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1/contents

2/Executive summary P03 5/The Indian Construction Industry P15

5.1 Size and structure

3/overview of the indian construction market P04 5.2 Opportunities for foreign firms

3.1 Economic overview 5.2.1 architects

3.2 Background 5.2.2 engineers

3.3 Infrastructure investment 5.2.3 quantity surveyors

3.4 Drivers for infrastructure investment 5.2.4 project managers

3.4.1 fiscal deficit 5.2.5 contractors

3.4.2 demographics 5.2.6 specialists and manufacturers

3.4.3 social inequality 5.3 Case studies

3.4.4 urbanisation 5.3.1 Gleeds

3.5 Barriers to development: 5.3.2 Turner and Townsend

3.5.1 land acquisition 5.3.3 Hopkins

3.5.2 corruption 5.3.4 Mott Macdonald

3.5.3 labour shortages 5.5 Client perspective

3.6. Funding 5.5.1 UK Department for International Development

3.6.1 public sector 5.5.2 Bangalore Metro

3.6.2 private sector

3.7 Key cities and regions 6/Doing business in India P20

6.1 Entering the market

4/Opportunities by sector P11 6.2 Dealing with corruption

4.1 Transport 6.3 Recruiting and training local staff

4.2 Power 6.4 Health and safety

4.3 Water 6.5 Procurement

4.4 Health and education 6.6 Contracts and dispute resolution

4.5 Urban regeneration

4.6 Residential 7/Sustainability P23

4.7 Commercial 7.1 Green building movement

4.8 Retail 7.2 Standards and codes

4.9 Hotels and tourism 7.3 Opportunities

4.10 Industrial 7.4 Interview: M. Amand, senior counsellor, Indian Green Building Council

8/The concrete sector P26

8.1 Overview

8.2 Innovation and sustainability

8.3 Top cement producers by capacity

9/Key contacts and glossary P28

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2/executive summary

India is one of the world’s fastest-growing l Every aspect of India’s infrastructure Over the last five years, the
economies, and its potential appears requires massive investment, but the most
unstoppable. Its population is young, well pressing areas are roads, power and water.
government has spent $500bn on
educated, increasingly affluent and driving Traffic volumes in India have grown at about infrastructure, and it has set out
steep demand for everything from housing to the same rate as overall GDP, but National
detailed plans to spend a further
cars to luxury goods. While foreign investors Highways account for only 2% of India’s
continue to flock to India’s Special Economic 4.2 million km of roads, half of which are $1 trillion up to 2017
Zones, domestic demand is more than unpaved. The government believes energy
sufficient to maintain GDP growth well above supplies will have to grow at a rate of 6.5%
the global average. per year to achieve its target growth rate, and
To achieve its potential, however, the it has set a target of 100GW of new capacity
Indian government knows that billions of by 2017. With 16% of the world’s population
dollars must be spent on every aspect of the and only 4% of its usable fresh water, India
country’s physical and social infrastructure, is facing severe water shortages unless it can
to support its growing industries and raise manage its resources more effectively. All of
living standards for the millions of Indians these areas offer major opportunities for UK
trapped in some of the poorest communities firms with infrastructure experience.
in the world. Over the last five years, the
government has spent US$500bn (£315bn) l India is undergoing urbanisation at an where it ranks 181st and 182nd respectively.
on infrastructure, and it has set out detailed unprecedented rate. Of its population of UK firms will need to make many visits,
plans to spend a further $1 trillion up to 2017. 1.2 billion, 380 million now live in cities and undertake in-depth research, and probably
There is also great demand for residential, this is expected to rise to 600 million by 2030. find a local partner to help them navigate
commercial and industrial space in India’s This means the government must invest the market. Most importantly perhaps, they
growing cities, and many billions must be hundreds of billions of dollars in upgrading should be crystal clear about what they
invested to clean up its slums and to supply its rudimentary urban infrastructure. can offer and why shrewd, cost-conscious
electricity and water to the urban population. Indian clients should pay a premium for it.
As such, India represents an enormous l India is facing a major housing shortage, Nevertheless, there are many areas where
opportunity for construction firms. It is driven by rapid urbanisation, changing India needs specialist expertise in design,
predicted to be the world’s third largest lifestyles and rising aspirations. Much of the engineering, cost and project management
construction market by 2020, accounting for existing housing is low quality, and mass and delivery, and many opportunities for
7% of global spending. housing for those with moderate incomes is companies with the perseverance and
But although the will undeniably an enormous potential market. Across the resourcefulness to seize them.
exists, there are a number of obstacles to country, the RICS estimates a total demand This report outlines why India
development in India. Its complex political for residential space of 3.2 billion ft2. presents such a big opportunity for the
landscape, and federal system of 27 states, construction industry, the key drivers and
makes for a fragmented regulatory landscape l Though the Indian construction industry barriers to development, and provides
that can be slow to change. Projects are enjoys a good supply of technically excellent detailed information on opportunities by
often derailed by difficulties in acquiring graduates, its project management and market sector. It also details the size and
land; and endemic corruption, bureaucracy construction processes are unsophisticated capacity of India’s construction sector,
and poor project management siphon off and cause considerable waste. the biggest companies delivering projects,
development funding. and opportunities for foreign firms by
Neither is India an easy market to enter. l India’s green building movement has taken discipline, and discusses the experiences
The World Bank ranks it 132nd out of 183 off rapidly, with more than 1 billion ft2 of of companies already working in India. It
countries for ease of doing business and projects registered for LEED accreditation covers procurement, contracts and business
transparency, tailing China at 91st place and since 2003. The Indian Green Building regulations affecting companies entering the
just behind Brazil at 126th. This also masks Council estimates that there is a potential market, and finally provides an overview of
much lower performance on dealing with market of $10bn up to 2015 for compliant India’s concrete sector and its rapidly growing
construction permits and enforcing contracts, building materials and products. green building movement.

