The Hindu Business Line : CII report upbeat on construction sector — 'Scope for project exporters to tap new markets'

AN increased investment in infrastructure has led to a surge in the activities of the construction industry, according to a report by the Confederation of Indian Industry (CII).

The growth wave in the sector is evident from the financial results posted by some of the leading contractors, showing a 30-100 per cent growth in the first nine months of 2004-05.

However, the construction industry is faced with certain challenges. The industry must look into price-competitiveness, safety, quality , technological changes, developing new construction materials and having an adequately trained manpower. There is a clear increase in fund allocations for the infrastructure sector in the Tenth Plan (2002-07) by the Planning Commission most of which is to be spent in the construction sector. The CII report states that such an expenditure would not only have a direct impact on the construction sector, but would also have a ripple effect in boosting demand in other core sectors (such as cement and steel). This would have a positive impact on the Indian economy as a whole. "The construction sector, therefore, has to gear up fully to take on the ever-increasing challenge," it adds.

The report states that the Indian construction industry, which is ranked 12th in the world, has the potential to emerge as a front-runner if construction activity is unleashed in all the sectors. The resultant spin-offs to industry and employment will drive economic growth. The industry, according to CII is one of the world's largest industrial employers. As per an earlier study by the Confederation of International Contractors' Association (CICA) and the United Nations Environment Programme, the annual output worldwide is estimated to be $3,400 billion. India accounts for 1.75 per cent of the world market for the construction sector.

The construction sector in India, accounting for 5 per cent of the gross domestic product, is the second highest employer after agriculture and provides direct or indirect employment to about 32 million people. Indian project exporters have been able to secure high-value contracts abroad during the last three decades. The regions that continue to be potential markets for the project exports sector are the SAARC region, South-East Asia, Afghanistan, Africa, West Asia and other oil-rich countries, Russia, CIS countries and Latin America.

Therefore, there is scope for Indian project exporters to enter into new markets and cover new sectors. According to the report, the recent trends observed in the pattern of bidding by Indian project exporters are encouraging, particularly for project opportunities in neighbouring and other developing countries. With increasing competitiveness and sound technical and managerial capabilities, the Indian project exporters are hopeful of penetrating new overseas markets.

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