Construction And Engineering: Sector Which Creates Development
Infrastructure sector drives the indian economy and is responsible for India's overall development and enjoys intense focus from the government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. The market has grown in the last few years with a rise in demand for planning and designing services in the country. Rising public spending in housing projects with increased investments for new constructions and renovations will have a major impact on markets across the globe. Know more about the construction industry in this blog with us #ThinkWithNiche
The engineering sector is the largest industrial sector in India. It accounts for 27% of the total factories in the industrial sector and represents 63% of the overall foreign collaborations. The infrastructure sector drives the Indian economy and is responsible for India's overall development and enjoys intense focus from the government for initiating policies that would ensure time-bound creation of world-class infrastructure in the country. Engineering sector capacity is constituted in sectors such as infrastructure, power, mining, oil and gas, refinery, steel automotive and construction durables which are responsible for driving high demand in the sector.
Infrastructure investment is expected to increase to 50.2 trillion INR (the US $778.90 bn) during Financial Year 18-22, which will drive demand for capital goods. 100% FDI is permitted in march 2020, the government's production incentive scheme (PLI) for large-scale manufacturing of electronics. The sector includes roads, buildings, airports, tunnels, dams, bridges and systems for water supply and sewage. It is a blend of construction management and design-focused engineering.
1. Rapid industrialization and Urbanization
The main focus is on the development of high-quality infrastructure which drives the market growth and boosts the construction segment and product demand. There has been a considerable expansion in industrial commercial sectors with rising demand in planning and designing services in the country which has resulted in overall market growth. There has also been an increase in manufacturing activities in emerging economies such as China, India and S. Korea, so the product market has boosted in the Asia Pacific.
India exports engineering goods mostly to the US and Europe, which account for over 60% of the total export. The Indian machine tool production and consumption were estimated at Rs 6150 crore (US$872.46 million) and Rs. 15670 crore respectively in 2019-2020. According to the department for Promotion of Industry and Internal Trade (DPIIT), FDIs in the construction development sector (townships, housing, built-up infrastructure and construction development projects) and construction (infrastructure) activities stood at US$25.93 bn and US$23.99 BN, respectively between 2000 and 2020.
3. Initiatives and Investments
The engineering sector in India enjoys a comparative advantage in terms of manufacturing cost, technology and innovation and attracts many foreign players in the sector. This sector is important for the economy because it integrates with other industry segments. The government has relaxed the excise duties on factory gate tax, capital goods, consumer durables and vehicles. In the Union budget 2021, the government allocated Rs. 2,33,083 cr. also, under budget 2021 the government has announced many interventions under Pradhan Mantri Aatmanirbhar Swasth Bharat Yojana (PMANSY). Rs. 18,998 crore has been allocated for metro projects.
It is a very essential part of construction and engineering to increase the life of a structure and avoid losses. There are a number of tasks to be done such as cleaning, repairing and replacements. It also includes services such as renovation, retrofilling, reconstruction and alteration for the existence of structure.
The infrastructure sector has become the biggest focus area for the government of India. India plans to spend US$ 1.4 trillion on infrastructure during 2019-23 to have a sustainable development of the country. Favourable government policies for the development of railways, road infrastructure as well as the renovation of public infrastructure, buildings and their maintenance are aimed to benefit the segment growth.
Rising public spending on housing projects with increased investments for new constructions and renovations will have a major impact on markets across the globe. The private sector which includes constructors, contractors, individuals, real estate developers is a major consumer for the services. There has been an increase in the investments from the private companies in construction activities such as housing projects, development of health care centres, schools indicate rising demand in the sector.