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3/overview of the indian construction market

3.1 Economic ovErviEw [a] largest global construction markets in 2020

India’s GDP stood at $1.727 trillion

n China 21%
(£1.089 trillion) in 2010, according to the
n US 15%
World Bank, making it the world’s ninth
largest economy. A population of over n India 7%
1 billion people, rapid urbanisation n Japan 6%
nationwide and a fast-growing middle class n Canada 3%
mean that it is powered largely by domestic n Indonesia 3%
demand, and although it was not unscathed n France 3%
by the global financial crisis, India has n Germany 3%
continued to enjoy one of the strongest n Australia 3%
growth rates in the world. The International
n Spain 2%
Monetary Fund (IMF) predicts that its
n Italy 2%
economy will grow by 7.0% in 2012 and
n UK 2%
7.3% in 2013, compared to global growth of
n Brazil 2%
3.3% and 3.9% respectively. Only China is
n Russia 2%
predicted to perform better. Goldman Sachs
predicts it could become the third-largest n Mexico 2% Source: Global Construction 2020, published by Global
economy in the world within two decades, n Others 24% Construction Perspectives and Oxford Economics

[b] built environment contribution to indian gdp

n Total GDP (USD Bn) n Real Estate Services (USD Bn) n Construction (USD Bn) Projected
2,000

1,800

1,600

1,400
US$bn

1,200

1,000

800

600

400

200

Year 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16

India GDP 242 500 574 660 756 876 1,009 1,162 1,240 1,346 1,455 1,580 1,723 1,889 2,080

Construction 28 31 40 51 61 72 85 100 98 107 115 125 136 149 164

US$bn

Real estate services 30 34 44 59 69 82 99 120 118 128 138 150 163 179 197

Built environment 58 65 84 101 130 154 184 220 216 234 253 275 300 328 362
GDP
% of

Built environment 23.9% 12.9% 14.7% 16.7% 17.2% 17.6% 18.2% 18.9% 17.4% 17.4% 17.4% 17.4% 17.4% 17.4% 17.4%

