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Building a sustainable future

Construction sector consists of the real estate as well as the urban development segment. The real estate 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, among others.

  •   By 2020, construction equipment industry’s revenue is estimated to reach USD 5 bn
  •   By 2025, construction output is expected to grow on average by 7.1% a year
  •   By 2025, India's construction market is expected to emerge as the third largest in the world


100% FDI under automatic route is permitted in completed projects for operations and management of townships, malls/shopping complexes and business constructions. 100% FDI is allowed under the automatic route for urban infrastructure areas like urban transport, water supply, sewerage and sewage treatment.

for more details refer FDI Policy 2017


  • Second largest employer in India
  • Second largest FDI recipient in India
  • Third largest market by 2025

Industry Scenario

The Indian construction industry is estimated at approximately USD 136 bn for 2017.

The construction sector has strong linkages with other manufacturing industries accounting for a significant share. The sector contributes 55% share in the steel industry, 15% in paint industry and 30% in the glass industry.

The Indian construction sector is expected to grow at 5.6% during 2016-20, compared to 2.9% during 2011-15. The activities that registered the highest growth include export cargo (10%), highway construction/widening (9.8%), power generation (6.6%), import cargo (5.8%) and cargo at major ports (5.3%).

  •   India needs to spend USD 454.8 bn on infrastructure development over the period of 5 years (2015-20), with 70% of funds needed for power, roads and urban infrastructure segments
  •   Cement capacity of 80-100 MT per annum is expected to be added over the next 5 years

Growth Drivers

GD con
  • GDP contribution

    ~ 8%

  • Avg. real industrial growth rate (2008-14)


  • Infrastructural investments (2012-17)

    USD 1 tn

  • People employed

    44 mn

Key policies

Atal Mission for Rejuvenation and Urban Transformation

The mission of AMRUT is to provide basic services such as water supply, sewerage and urban transport to households, and build amenities in cities which will improve the quality of life for all, especially the poor and the disadvantaged. Accordingly, the purpose of AMRUT are as follows:

  1. To ensure that every household has access to a tap with assured water supply and a sewerage connection
  2. To increase the amenity value of cities by developing greenery and well-maintained open spaces (e.g. parks)
  3. To reduce pollution by switching to public transport or constructing facilities for non-motorized transport (e.g. walking and cycling).
HRIDAY (Heritage City Development and Augmentation Yojana)

HRIDAY aims to preserve and revitalise the soul of the heritage city to reflect its unique character by encouraging an aesthetically appealing, accessible, informative and a secured environment. The Scheme supports the development of core heritage infrastructure projects which shall include revitalization of urban infrastructure for areas around heritage assets identified/ approved by the Ministry of Culture, Government of India and State Governments. Under HRIDAY, initiatives shall include development of water supply, sanitation, drainage, waste management, approach roads, footpaths, street lights, tourist conveniences, electricity wiring, landscaping and such citizen services.

Industrial corridors

Government of India has identified, planned and launched five industrial corridor projects across India. These corridors are planned with a strategic focus on inclusive development to provide an impetus to industrialization and planned urbanization. In each of these corridors, manufacturing will be a key economic driver and these projects are seen as critical in raising the share of manufacturing in India's GDP from the current levels of 15% to 25% by 2025.

Smart Industrial Cities are being developed along the corridors. These cities are being developed to integrate the new workforce that will power manufacturing and will lead to planned urbanization.

Land Acquisition Act, 2013

An Act to ensure humane, participative, informed and transparent system of land acquisition for industrialization, development of essential infrastructural facilities and urbanization with least disturbance to land owners and other affected families whose land has been acquired; and make adequate provisions for such affected persons for their rehabilitation and resettlement.

National Mission for Clean Ganga

The aim and objectives of NMCG is to accomplish the mandate of National Ganga River Basin Authority (NGRBA), which are:

1.To ensure effective abatement of pollution and rejuvenation of the river Ganga by adopting a river basin approach to promote inter-sectoral coordination for comprehensive planning and management

2. To maintain minimum ecological flows in the river Ganga with the aim of ensuring water quality and environmentally sustainable development.

Pradhan Mantri Awas Yojana (Affordable Housing for All by 2022)

The mission of Pradhan Mantri Awas Yojana (PMAY) is to support the construction of houses of upto 30 sq. m. carpet area with basic civic infrastructure. States/UTs will have flexibility in terms of determining the size of house and other facilities at the state level in consultation with the ministry but without any enhanced financial assistance from the Centre. Slum redevelopment projects and affordable housing projects in partnership should have basic civic infrastructure like water, sanitation, sewerage, road and electricity. Urban Local Bodies (ULBs) should ensure that individual houses under credit linked interest subsidy and beneficiary led construction should have provision for these basic civic services.

Real Estate (Regulation and Development) Act, 2016 (RERA)

An Act to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment, building or real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal.

Smart City Mission

The objective of the Smart City Mission is to promote cities that provide basic infrastructure and a decent quality of life to its citizens, a clean and sustainable environment and application of ‘Smart’ Solutions. The focus is on sustainable and inclusive development and the idea is to look at compact areas, create a replicable model which will act like a lighthouse to other aspiring cities. It is meant to set examples that can be replicated both within and outside the Smart City, catalysing the creation of similar Smart Cities in various regions and parts of the country.

Swachh Bharat Mission

Swachh Bharat Mission was launched by Prime Minister Narendra Modi on 2 October 2014, to accelerate the efforts to achieve universal sanitation coverage and to put focus on sanitation. The Mission aims to achieve a "Swachh Bharat" by 2019, as a fitting tribute to Mahatma Gandhi on his 150th birth anniversary

FDI Facts

  • FDI inflows (in USD) in construction development (April 2000 - December 2017)

  • FDI inflows (in USD) in construction (infrastructure) activites (April 2000 - December 2017)

  • FDI equity inflows (in USD) in construction development (April 2017- December 2017)

Recent Investments

  • May 2017 - Ascendas-Sembcorp to co-develop start-up area in Amaravati. The consortium of Singaporean companies will spend USD 46.6 mn while the government will invest USD 34.1 mn in a 58:42 proportion.

  • February 2017 - Infrastructure Leasing and Financial Services Ltd (IL&FS) and global private equity (PE) firm Lone Star plan to jointly invest USD 550 mn in stressed infrastructure projects in India.

  • November 2016 - Indian real estate is likely to provide investment opportunity worth USD 77 bn through Real Estate Investment Trust (REIT). - Eligible areas are commercial - office and retail, properties across the country’s top seven cities by 2020.

Major Investors