BUILDING INDIA'S FUTURE

The Indian construction sector has grown at a phenomenal pace in the last few years. The emphasis of the governments, both at the Centre and state levels, has been on offering quality roads, flyovers, bridges, railway tracks, airports, seaports, railway stations, high-rise office, residential or government buildings, hospitals, retail, etc.

These developments have not only given a boost to the construction sector, but they have also brought in a tremendous change in the methods and materials used for building these structures. The present-day construction industry in India is becoming more aware and is adopting latest technologies and systems. The industry is also mindful of the need to use environment-friendly building materials as there is a growing emphasis on reducing carbon emissions. It goes without saying that buildings that are crafted with the most modern materials will be more equipped to solve ongoing challenges, reduce their carbon footprint, and make an impact in the industry.

Given the developments, the overall building materials segment is poised for a major growth.

Steel

Infrastructure is one of the important sectors in the development of nation. Being one of the most resilient sectors, it plays a crucial role in accelerating India's overall development, thereby driving its economic growth. Steel, one of the key components of India's growth engine is poised to witness a significant demand, on the back of the initiatives taken by the government to accelerate the infrastructure growth.

According to a report by ratings agency Crisil, the demand from building and construction segment, which accounts for 35-45% of steel demand is expected to rise 5-6% between FY 2021-22 and FY 24-25, led by a pickup in affordable housing, kutcha to pucca conversions in rural belts, especially in the east and central regions and real estate construction.

Last year, the Ministry of Steel prepared a draft framework policy for development of steel clusters in the country. It also launched 'Mission Purvodaya' to accelerate development of the eastern states of India through establishment of an integrated steel hub in Kolkata, West Bengal.

A large part of this growth will be spurred by the government's Rs 111 lakh crore NIP initiative through fiscal 2025. The government's initiatives on housing for all, roads, ports railways and airports will provide the impetus. The share of building and infrastructure construction in overall steel consumption is today 60-65%.

Given the initiatives, the steel demand is poised to log a CAGR of 7-7.5% between FY22 and 2025.

Cement

According to a report by IBEF, the growth drivers for the cement industry involve the Budgetary outlay of Rs 1.18 lakh crore for the Ministry of Road Transport and Highways, expansion of the National Infrastructure Pipeline to 7400 projects and the allocation of Rs 13,750 crore and Rs 12,294 crore for Urban Rejuvenation Mission: AMRUT and Smart Cities Mission and Swachh Bharat Mission, respectively and Rs 27,500 crore allotted under the Pradhan Mantri Awas Yojana.

The Indian cement industry has been on a volume growth path led by several government initiatives and has a “bright” prospect in the future, observed Dr. SB Hegde, President - Manufacturing, Kanodia Cement, Noida and Visiting Professor, Penn University, USA.

“The government's spending on infrastructure projects and affordable housing schemes such as the Pradhan Mantri Awas Yojana (PMAY), boosting railway infrastructure and expanding roadways network and metro rail projects, with enhanced budgetary allocations will be the primary drivers of growth for the cement industry,” he said.

Over the pandemic impacted FY21, though the cement industry witnessed de-growth of 10-12% due to the Covid-19 pandemic, in H2 FY2021, it began to show signs of early recovery.  Nearly 80 MT of capacity addition is expected in next 3 years, of which around 60% of the new capacities will be brownfield, enhancements at the same location, thereby keeping capital costs 40-50% lower.

“Capex cycle in the cement industry has revived on the back of a significant fall in replacement cost and sustained buoyant demand in north, east and central India. The cost of equipment and machinery for setting up cement plants has fallen significantly with a slump in global demand barring India. The developments in India's infrastructure sector are exciting. Furthermore, the upward growth trajectory of the space depicts the sustainable development of the country. If the proposed roadmap is implemented on time and zeal, the sector will become one of the most promising ones for the Indian economy,” Hegde added.

Echoing similar views, Ravinder Reddy, Director, Marketing, Bharathi Cement said that it is only a matter of time that before the capex plans will fall in place and so will the investments fall in place. “India requires an investment worth Rs 50 lakh crore only in infrastructure over the next few years for a sustainable economic development in the country. A few of Indian major players have lined up a good over Rs 13000 crore seeing the potential in the governments' infrastructure plans.”