Source: RICS India

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behind the US and China. Investment in leading to a growing trade deficit, now at of GDP to 8% over the course of the Eleventh
infrastructure will account for a significant its highest point since the early 1990s. The Plan, with a total spend of $500bn (£315bn).
proportion of this growth – by 2020, it is government is committed to bringing it back Under the Twelfth Plan, the Planning
predicted to be the world’s third largest under control, with high growth paying a key Commission proposes to double this to
construction market, accounting for 7% of role, alongside greater efficiency and better $1 trillion, and for construction to reach
global spending (see chart A). targeted spending. Despite the downturn, 10% of GDP.
money continues to pour into the country, So far, all this investment has barely
3.2 BACKGROUND to the tune of $24bn (£15.1bn) in 2010. made a dent in a 3.2 million km2 developing
AT Kearney’s FDI confidence index, which nation. India’s infrastructure remains very
India’s modern success story began in 1991, measures countries’ attractiveness to global poor, and far below that required to meet
when a fiscal deficit built up through the executives, places India second, just behind its economic ambitions and to redress great
1980s culminated in an economic crisis and China and above Brazil. social inequality. India’s breathtakingly fast
the rapid devaluation of the rupee (R). A growth in some areas belies the still desperate
bail-out from the IMF was conditional on state of its networks. Between 2005 and
structural reforms. This led the government 3.3 INFRASTRUCTURE INVESTMENT 2009, mobile phone subscriptions in India
to liberalise the economy, opening it up to increased by 55% every year. But despite its
foreign investment, cutting regulation and Since 1951, India’s government has published reputation as a high-tech outsourcing centre,
bureaucracy, and beginning the privatisation a series of five-year plans, setting out targets it is still ranked in the lowest tier of the
of state-owned assets. for its economic and social progress. The International Telecommunications Union’s
Between 1976 and 1991, the Indian Eleventh Plan (2007-12) aimed at rapid ICT development index. In 2009, while
economy had grown at an average annual rate economic growth, while ensuring the benefits 44% of the population had a mobile phone
of 4.5%; following liberalisation, GDP grew by were equally shared by all sections of society, subscription, only 5.1% used the internet and
6% a year until 1999, and then 7.2% from 2000 and had a strong focus on infrastructure just 0.6% had access to broadband.
to 2008. Foreign companies flocked to invest investment as the key to achieving many
in India, drawn by a well-educated, English- of its other ambitions. GDP growth was
speaking workforce available at a comparably targeted at 9% per year, but the average over 3.4 DRIVERS FOR INFRASTRUCTURE
low cost. India became the world’s call centre, the five-year period of the plan is likely to be INVESTMENT
and a hub for business process outsourcing. around 8.2%. Though the acceleration in the
With the new prosperity of a growing Indian economy may have slowed, this is still higher
middle class, demand for all the trappings than the 7.8% average achieved in the Tenth 3.4.1 Fiscal Deficit
of a comfortable, leisured lifestyle soared, Plan, and implies an almost 35% increase in
and a new generation of talented Indian per capita GDP from 2007-08 to 2011-12. There is a determined drive to increase
entrepreneurs, often educated in the US or Much development took place under the India’s exports by an average of 25% per
Europe, grew to fulfil their aspirations. A Eleventh Plan, though delivery fell short of year over the next six years, both to restore
report by analyst AT Kearney in 2010 found the government’s ambitious targets in several its balance of trade and to provide jobs for
that the market for luxury goods in India was areas. “The pace of investment has been its growing workforce. The Department of
growing by around 20% a year. particularly buoyant in some sectors, notably Commerce aims to grow exports of $246bn
In 2005, restrictions on foreign direct telecommunications, oil and gas pipelines, (£155bn) in 2010-11 to $500bn in 2013-14,
investment (FDI) were further relaxed to while falling short of targets in electricity, requiring a compound annual growth rate of
allow 100% FDI on projects, much of it railways, roads and ports.” The creation of 26.7%. The long-term objective is to double
flooding into construction and real estate. additional port capacity is expected to be only India’s share of global trade by 2020.
Figures from the IMF show FDI into India 55% of the target, for example. The Planning There has been disappointing progress
increasing from $73m in 1991 to $3.58bn in Commission intends that the delayed projects under the government’s Eleventh
2000, peaking at $43bn in 2008. be completed swiftly in the first two years of Plan, which targeted annual growth in
By 2009, the knock-on effects of economic the Twelfth Plan (2012-17). manufacturing at 10-11%, but achieved only
crisis in India’s key markets around the “Inclusive” development remains a focus 7.7%. Manufacturing accounts for just 15% of
world and the tightening of its credit lines for the Twelfth Plan, under which the India’s GDP, compared to 34% in China and
had checked its pace somewhat, though it government hopes to achieve an average 40% in Thailand.
still achieved GDP growth in excess of 6% in annual growth in GDP of 9%. Improving One of the key barriers to this target
2008 and 2009, before rebounding to 9.9% in India’s infrastructure is still the number one is insufficient infrastructure in terms of
2010. To sustain its growing economy, India’s priority, essential to progress in every other power, ports, roads and railways. As the
imports have risen even faster than its output, area. Infrastructure spending grew from 5.7% Planning Commission says in its draft

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Twelfth Plan, “Infrastructure constitutes

the single most important impediment to [c] social indicators in g20 emerging economies
India’s competitiveness in the international
markets”. Poverty 1/ Malnutrition 2/ Employment 3/

3.4.2 Demographics Argentina 0.87 2.3 56.5

Brazil 3.8 2.2 63.9
India has the world’s second highest China 15.92 4.5 71.0
population, with 1.21 billion people, according India 41.64 43.5 55.6
to the 2011 census. China is the only other Indonesia 19.73 3.4 61.8
country to have a population exceeding Mexico 3.44 5.3 57.1
1 billion. Growth has slowed in recent decades Russia 0 na 56.7
but remained at 1.4% in 2010, according to Saudi Arabia na 5.3 47.2
the UN Economic and Social Commission for Africa 17.35 na 41.1
Asia and the Pacific (UNESCAP). Turkey 2.72 na 42.3
One of India’s greatest assets – and a key
differentiator from its BRIC peers – is its 1/ Percentage of population earning less than $1.25 a day
relative youth. The CIA World Factbook puts 2/ Percentage of children malnourished, weight for age (under five years)
its median age at 26.2, compared with 35.5 in 3/ Percentage of population aged 15 or over
China and 29.3 in Brazil. Source: World Bank
According to the Indian government’s
Planning Commission, the labour force is
expected to increase by 30% over the next [d] Proportion of urban and rural population below the poverty line*
20 years, compared with a decline of 4% in
industrialised countries and nearly 5% in Country and year data Population below Rural proportion of
China. It is also becoming increasingly well collected poverty line (%) total population (%)
educated. Government figures show that the Rural Urban
number of 15-24 year olds who continued in China 1990 74.1 23.4 72.6
education rather than going to work doubled 2005 26.1 1.7 59.6
between 2004-05 and 2009-10, to more than India 1994 52.5 40.8 74.5
60 million. The government is aware that to 2005 43.8 36.2 71.3
exploit the potential of this “demographic Indonesia 1990 57.1 47.8 69.4
dividend” it must continue to improve levels 2005 24.0 18.7 51.9
of health, education and skill development
and provide good quality employment * Earning less than $1.25 a day
opportunities to meet the aspirations of its Source: World Bank
young population.

