India’s construction industry plays a pivotal role in the country’s economic growth. Currently, the combination of government stimulus to the infrastructure sector, the focus on renewable energy, increasing foreign investments and a healthy pipeline of projects post Covid-19 have led to an upturn in the sector’s growth curve.
Over the years, the sector has seen major advancements, with the adoption of modern machinery, sustainable materials and innovative technology in construction projects. The government is also promoting the use of recycled construction and demolition waste, and other sustainable practices to minimise the adverse environmental impact.
The sector is currently experiencing a much-anticipated economic upturn, after a long period of pandemic-induced recession. The revival is being fuelled by several factors, including an increase in per capita income, population growth resulting in a significant demand for affordable housing, and the rapid implementation of projects in crucial sectors such as mining, quarrying and road construction. Despite challenges faced in recent years, this industry has shown resilience. Furthermore, it now ranks third globally.
Supporting statistics
As per the Indian Construction Equipment Manufacturers’ Association (ICEMA), during 2023-24, the total units of construction equipment sold increased by 26 per cent to 135,650 units, compared to 107,779 units sold in 2022-23, exceeding all projections. This has majorly been led by infrastructure-oriented development. Given that overall sales crossed the 100,000 mark for the first time in 2022-23, the preceding year has sustained the growth momentum with an annual 26 per cent increase in sales for the second consecutive year. A positive growth trajectory has been observed in all five primary construction equipment segments owing to pre-election construction impetus.
The total sales of earth moving equipment increased to 93,531 units in 2023-24, a year-on-year increase of around 21 per cent. Additionally, the growth in sales for backhoe loaders and crawler excavators by approximately 55 per cent and 35 per cent accounted for 90 per cent of the total earth moving equipment sales.
A surge in equipment demand has been observed in both domestic as well as export markets, by 24 per cent and 49 per cent respectively. Moreover, road construction equipment, which is the only segment to experience negative growth in 2022-23, made a remarkable recovery in 2023-24, selling 6,571 units of equipment, a 40 per cent increase from the 4,828 units sold in 2022-23.
Additionally, as per the Ministry of Statistics and Programme Implementation (MoSPI), the gross value added (GVA) of the construction industry (at constant 2011-12 prices) increased from Rs 11.29 trillion in 2021-22 to Rs 12.42 trillion in 2022-23, registering a growth rate of 10 per cent. In the April-December period of 2023-24, the construction sector GVA grew by another 10 per cent to Rs 10.15 trillion over the GVA of the corresponding period (Rs 9.19 trillion) in 2022-23. The growth was primarily driven by an improved pace of project execution as well as the moderation in raw material prices.
Technology advantage
It is crucial for the Indian construction industry to embrace digital transformation, which will unlock its true potential. Key effective technology tools include building information modelling (BIM) and robotics and automation. Moreover, considering the quantum of infrastructure projects in the pipeline, it is the need of the hour to rapidly adopt better and more reliable methods to fast-track the construction pace while maintaining the best quality.
The use of BIM is still at a nascent stage in India although it is being implemented across various airport projects. For instance, Bengaluru International Airport Limited has employed BIM for designing, building and operations, same as Guwahati’s new integrated terminal building at the Lokpriya Gopinath Bordoloi International Airport and at Terminal 3 of Delhi airport. Further, the upcoming airports in Jaipur and Navi Mumbai are set to leverage this technology.
Geospatial technologies have revolutionised asset management in India. Key actively deployed technologies include GIS, drones and LiDAR. These advancements have enabled accurate collection of geographic data, monitoring of remote infrastructure and identification of any maintenance issues. As of May 2024, the centre plans to finalise the GIS mapping of all national highways. This initiative aims to improve planning, execution and monitoring of the road network for timely project completion.
The Mumbai-Ahmedabad High-Speed Rail Project was the first instance in which National High Speed Rail Corporation Limited employed aerial LiDAR survey. This technique offers the advantage of delivering comprehensive ground details and data within a span of three months, whereas the conventional approach typically requires 10-12 months. Moreover, the application of LiDAR in the project helped achieve a vertical precision of 39 mm and a horizontal accuracy ranging from 93 mm to 100 mm.
Even though technologies such as pre-cast construction have been introduced, the widespread adoption has been sluggish and requires more focus.
Key challenges
A key challenge is the reluctance to acclimatise to the available mechanised construction techniques across infrastructure projects. This is due to a lack of understanding and the possibility of unanticipated obstacles that could have a significant impact on the schedule, budget and quality of the project. As an alternative to adopting high-priced but effective technologies, contractors exhibit a preference for deploying cheaper labour.
As per MoSPI, in June 2023, of the 1,643 large-scale government projects, around 815 projects are behind their schedule compared to the original timeline. These delayed projects have collectively exceeded their original cost projection by around 19 per cent. The hesitation to adopt new and better techniques can be alleviated through comprehensive technological workshops, increased emphasis on effectively executing these strategies and drawing insights from best practices.
Additionally, obtaining approvals to implement new technologies during construction is a constraint if not specified in the contract. However, in the event of a contractor assuming the risk, the cost savings are transferred to the authority.
Optimistic forecast
To fully capitalise on the emerging opportunities in the construction sector, it is important to increase investments in infrastructure, recruit highly skilled workers, enforce the adoption of modern technologies and foster participation by the private sector. Moreover, with a continued focus on implementing strategic planning at all levels of the government and effectively tackling sector challenges, the current economic upswing is likely to continue.
Due to monsoon-associated challenges, the pace of different construction activities in the country is expected to slow down somewhat. As a result of this, construction equipment sales are likely to witness a downward trajectory for at least the initial two quarters of 2024-25. Nevertheless, owing to ambitious construction targets set for the year, infrastructure development is expected to resurge in 2024-25. This will be driven by the speedy awards of new projects and focus on the timely completion of under-construction projects.
The government is making efforts to improve the availability of affordable housing by offering subsidies, which is promoting construction in smaller towns and cities in the country. Ongoing initiatives in both residential and industrial sectors such as the Central Vista Redevelopment Project in Delhi, significantly contribute to the ever-evolving construction equipment industry in the country. Additionally, the Ministry of Road Transport and Highways has unveiled an ambitious short-term 100-day roadmap to operationalise 700 km of high-speed corridors and award 3,000 km of highway projects in 2024-25.
All in all, while there is uncertainty regarding short-term construction activities, equipment sales and the rate of target completion in various segments, the long-term outlook for the construction sector remains promising.
Harman Mangat
