Pressreleaseshare.aspx?PRID=1598643
  7. India Infrastructure Sector 2019-23, EMIS, https://www.emis.com/php/store/reports/IN/India_Construction_Sector_Report_20192023_en_661610067.html
  8. “Department for Promotion of Industry and Internal Trade”, Consolidated FDI Policy, https://dipp.gov.in/sites/default/files/CFPC_2017_FINAL_RELEASED_28.8.17_1.pdf
  9. “Department for Promotion of Industry and Internal Trade”, Consolidated FDI Policy, https://dipp.gov.in/sites/default/files/CFPC_2017_FINAL_RELEASED_28.8.17_1.pdf
  10. “Smart Cities Mission”, Ministry of Housing and Urban Affairs,  What is Smart City, http://smartcities.gov.in/upload/uploadfiles/files/What%20is%20Smart%20City.pdf
  11. “Smart Cities Mission”, Ministry of Housing and Urban Affairs,  What is Smart City, http://smartcities.gov.in/upload/uploadfiles/files/What%20is%20Smart%20City.pdf
  12. ”Ministry of Housing and Urban Affairs”, Global Housing Technology Challenge -India, https://ghtc-india.gov.in/Content/ConceptNote_on_GHTC-India.pdf
  13. PMAY, https://pmaymis.gov.in/
  14. “PM India”, Major Initiatives, Swachh Bharat Abhiyan, https://www.pmindia.gov.in/en/major_initiatives/swachh-bharat-abhiyan/
  15. “Ministry of Housing and Urban Affairs”, Swachh Bharat Mission, http://mohua.gov.in/cms/swachh-bharat-mission.php
  16. “Ministry of Drinking Water and Sanitation”, Year End Review-2018: Ministry of Drinking Water and Sanitation Swachh Bharat Mission, http://pibarchive.nic.in/newsite/PrintRelease.aspx?relid=186600
  17. “Ministry of Drinking Water and Sanitation”, Year End Review-2018: Ministry of Drinking Water and Sanitation Swachh Bharat Mission, http://pibarchive.nic.in/newsite/PrintRelease.aspx?relid=186600
  18. “Ministry of Housing and Urban Affairs”, Smart Bharat Mission Urban, http://swachhbharaturban.gov.in/
  19. “World Bank”, World Bank Approves USD 1.5 Bn to Support India’s Universal Sanitation Initiatives, http://www.worldbank.org/en/news/press-release/2015/12/15/world-bank-approves-usd-1point5-billion-support-india-universal-sanitation-initiatives
  20. “Ministry of Housing and Urban Affairs”, HRIDAY, http://mohua.gov.in/cms/hariday.php
  21. "5th Anniversary of Urban Missions", Ministry of Housing and Urban Affairs, PIB, https://pib.gov.in/PressReleasePage.aspx?PRID=1634268 
  22. “Ministry of Housing and Urban Affairs”, HRIDAY, http://mohua.gov.in/cms/hariday.php
  23. “Ministry of Finance”, Decisions taken by the GST Council in the 34th meeting held on 19th March, 2019 regarding GST rate on real estate sector, http://pibarchive.nic.in/newsite/PrintRelease.aspx?relid=189462
  24. “Ministry of Housing and Urban Development”, Real Estate Regulation and Development Act -2016, http://mohua.gov.in/cms/real-estate-regulation-and-development-act-2016.php
  25. “Ministry of Housing and Urban Poverty Alleviation”, Year Ender-6-PMAY-Ministry of Housing & Urban Affairs, http://pibarchive.nic.in/newsite/PrintRelease.aspx?relid=186831
  26. “Ministry of Housing and Urban Poverty Alleviation”, Year Ender-6-PMAY-Ministry of Housing & Urban Affairs, http://pibarchive.nic.in/newsite/PrintRelease.aspx?relid=186831
  27. ”Ministry of Housing and Urban Poverty Alleviation”, Rs 41,765 crores allocated for MOHUA for 2018-19 – An Increase of Nearly 3% over las5 year’s budget, http://pibarchive.nic.in/newsite/PrintRelease.aspx?relid=176273
  28. “Ministry of Housing and Urban Affairs” Convergence, http://smartcities.gov.in/content/innerpage/convergence-sp.php
  29. Expenditure Budget Profile - Ministry of Housing and Urban Affairs, Union Budget website, https://www.indiabudget.gov.in/doc/eb/sbe57.pdf
  30. Expenditure Budget Profile - Centrally Sponsored Schemes, Union Budget website, https://www.indiabudget.gov.in/doc/eb/stat4a.pdf
  31. ARHC, Ministry of Housing and Urban Affairs, http://arhc.mohua.gov.in/
  32. PM SVANidhi, Ministry of Housing and Urban Affairs, https://www.pmsvanidhi.mohua.gov.in/Home/Schemes
  33. NERUDP, Ministry of Housing and Urban Affairs, http://mohua.gov.in/cms/nerudp.php
  34. NERUDP, https://nerudp.nic.in/index.html
  35. PIB RELEASE, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1670032
  36. Monthly Economic Review, Department of Economic affairs, https://dea.gov.in/sites/default/files/October%202020.pdf
  37. “Ministry of Housing and Urban Affairs”, http://mohua.gov.in/upload/whatsnew/5fa52ec5702e2Standard+specifications+of+Metro+Neo-2%20(1).pdf
  38. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1676471
  39. PIB Release, https://pib.gov.in/PressReleasePage.aspx?PRID=1672321
  40. Monthly Report, http://mohua.gov.in/upload/whatsnew/5fa1431c29e10Cab_Sept.pdf
  41. Monthly Report, https://jalshakti-ddws.gov.in/sites/default/files/monthly_summary_October_2020_eng.pdf
  42. “Ministry of Housing and Urban Affairs”, http://mohua.gov.in/upload/whatsnew/5fa1431c29e10Cab_Sept.pdf
  43. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1687573
  44. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1690002
  45. PIB Release,  https://www.pib.gov.in/PressReleasePage.aspx?PRID=1730341

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