3.4.3 Social Inequality

Despite the great leaps in economic

prosperity of recent years, the benefits have
been spread far from evenly across Indian
society. India’s middle class is growing and a
tiny minority enjoys extraordinary affluence,
but India’s population remains one of the
poorest in the world. According to the World
Bank, 41.64%, or 410 million people, earned
less than $1.25 (79p) a day in 2005, a higher
proportion of impoverished individuals
than in any other G20 emerging economy
(see table C), and more than double that of

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China. Among the Asia-Pacific nations, it communities. It is hoped that this will
has one of the lowest life expectancies at The Bandra-Worli Sea Link smooth the path for essential projects.
birth (65.7 for women, 62.8 for men). Infant was supposed to be constructed
mortality has improved significantly over the 3.5.2 Corruption
over five years from 1999 and to
last 20 years, but remains among the highest
in Asia-Pacific. Almost half of all children cost Rs6.6bn. The project finally Corruption remains endemic in India,
under five are malnourished. which is ranked 95th out of 183 countries
opened in 2009, at a total cost
Under the UN’s Gini index of relative by Transparency International in its latest
social inequality, the vast gap between its of Rs16.6bn report on public-sector corruption. The
haves and have-nots leaves it well down the most notorious example in recent years was
bottom half of the table. As a result, there is the 2010 Commonwealth Games in Delhi,
great pressure on the government to improve when preparations were marred by serious
social conditions and ensure the majority irregularities in bidding and contracts,
of the population shares the benefits of incompetent management led to delays,
economic success. and the total budget finished several billion
dollars higher than planned. A number of
3.4.4 Urbanisation Games officials were sacked and arrested, and
the head of the organising committee was
India is transforming at break-neck speed sent to prison on corruption charges.
from a rural economy to an urban one. The bureaucracy surrounding development
Between the 2001 and 2011 censuses, the private projects. Central government agencies and a multi-layered approval process is a
urban population increased from 295 million are often at the mercy of state government fertile breeding ground for backhanders and
(27.8%) to 380 million (31.2%). By 2030, this departments to make the land available, and bribes. Jones Lang LaSalle’s latest Global
is expected to rise to more than 40% of the even after sites have been assembled, projects Real Estate Transparency Index ranks it as
population, with 600 million people living can fall through, leaving PPP contractors in “semi-transparent”, placing its tier 1, 2 and
in cities. the lurch. 3 cities at 41st, 49th and 55th place out of 81
This makes India’s infrastructure deficit A vigorous and fragmented political respectively, slightly more transparent than
even starker. In its draft Twelfth Plan, the landscape contributes to a tortuous path their Chinese counterparts. It does note that
Planning Commission says: “This would to development in the world’s largest improvements in transparency have been
generate a heavy demand for better quality democracy, as India’s property ownership made in recent years, particularly due to the
infrastructure in urban areas, especially laws are not conducive to development and entry of global players in its booming real
water, sewerage, public transport and are ripe for exploitation by local politicians estate market.
low-cost housing. Since it takes time to and anti-development organisations. This There is growing intolerance of the
create urban infrastructure, it is necessary can be a particular barrier to the delivery of corruption that thwarts India’s progress.
to have a sufficiently long-term focus on infrastructure projects such as highways and Governance is a major focus for the Twelfth
urban planning in the Twelfth Plan … The power plants. The Bandra-Worli Sea Link Plan. It calls for streamlined approval
Twelfth Plan must continue the thrust bridge in Mumbai, for example, was supposed processes, breaking down silos and
on accelerating the pace of investment in to be constructed over five years from 1999 bureaucracy, and resolving delays to multiple
infrastructure, as this is critical for sustaining and to cost Rs6.6bn (£84.8m), but opposition levels of appeal in dispute resolution. Longer
and accelerating growth.” from local residents resulted in a number of term, there is hope that the rise of a younger
public interest litigations, finally defeated in generation educated abroad and aspiring
2006. The project finally opened in 2009, at a to international best practice will demand
2.5. BARRIERS TO DEVELOPMENT total cost of Rs16bn (£205.5m). higher standards of propriety in public life,
In September 2011, the much-awaited driving out entrenched corruption in the
Land Acquisition, Rehabilitation and coming decades.
2.5.1 Land Acquisition Resettlement Bill was published. It is
intended to replace the Land Acquisition 2.5.3 Labour Shortages
Acquiring the necessary land for development Act of 1894, providing a cohesive national
is a major obstacle to growth in India, and policy that will enable the government to Though India is a highly populated country,
an inability to assemble sites and secure acquire land for public purpose and transfer that does not translate into a trained army
environmental clearances has led to the delay it to private companies, while enshrining of workers. There is a shortage of skilled
and even cancellation of many public and protections for landowners and displaced labour and construction must vie with

