Major Challenges Facing the Construction Industry in India in 2018

The construction industry is the second largest contributor to India’s GDP. Not only does it accompany huge economic potential but is also among the biggest employment providers. According to government reports, the sector was valued over $126 billion in 2016 and it continues on a steady growth path. It is expected that the value of the real estate and construction market will increase 7 folds by 2028. While all of this seems encouraging, there are innumerable challenges that have been limiting the growth prospects of the construction industry in India.

 

Biggest Challenges The Construction Industry in India Would Face In 2018

 

Some of the biggest challenges that the construction industry in India would face in 2018 and coming years include:

1. Lack of skilled workforce

The construction industry offers a lot of opportunity for employment but most of it is restricted to manual jobs. Due to the low wage expectancy of workers, who mainly come from the rural areas in search of work, contractors still follow traditional work practices. This doesn’t just reduce the efficiency of the process but also makes it a lot risky. As many as 70% contractors believe that there is lack of skilled workforce and qualified/certified professionals.

 

2. Non-availability of land within city limits

Though the demand for housing and commercial projects in the cities has been increasing, supply is highly limited due to non-availability of land and the rising costs. This makes most construction projects non-feasible and the implications fall both on the contractors and the buyers. Material prices too have increased over the past few years and building high-quality properties with the right technology and materials has become a very costly affair – something that doesn’t attract the general buyer.

 

3. Alleviated cost of materials

The cost of construction materials, especially after the implementation of GST (Goods and Service Tax) has undergone changes. Most materials used in the construction industry, especially those in the high-end category fall in the 28% GST slab. This has grown up to be a big challenge for all stakeholders.

 

4. Technology Adoption

Technology has been a big differentiator in the construction industry today. This is especially pressing with international investors pouring into India. Technologically efficient builders are attracting collaborations in the higher end and businesses that follow traditional means are falling behind. Elements like Virtual Reality, AI security, and BIM are transforming the trends today, both in the commercial and housing sector. It is necessary that all competitors start getting technologically efficient to live up to the challenge of technology.

 

5. Project Complexity

Modern construction projects are getting more demanding, both in terms of design and functionality. The challenge is alleviated by the lack of skilled labor and latest technology with most investors. Firms consequently are getting selective into what projects they will be able to accept. A report by Accenture suggests that only 30% of firms have been able to deliver projects in the agreed budget and 15% on the agreed time.

 

6. Power

The government too plays a pivotal role in guiding the construction industry in India. Being the policy-making body, it rests upon the current government in power as to whether the current policies are in favor or against the general acceptance of the industry.

 

7. Environmental sustainability

The construction industry is responsible for 25-40% of the carbon emissions on a global scale. In the Indian perspective, this is even more pressing as traditional means of manufacturing and construction is a large part of the process even today. Climate change and environment is a global agenda and governments across the world are pushing towards environmentally sustainable practices. New norms and regulations require companies to become more technology advanced and acquire skilled manpower. Caring about the environment is no more just a social obligation but a legal requirement.

 

8. Natural Hazards

Being a tropical nation, India is prone to a lot of climatic disasters, especially floods that happened every year. Big cities like Mumbai and Chennai have been under havoc continuously in the past years and this has been a huge challenge for the construction industry. However, this might be the only challenge that the industry will continue to live with while building ways into more sustainable and safer building practices.

 

Final Thoughts

The years ahead are crucial for the Indian construction industry, especially when it’s trying to make headway into the global standards. Technology and training will become the key answers to the problems and to bring back the confidence in its growth.

Curated by editor at  Wienerberger India

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