Snapshot

Building a sustainable future

The Construction industry in India consists of the Real estate as well as the Urban development segment. The Real estate segment covers residential, office, retail, hotels and leisure parks, among others. While Urban development segment broadly consists of sub-segments such as Water supply, Sanitation, Urban transport, Schools, and Healthcare. 

  • Policy Support - In March 2021, the Parliament passed a bill to create a $ 2.5 Bn development finance institution called National Bank for Financing Infrastructure and Development (NaBFID) to fund infrastructure projects in India.
  • FDI in the construction development sector (townships, housing, built up infrastructure and construction development projects) and construction (infrastructure) activities stood at $26.24 bn and $28.96 bn respectively, between April 2000 and September 2022.
  • Cement production (weight: 5.37 %) increased by 28.6 % in November 2022 over November 2021. Its cumulative index increased by 10.8 % during April to November 2022 over the corresponding period of previous year.

100% Foreign direct investment in the construction industry in India under automatic route is permitted in completed projects for operations and management of townships, malls/shopping complexes, and business constructions.

100% Foreign direct investment in the construction industry is allowed under the automatic route for urban infrastructures such as urban transport, water supply, sewerage, and sewage treatment.

For further details, please refer FDI Policy

  • %

    Share in India's GDP

  • mn

    People employed

Explore Related Sub Sectors

Second largest employer in India

Second largest FDI recipient sector for India in 2020-21

Third largest construction market globally by 2025

Industry Scenario

The construction Industry in India is expected to reach $1.4 Tn by 2025

  • Cities Driving Growth - Urban population to contribute 75% of GDP (63% present), and 68 cities will have a population of more than 1 mn
  • The construction industry market in India works across 250 sub-sectors with linkages across sectors.
  • The Real Estate Industry in India is expected to reach $1 Tn by 2030 and will contribute 13% to India’s GDP
  • Residential- 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.
  • Under NIP, India has an investment budget of $1.4 Tn on infrastructure - 24% on renewable energy, 19% on roads & highways, 16% on urban infrastructure, and 13% on railways
  • Schemes such as the revolutionary Smart City Mission (target 100 cities) are expected to improve quality of life through modernized/ technology driven urban planning.
  • Industrial & Logistics sector has attracted about $144 mn of investment across greenfield and brownfield assets led by global investors, with a major share of 63% followed by domestic players during January-September 2022.
  • 54 global innovative construction technologies identified under a Technology Sub-Mission of PMAY-U to start a new era in Indian construction technology sector.
  • Over 3,500 cities have certified as ODF+ and 1,191 cities  as ODF++  under SBM-U.

GROWTH DRIVERS

  • Smart cities

    100 smart cities currently. Mission to improve quality of life through modernized/technology driven urban planning

  • Industrial corridors

    Eleven industrial corridors planned

  • Data Centres

    Real estate demand is set to increase by 15-18 Mn sq. ft. by 2025 across major cities

  • Cold storage

    Expected to add an incremental of ~10 mn tonnes by 2023

  • Increasing demand for commercial space

    Construction of office spaces, hotels, retail, entertainment units. The net office space absorption across India's largest 6 cities stood at 31.9 Mn sqft in 2020

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FAQs

Frequently
Asked Questions

What are investment opportunities under Swachh Bharat Mission?

Some of the investment opportunities are:

  1. Solid & Liquid Waste Management
  2. Wastewater Management
  3. Construction of Toilets 
  4. In February 2021, the government allocated Rs. 141,678 crore (US$ 19.22 billion) to tackle water, land & air pollution besides waste management over the next five years.
  5. In October 2020, the National Bank for Agriculture & Rural Development (NABARD) disbursed Rs. 12,298 crore (US$ 1.66 billion) under the Swachh Bharat Mission Gramin (SBM-G) for construction of 32.9 million household toilets.


 

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What is 'Smart Cities' program of the Indian government?

Government of India has launched a new urban development mission. Target is to develop 500 cities, which include cities with a population of more than 100,000 and some cities of religious and tourist importance. These cities will be supported and encouraged to harness private capital and expertise through Public Private Partnerships (PPPs), to holster their infrastructure and services in the next 10 years. The strategic components of Area-based development in the Smart Cities Mission are:
1) City improvement (retrofitting).
2) City renewal (redevelopment).
3) City extension (greenfield development).
4) Pan-city initiative in which Smart Solutions are applied covering larger parts of the city.
Please refer to these links for further details, link.

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How can we get our propriety building technology for affordable housing, certified and approved by government?

Building Materials and Technology Promotion Council does evaluation, validation and certification of innovative building materials and construction technologies under performance appraisal certification scheme. For details please refer to link.

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What kind of real estate business activities are prohibited for foreign investment?

FDI is not permitted in an entity which is engaged or proposes to engage in real estate business, construction of farm-houses and trading in transferable development rights (TDRs). “Real estate business” means dealing in land and immovable property with a view to earning profit there from and does not include development of townships, construction of residential/ commercial premises, roads or bridges, educational institutions, recreational facilities, city, regional level infrastructure and Real Estate Investment Trusts (REITs) registered and regulated under the SEBI (REITs) Regulations 2014. Further, earning of rent/ income on lease of the property, not amounting to transfer, will not amount to real estate business.

For further details, please refer to latest FDI Policy 2020 at the following link.

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What are the types of construction-development projects in which foreign investors/companies can invest in India?

Government has permitted 100% equity under automatic route for construction-development projects (which would include development of townships, construction of residential/commercial premises, roads or bridges, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure, townships).

We would also request you to refer to some conditions under which the investment in this sector is governed, as mentioned under section 5.2.10 of latest FDI Policy 2020.

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