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[E] estimated demand for specialist professionals in the built enviroment

2010 2011 2012 2013 2014 2015 2020

Valuers
112 118 124 130 136 143 182
Quantity surveyors
70 72 74 77 79 82 97
Facility managers
Management level 16 17 17 17 18 18 21
Executive level 26 27 27 28 29 29 33
Technician level 78 77 82 84 86 88 98
Total facility managers 120 121 126 129 133 135 152
Sustainability professionals
Civil and related 270 273 276 278 281 284 300
Architects 65 65 65 66 66 67 69
Planners 24 24 24 25 25 25 27
Total sustainability professionals 359 362 365 369 372 376 396

Source: RICS India. All figures in 000s

labour-intensive agriculture for workers – Infrastructure database of the World Bank, in 2010 more than 11% of total FDI was in
both industries are ripe for mechanisation. India is second only to China in terms of the this sector. The RICS estimates that between
According to the Planning Commission, number of PPP projects, and only to Brazil 2010 and 2020, demand for new real estate
the construction industry currently employs in the size of the investment. At present, will be approximately 95.3 billion ft2, driven
about 35 million people, and this expected to transport projects account for the greatest by urgent need for homes, commercial and
rise to 92 million by 2022. share, due to the large number of road retail space, and opportunities for expansion
contracts let under a Build-Operate-Transfer in markets such as hospitality, health and
model. The Planning Commission says that education.
3.6 FUNDING further efforts are needed to develop PPPs India’s investors have suffered somewhat
in areas such as power transmission and in recent years. The Reserve Bank of India
distribution, water supply and sewerage and sought to dampen inflation with seven
3.6.1 Public Sector railways, and in social sectors such as health interest rate rises in 2010-11, but when this
and education. had little effect, it took an even tougher
The Indian government is able to finance In remote areas, it accepts that the public line in 2011-12, with greater success. But
its growing debt at a relatively low cost, due purse will have to bear the cost of improving as a result, growth in the property sector
to high levels of private saving – second only networks that offer little return to investors. stalled, as banks became reluctant to lend to
to China among emerging G20 economies But wherever possible, it urges central and developers, with the residential, commercial
– capital controls and rules forcing financial state government bodies to seek to share the and hospitality sectors hit particularly hard.
institutions to buy government securities. But load with the private sector. The Planning Many developers’ loans are in dollars, so they
it remains committed to bringing its deficit Commission says: “Since resource constraints have also suffered from the rupee’s sharp fall
back under control, partly through seeking will continue to limit public investment in in value against the US currency, brought on
much greater private sector investment in infrastructure in other areas, PPP-based by India’s current account deficit, while the
infrastructure spending. development needs to be encouraged cost of imported construction components
According to the Planning Commission, wherever feasible. It is necessary to review has risen.
India has 1,017 PPP projects, accounting for the factors which may be constraining private
an investment of Rs4.86,603 crore (£62.6bn, investment, and take steps to rectify them.”
see Glossary for explanation of South-east 3.7 KEY CITIES AND REGIONS
Asian numbering system). Private and PPP 3.6.2 Private Sector
investments accounted for 30% of funding India is made up of 27 states, which vary
under the Eleventh Plan, and it hopes this India’s real estate sector was worth $66.8bn significantly in accessibility, modernisation
will rise to 50% under the Twelfth Plan. in 2010-11. It has received $9bn in foreign and their growth rate. While some are
According to the Private Participation in direct investment over the last decade, and engaging enthusiastically in an inter-state

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[f] growth potential of indian cities, tiers 1-4

6
5
8

3
11 10
4
8
10

2 11
5

3
7

9 n Tier 1 cities
Mumbai, NCR-Delhi, Bangalore, Chennai

1
n Tier 2 cities
Hyderabad, 1 Pune, Kolkata, 2 Ahmedabad
5

n Tier 3 cities
7
1 Goa, Jaipur, 2 Kochi, 3 Surat,
1 Bhubaneswar, 4 Vadodara, Trivandrum, 5
Vishakhapatnam, 6 Coimbatore, 7 Nagpur,
Chandigarh, 8 Ludhiana, 9 Nashik,
1 10 Guwahati, 11 Indore

