A guide to India's construction industry

India's construction industry is growing ever-stronger, and is becoming an excellent area for build and interiors investment. This guide details the facts about the nation that will be useful for anyone looking to get involved with this vibrant, growing market.

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Key statistics

 - Population: 1.252 billion (2013), the second highest in the world.

 - Annual population growth rate: 1.27 per cent.

 - Percentage of population of a working age: 66.29 per cent (2012).

 - GDP per capita: $4,247 (2009).

 - Total GDP: $4,969 billion (2009).

 - Estimated GDP growth: 5.6 per cent (2014).

 - Unemployment: 3.6 per cent (2013).

 - Ease of doing business: 142nd in the world.

 - Ease of getting credit: 36th in the world.

 - 2014 World Competitiveness Yearbook ranking: 44th.

 - 2014 World Talent ranking: 48th.

 - Government: federal republic.

 - DHL Global Connectedness Index 2014 ranking: 71st.

 - Interest rate: 3.2 per cent (2013).

 - Foreign Direct Investment (FDI) into India: $25.53 billion (April 2014-January 2015)

 - Of this, $7.66 billion came from Mauritius, $5.26 billion from Singapore, $3.14 billion from the Netherlands, $1.61 billion from Japan and $1.58 billion from the US.

 - Starting a business in India takes an average of 28.5 days, compared to the world average of 30.6 days.

 

Construction facts

 - Construction industry value: $126 billion (2013).

 - Total construction spending: $427 billion (2013), the third-highest in Asia.

 - Construction spending growth: seven per cent (2013), the second-highest in Asia.

 - Between 2000 and 2013, an average of 11 per cent of India's GDP was based on construction activity.

 - Over 35 million people are employed in the construction industry, making it the second-largest employer in India.

 - The construction sector accounts for the second-highest inflow of FDI into India, after services.

 - India's earthmoving and construction equipment market is currently valued at around $3 billion, but is projected to grow to $7-8 billion by 2016 and $16-21 billion by 2020.

 - The National Housing Bank's housing index show that house prices in India are at an all-time high of 233 index points (based on 2007's house prices = 100 index points).

 - Infrastructure output has grown at an average of 5.34 per cent per month in the last decade.

 - Value of paints and coatings industry: $4.79 billion (2012).

 - Paint and coatings industry expected to grow at a compound annual growth rate of 14 per cent, hitting a value of $9 billion in 2017.    

 

Major projects

1. The Delhi-Mumbai Industrial Corridor (DMIC)

One of the most ambitious projects India is currently undertaking in the DMIC, a 1,483 km stretch consisting of nine "Mega Industrial Zones" linking Mumbai and Delhi. The project, which is estimated to cost upwards of $90 billion, will also involve the construction of ports, roads, airports and a power plant.

The DMIC - which would span six of India's states - is being funded by both the Indian government and foreign investment. At the moment, a large portion of the project's money is coming from Japanese businesses, but the scheme is open to FDI from other nations.

In the long term, the goals of the project are to double employment potential, triple industrial output and quadruple exports from the region in the five years following its completion in 2017.

 

2. Navi Mumbai International Airport (NMIA)

One of the largest greenfield airport projects in the world, the NMIA is forecast to process ten million passengers a year in its first year of operation; currently scheduled as 2019. Ultimately, the airport will be able to service 60 million passengers per year in 2030, according to the latest estimates.

The airport will cover an area of 11.6 sq km, and will consist of two parallel runways with a terminal in between them. The scheme has been in the works since 2007, but delays have prevented construction from occurring until now. Work will officially start in October 2015, according to a recent announcement from Maharashtra chief minister Devendra Fadnavis.

 

3. Gujarat International Finance Tec-City (GIFT)

Located 12 km from Ahmedabad and eight km from Gandhinagar, GIFT is a huge central business district that will be one of the largest financial hubs in the world once completed. The scheme has a construction area of 8.5 million sq m; for comparison, Tokyo's Shinjuku district measures 1.6 million sq m, and London's Dockyards has an area of 1.1 million sq m.

Currently, two buildings - each measuring 122 m tall - have been completed along with all the phase one infrastructure work. One of these is already 70 per cent occupied. Ramakant Jha, GIFT's group CEO, said: " "Our target in phase one was to sell ten million square feet in developmental rights. We have already sold 12.6 million until December 2014."

 

4. SmartCity Kochi

This development involves the construction of an 'IT township': a city built around a business park with a focus on technology. The first phase of this project - which is thought to cost up to $800 million - is nearing completion, and its first building will be inaugurated in June this year. This phase alone will generate around 5,500 jobs.

Construction of phase two will begin in 2016, and will involve building hospitals, educational facilities and a wide range of other buildings, along with their supporting infrastructure. Residential buildings are also planned, along with retail and office space.

 

5. Happinest housing project

This housing development, led by Mahindra Lifespaces Developers, launched its second arm at the end of 2014. The first scheme in Avadi - near Chennai - consists of 1,268 apartments, while the new Mumbai project will see over 800 apartments spread over an area of over 54,000 sq m.

The first phase of construction for the Mumbai project is ongoing, but Mahindra Lifespaces expects to have 359 units completed by the end of 2015. Speaking to the Times of India, the firm's CEO and managing director Anita Arjundas said: "There is a huge demand for affordable housing.

"We are evaluating opportunities and we may come up with such projects in Maharashtra… considering the increasing demand for affordable housing and development of infrastructure and industries in the state."

 

Business culture

When doing business in India, there are a few things that need to be remembered. The first thing is the sheer variety of cultures the nation contains. While Hindi is the official national language of India, and English generally the language in which international business is conducted, there are hundreds of other languages spoken in the country.

Similarly, many businesses are family-run and strictly hierarchical. International deals are typically conducted with the head of the company, with few decisions made if this figure is not present. However, an increasing number of businesses are becoming more westernised, so research is necessary.

Culturally, Indians tend to stand a good arms length apart from each other, so it is important not to get too close and invade their personal space. Handshakes are usually fine as a method of greeting, but placing your hands together at chest height and bowing your head is more traditional and shows respect for Indian culture.

Personal relationships are incredibly important in Indian business, so it is important to get to know contacts and build trust. This often needs to happen on both a business and a personal level.

 

International investment

FDI regulations in India were relaxed in late 2014, making it easier for international companies to invest in the nation's construction industry. As of December 3rd 2014, the minimum thresholds for contributing to Indian projects have been significantly reduced.

Foreign firms can contribute to any projects with a minimum built area of 20,000 sq m, whereas before that threshold was 50,000 sq m. Similarly, the minimum capital investment by foreign firms has been halved from $10 million to $5 million.

 

Interior design trends 2015

There are several key trends emerging in Indian interior design this year. The general theme is one of minimalism and modernity, but without losing sight of traditional Indian culture. This is leading to the resurgence of a few old-fashioned design elements.

For example, copper and brass are looking likely to be featured heavily in Indian homes this year in elements like taps and door handles. This is a callback to a rustic, traditionally Indian style. Similarly, lots of old-fashioned wooden items of furniture look likely to become more popular in 2015.

However, minimalism is becoming more of a trend in India as well. Expect a lot of Indian homes to feature white or grey walls with simple decor. In some cases, a more industrial style is preferred, with walls being stripped back to bare bricks and sometimes being painted with graffiti-style art.
Brightly coloured feature walls are also becoming a common sight in India. Block colours are still preferred for these, but the shades are changing. Blues especially are becoming popular, and many Indians are painting their doors this shade. Pinks and yellows are also being used more often.

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