Jamshed N Cooper, Managing Director, HeidelbergCement India and Zuari Cement, noted that so far India's cement industry has not been subjected to the environmental norms that are getting implemented in developed countries. “It will not be too far when our industry will be called upon to meet the obligations of carbon reduction and other stringent emission norms.”

Aluminium

Apart from steel and cement, the other product that is gaining importance in the current scenario is aluminium. According to Pragun Khaitan, Vice-Chairman and Managing Director, Jindal Aluminium, the growth for aluminium downstream will be driven by sectors like construction, power, defence, aviation, aerospace, and the mobility space with electric vehicles and related infrastructure.

“The penetration of aluminium as a metal is phenomenal across all sectors. We are looking at a multitude of market opportunities and believe that there is massive scope for aluminium usage in the building and construction sectors,” he added.

Echoing similar views, Rahul Sharma, CEO - Aluminium Business, Vedanta, noted that projects such as National Infrastructure Plan, the Affordable Rental Housing Complex (ARHC) scheme, Sagarmala, UDAN-RCS, etc. will increase demand for critical metals such as aluminium.

“Between 2021-26, the Indian government has planned an investment of USD 2.15 billion to electrify rural households. It also plans to double the share of installed electricity generation capacity of renewable energy to 40% by 2030, and targets 100% electrification of Indian Railways by 2023. All of these will boost the demand for electricity, and this will increase demand for aluminium, as aluminium is the best and most cost-effective enabler of long-distance electricity transmission,” he said.

Cables & Wires

Cables and wires industry in India will see impressive growth in the next five years due to key reasons like increase in consumption with the increase in working-age population, budgetary allocations to infra projects, industry capex and policy reforms that will boost production, opined Shashi Amin, Executive President & Chief Business Officer - HDC, Polycab India.

The Union Budget revolves around infrastructure revival and growth stemming from the 34.5% increase in capital expenditure in FY22 set at Rs 5.54 lakh crore. This coupled with an increase in the number of projects under the National Infrastructure Pipeline (NIP) indicates strong infrastructure development and growth. This will give a booster for fundamental sectors like cables and wires due to increased demand,” he added.

PVC Pipes

The government has undertaken several initiatives to invest in housing, and sanitation through schemes such as 'Housing for All,' AMRUT, and the PMAY, which will provide affordable housing to the urban poor. With the Pradhan Mantri Awas Yojana, it is estimated that the country will build 20 million affordable houses by 2022.

“In the agriculture and irrigation segments, the 'Pradhan Mantri Krishi Sinchayee Yojana' will be driving development. We are positive the PVC pipe sector, led by multiple initiatives of the government, the demand outlook for plumbing and sanitation pipes, and the major urban realty markets already showing signs of sustainable recovery, will be on the uptick for the next few quarters. At Finolex we are well equipped to address the upsurge in demand and contribute to the development,” said Pradeep Vedula, President Sales and Marketing, Finolex Industries.

Elevators

Vertical mobility has been one of the critical elements in the development of infrastructure of today. Elevators and escalators have become an integral part of infrastructure development, be it for ports, airports, railways, metros, etc.

“Urbanization is a major driver for the elevator and escalator industry. Indian cities are likely to contribute to 70% of India's GDP by 2030. It is estimated that 17 of the 20 fastest-growing cities in the world between 2019 and 2035 will be from India. This growth means that as cities accommodate even more people, we will need more buildings. This bodes well for the elevator industry,” said Sebi Joseph, President, Otis India.

According to Manish Mehan, CEO and MD of TKE (India), smart mobility solutions are critical in smart and sustainable cities. “Real estate investments in the vicinity of metro rail stations and airports will create demand for elevators and escalators, contributing to elevator and escalator market growth in India. At the same time, the smart cities initiative will also be a major impetus to the growth of smart elevators in India.”

The elevator and escalator industry is amid many game-changing advancements that could revolutionize the way elevators and escalators operate, opined Amit Gossain, Managing Director, Kone Elevator India.

“The changing trends in the industry are more about the needed fundamental developments. We know that demand in the industry is set to increase, residential segment especially low-cost and affordable housing being a major contributor. But this growth is followed by a strong need for energy-efficient, smart and sustainable products and solutions,” he added.

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