2
n Tier 4 cities
1 Mangalore, Lucknow, 2 Mysore, 3 Agra, 4
6
Kanpur, 5 Jalandhar, 6 Amritsar, Bhopal,
2 7 Vijayawada, 8 Allahabad, 9 Meerut,
10 Varanasi, Patna, Ranchi, 11 Jodhpur

Source: Jones Lang

LaSalle (2012)

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While some states are engaging

enthusiastically in an inter-state
competition for investment,
stripping away bureaucracy
and welcoming corporates and
developers with open arms, others
remain all but impenetrable

competition for investment, stripping away

bureaucracy and welcoming corporates and
developers with open arms, others remain
all but impenetrable. Notably, Gujarat
has streamlined land acquisition and
offers single-window clearance for project
approvals, and Rajasthan too is welcoming
new industrial investors.
Analysts divide Indian cities into tiers,
according to their size and potential for
growth (see map F, page 9). Delhi NCR
(National Capital Region) encompasses
not only the whole of the National Capital
Territory of Delhi itself, but takes in
surrounding urban areas in the states of
Haryana, Uttarakhand, Uttar Pradesh and
Rajasthan, and includes the thriving real
estate markets of Gurgaon and Noida.
It is the world’s second largest urban
agglomeration after Tokyo, and home to 22.16
million people. While Delhi is the political
capital, a lot of Indian business centres
around Mumbai, and its fast growing high-
tech satellite Pune, now rivalling Bangalore
as a target for international investors.
Bangalore, also known as Bengaluru, was
the first business process and IT outsourcing
hub, and remains the most popular entry
point for many multinationals, while
Chennai, in the south, is a key destination
for many companies from the Far East and a
centre for the automotive industry.
Meanwhile, one of the greatest success
stories in recent years is Ahmedabad, which
has risen from tier 3 to tier 2, as the wealthy
financial capital of development-friendly
Gujarat.
Companies entering the market will
inevitably want a foothold in the key markets
of Delhi, Mumbai and Bangalore, but the
greatest growth is forecast for India’s smaller,
tier 3 and 4 cities, where space and labour is
cheaper and there is a large, untapped market
for consumer goods.

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4/opportunities by sector

4.1 transPort [g] split of indian construction output

With 4.2 million km of roads, India has the

n Residential 12%
world’s second largest network and most
n Non-residential 59%
of it requires some form of improvement.
Half remains unpaved, and the new n Infrastructure 29%
National Highways account for only 2%
of the total length. Under the Eleventh
Plan, the National Highways Authority of
India completed a series of major flagship
projects under the National Highways
Development Programme (NHDP), and this
will continue under the Twelfth Plan. The
“Golden Quadrilateral” project (NHDP-I)
saw the construction of 5,846km of National
Highways linking Mumbai, Delhi, Kolkata
and Chennai, and the North-South-East-West
links project (NHDP-II) resulted in 7,300km
of highways bisecting the country. The most
heavily used parts of both networks are now Source: Global Construction 2020
being expanded from four to six lanes under
NHDP-VI.
A masterplan for 18,637km of toll-funded
expressways, with either four or six lanes, has [h] trend in indian construction output by sector
been drawn up and is expected to be delivered
under a Build-Operate-Transfer arrangement.
12
This is the Planning Commission’s preferred 10.6
% annual average growth rates

10 9.9 9.9
means of delivering new roads, but it 10 9.7
9 8.8
anticipates that it may not be viable for
8 7.6 7.6
the necessary upgrades to 20,000km of the 7.4

network with low traffic density, where a

6 5.7
turnkey EPC (Engineering Procurement
Construction) model will be used. A National
4 3.5
Transport Development Policy Committee
has been set up to develop a transport policy 2
going up 2030.
The Twelfth Plan also urges states to 0

implement their own plans for lower-level 2005-2010 2010-2015 2015-2020

road networks, stating: “It is necessary that
n Residential
universalisation of rural connectivity be
n Non-residential
completed during the next plan.”
There is also a need for substantial n Infrastructure
investment in rail projects. Indian Railways n Total
is one of the largest networks in the world, Source: Global Construction 2020
carrying 22 million passengers every day,
and 923 million tonnes of freight every
year. But the quality, speed and safety of
the service is poor. “The entire system is
in urgent need of modernisation and this

