Construction Industry in India

India is one of the world's fastest-growing construction markets, rising at the rate of 7-8 percent annually. By 2025, India will become the third-largest market in the world, thereby becoming a key driver for the Indian economy. The Indian construction industry employs over 30 million people and creates assets worth over ₹ 200 billion. Indian Construction Industry consists of 200 firms in the corporate sector.

The capital investment in construction represents about 40% to 60% of gross plan outlay and between 4% to 12% of the Gross National Product (GNP). In India, it employed about 3.5 million workers directly on construction in 1981, about 4 million in 1991, and about 15 million by 2001. In terms of total worker man-hours, it accounts for nearly 27% as against 29% of all other manufacturing and production industries. Further, these figures will greatly increase if allied industries of the construction sector are also taken into account.

On the export front, construction has been a major source of hard currency generation, only over-shadowed by the software industry only recently. Its share in the world construction market was about 2% in 1981 which unfortunately is reduced to less than 1% now. It is estimated that if India is able to increase its share to about 5% of the world construction market, the entire foreign debt accumulated till today can be wiped out.

A target of 5% is a fairly obtainable and achievable target with better organization, management, and national will. South Korea starting from practically scratch is able to capture more than 10% share in less than a decade and a half, India with much larger human, material, and technological resource base, can definitely make its presence felt at the international level with sincere and dedicated efforts of all of us who are involved in the construction, e.g. policymakers, government bureaucrats, entrepreneurs, construction managers, and teachers and researchers in universities. Nearly 20% to 50% of projects costing Rs. 20 million or more fail to keep up the stipulated time schedule and cost limits, The average cost overruns of more than 10% of projects are exceeding 100 percent with sore examples were cost overruns ere more than 200 to 500 percent.

Construction has been basically a labor-intensive industry in India, while in the international market; it has now become a high-tech, mechanized, and complex industry. If we want to become competitive in the world market, a radical change is required in the basic thinking process and attitudes at all the involved levels.

A well-organized and widespread network of Industrial Training Institutes (TTls) is established throughout the country for different trades of manufacturing, production, or process industries.

Many Government, and Seri-government agencies like Municipal Committees, Corporations, Area Development Authorities, Urban and Rural Planning and Development Agencies, Town and Country Planning Boards, Mining Department, Forest Department, Safety Inspectors, Fire Department, Labour Department, Director of Industries, local Police and Administration, Sales Tax, Income Tax and Excise Department, various other Public Departments and a similar never-ending plethora of controlling authorities required to issuing clearance certificates, controlling various aspects of construction at each project site. It is estimated that at a typical construction site, the construction manager is expected to deal with a minimum of twenty-two different inspectors and fill at least two dozen different returns quarter yearly and to attend to the whims of a large number of agencies.

Most of the work on construction is carried out with mobilization and other advances given by the owner. The capital investment required for setting up a construction firm is negligibly small. The requirement of experience for getting registration is almost non-existent. Thus, almost anybody who has an access to some capital is encouraged to enter the construction business, without any requirement of skill and or professional knowledge and experience. Most of these firms have no commitment to the construction profession or patience to acquire the required managerial skills. Their motivation to enter into the construction business is only to earn fast bucks without any regard for ethics or quality. It is, therefore, not surprising that according to statistics, construction firms are at the top of the list of business failures and bankruptcies.

It is not surprising therefore that the Indian construction industry is one of the least productive and competitive industries in the country. The quality index is also poor following the sating that ‘More is the number of inspections, poorer will be the quality of product’.

The bulk of the labor force engaged in construction is seasonal and migratory employed on a piece-rate basis. They are primarily committed to agriculture giving precedence to it over everything else during certain periods and climatic conditions in a year. During the rest of the year, they are engaged as construction labor for intermittent short durations; Very often the family is the unit of employment. They do not consider their involvement in construction as a vocation and thus have a commitment to the profession and have little aptitude and motivation to assimilate and improve upon the required knowledge and skill of the chosen trade. The piece rate of the mode of payment also encourages the workers to put long hours of work and take large risks at the cost of health and safety, Workforce lives near the worksite where the adequate provision of sanitary facilities and housing are not provided as a rule rather than exception in-spite of contract provisions in the stipulated rules and labor laws. There is no availability of medical facilities, insurance, and pension/provident fund benefits, In general, the employment pattern and working conditions are drastically different and primitive in construction as compared with other industries.

Construction is traditionally a contracting business right from the good old days, the industry comprises of a very large number of small firms. It is reported that there were three million registered contractors in India in 1987. This number must have been multiplied many times by the turn of the century. If we add to the number of labor and unregistered contractors, the figure would he mind-boggling. It is rightly said in the Indian context that it is much more difficult to hire a trained, skilled and efficient mason than to hire a contractor.