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should have top priority in the Twelfth 4.2 POWER India’s industrial development
Plan,” says the Planning Commission. The
Ministry of Railways has established a special The Planning Commission believes that is crying out for expanded port
purpose vehicle to deliver Dedicated Freight India’s energy supplies will have to grow at capacity, and most of its ports
Corridors. The first phase, the Eastern a rate of 6.5% per year to achieve its target
cannot accommodate larger
Route from Howrah to Delhi and Western growth rate of 9%. Under the Eleventh Plan,
Route from Mumbai to Delhi, are to be fully the government set a target of 78.7GW of vessels. Only 50% of the target
operational by 2017. The Twelfth Plan says additional grid power, but actual achievement
for port expansion under the
there is also a need to establish Dedicated is unlikely to be more than 50GW, due to poor
Passenger Corridors. public sector project implementation, lack Eleventh Plan will be met
There is major growth in metro systems of domestic manufacturing capacity and a
across India’s cities – the government has shortage of equipment. Under the Twelfth
announced investment in 20 networks for Plan, it is targeting 100GW, including 28GW on an unsustainable basis, the country is
cities with more than 5 million people. of delayed projects which are expected to be headed towards a grave water crisis”. Satellite
There are ongoing projects in Bangalore, complete within the first two years. data shows there was a 4cm decline in the
Chennai, Kolkata and Mumbai, and systems It envisages big increases in capacity for groundwater level each year between 2000 to
are planned for cities including Hyderabad, oil, natural gas and coal, but also an increase 2008 in the alluvial cracks of northern India
Jaipur, and much smaller Kochi. in the proportion of renewable energy and – equivalent to an increase in over 70% in the
India’s industrial development is crying hydroelectric power, and an increase of rate of water extraction compared with the
out for expanded port capacity, and most of around 50% in its small nuclear capacity. previous decade. Poor water management is
its ports cannot accommodate larger vessels. The current share of new renewable energy also a key cause of disease, with less than a
Only 50% of the target for port expansion is around 10%, and it is envisaged it could third of the country’s sewage treated before
under the Eleventh Plan will be met. Along increase to 15% by 2020. it is dumped back into the bodies that supply
India’s 7,517km coastline, there are 12 major “Continued emphasis has to be placed drinking water and irrigation.
ports under central government control on other renewable resources, especially UKTI believes designing, managing and
and almost 200 smaller ones which are on expanding wind power generation and installing water and waste water systems is
the jurisdiction of the state governments. in the emerging area of solar thermal and a key opportunity for UK companies. The
The Planning Commission says that it is solar photovoltaic,” says the Planning market is set to grow by 10% each year, with a
imperative that the pace of expansion is Commission. India’s solar capacity has planned spending of $1bn (£630m).
accelerated under the Twelfth Plan, and been estimated at 22GW by 2020, while the
that the capacity of the private sector is Planning Commission has called for a fresh
strengthened. UK Trade & Investment (UKTI) assessment of India’s wind power capacity. 4.4 HEALTH AND EDUCATION
quotes government figures that show that Current estimates are around 50GW, but it
£42bn of spending is anticipated in this believes the true potential is much higher. Under the Twelfth Plan, the Indian
sector up to 2020. The Indian government established an government would like to see an expansion of
Civil aviation grew by nearly 20% a year Expert Group on Low Carbon Strategies PPP projects into social infrastructure.
under the Eleventh Plan, and there was for Inclusive Growth to develop strategy According to the India Brand Equity
extensive modernisation of the airport to reduce the climate change impact of Foundation, the healthcare sector is expected
infrastructure, through a combination of India’s development. In its interim report, it to grow at a rate of 15% per year between 2011-
public and private investment. India’s two estimated that emissions intensity of its GDP 16. It estimates that India will need an extra
major airports – Delhi and Mumbai – have could be reduced by 23% to 33% by 2020, on 920,000 beds, requiring an investment of $32-
been successfully modernised under PPP 2005 levels. 50bn (£20-32bn) over the next decade.
contracts, as have Hyderabad, Bangalore Total public expenditure on health in India
and Kochi airports. Chennai and Kolkata by both central and state governments is less
airports are undergoing modernisation, along 4.3 WATER than 1% of GDP. The Planning Commission
with 35 non-metro airports. According to proposes to increase this to 2.5% of GDP by
UKTI’s government figures, there is planned With 16% of the world’s population and the end of the Twelfth Plan. It believes that
spending of £20bn by 2020. only 4% of its usable fresh water, India must one of the main reasons for the ongoing poor
urgently improve the management of finite quality of health services is a prolonged lack
water resources. According to the Planning of capital investment. According to the latest
Commission, “available evidence suggests set of data on rural health, there is a shortage
that with increased use of water, mostly of 19,590 sub-centres, 4,252 primary health

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A central government plan to universities to establish campuses and award quality accommodation. The RICS
degrees, though it is having a difficult passage estimates demand for residential space at
create new universities that into law. 3,278 million ft² in 2011, or 43.3% of the total
began under the Eleventh Plan The Planning Commission proposes the for real estate. The Indian mortgage market
creation of large education hubs on fallow is still relatively young and the amount of
will continue. The education
land at 45 locations around the country, mortgage debt proportion of GDP is still in
secretary has said India requires under public sector enterprises but funded single figures. This compares to 30-35% in
through private companies. It also wants China, and 70-80% in the UK.
50,000 more colleges and 1,000
to increase the percentage of the workforce Much of India’s existing housing is low
universities which has received formal skills through quality, with families living in one room
vocational education and training from and many buildings not built out of solid
12% to 25% by 2017, which would mean that materials or weatherproofed. In cities, new
centres, and 2,115 community health centres. 70 million people would have to receive stock is generally apartments, and while
The Planning Commission says it is essential formal skills training over the course of the India’s private developers have rushed to
that the basic infrastructure in rural areas is Twelfth Plan. provide luxury apartment developments for
completed by 2017. It also wants to establish the urban upper-middle classes, in the long-
low-cost treatment centres in all urban slums term, mass housing for those on moderate
and settlements to ensure city dwellers who 4.5 URBAN REGENERATION incomes is the far bigger market. There
do not have private medical insurance can is an even greater shortage of housing in
also access healthcare. In 2005, according to the UNESCAP, one rural areas. According to Business Monitor
Research for the India Brand Equity third of India’s city dwellers lived in slums International/Aranca Research, in 2010 there
Foundation predicts demand for education (see table D). was a shortage of 26 million homes in rural
real estate to rise from 14 million ft2 in 2010 to The Planning Commission estimates areas compared to 20.5 million in urban
16 million ft2 in 2014, with 70% of this in the that over the next 20 years Rs40 lakh crore areas. The government has allocated $625m
largest seven cities, and Delhi NCR showing (2009-10 prices, see Glossary for explanation (£394m) for rural housing. The residential
the highest growth. Following the Right to of South-east Asian numbering system), market is fragmented, with many state or
Education Act, which came into force in or about £510bn, of capital expenditure is city-focused players, and a small number of
2009, India’s Annual Status of Education required in new urban infrastructure – water very large pan-Indian names such as DLF
Report 2010 found that only 3.5% of 6-14 year supply, sewage, solid waste management, and Unitech.
olds were not enrolled in school. The overall storm water drains, roads, transport and
literacy rate has increased from 64.8% in 2001 street lighting – and another Rs20 lakh crore,
to 74% in 2011. or £255bn, for operation and maintenance. 4.7 COMMERCIAL
Under the Twelfth Plan, the Planning A massive push is needed to attract private
Commission wants to achieve universal investment in all areas. It talks about an Both India’s developers and its occupiers
secondary education by 2017 and an extended “4P” framework – People Private were hit by the global economic crisis,
expanded higher education network. Public Partnerships. It also believes that and supply and take-up were dented.
There is a huge opportunity in building better urban planning is crucial – much Nevertheless, demand for good-quality office
new universities. According to UNESCO, more attention should be given to “urban space remains strong, driven by continuing
while India has the third highest number of forms”, with not only wider consideration of inward investment and growth in the services
students in the world, it lags behind many spatial factors, but socio-technical ones too. sectors. According to Jones Lang LaSalle,
other countries in the proportion of 18-24 Planning is a growing field in India, but it is 36.7 million ft2 of new space was absorbed
year olds in tertiary education. A central still at an early stage and there are very few across the top seven cities (Mumbai,
government programme of creating new qualified planners. This is a great potential NCR-Delhi, Bangalore, Chennai, Pune,
universities began under the Eleventh Plan, opportunity for UK firms with experience of Hyderabad and Kolkata) in 2011, and this is
and it is to continue, meeting huge demand urban design and masterplanning. expected to grow to 39.4 million ft2 in 2014.
for higher education. India currently has Almost a third of the future supply will be
around 500 universities and 20,000 colleges. IT projects in Special Economic Zones,
The education secretary has said that it 4.6 RESIDENTIAL particularly in Bangalore, Pune, Kolkata and
requires 50,000 more colleges and 1,000 Hyderabad, while Mumbai skewed towards
universities to cater for its young population. India is facing a major housing shortage, non-IT space.
The Foreign Education Providers Bill, driven by rapid urbanisation, changing
launched in 2010, aimed to allow foreign lifestyles and rising aspirations for better

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4.8 RETAIL the amount of revenue from

tourism in India grew at a
Retail accounts for a small but growing
proportion of India’s real estate market. compound annual growth rate of
India’s retail market is worth roughly $435bn 13.6% between 2005 and 2010. In
(£274m), and while organised retail accounts
for only 7% at present, this is expected to
2010, India’s tourism sector was
reach 20% by 2020. Real estate consultant worth $14.2bn, and it welcomed
Cushman & Wakefield says that organised
more than 5.4 million visitors
retail is growing by 25-30% annually.
According to analyst AT Kearney, India’s Ministry of Tourism, the amount of revenue
strong growth, rising middle class and from tourism in India grew at a compound
demographic potential make it one of the annual growth rate of 13.6% between 2005
most appealing targets for global retailers, and 2010. In 2010, India’s tourism sector was
and are sustaining healthy expansion of worth $14.2bn (£9bn), and it welcomed more
domestic names too. than 5.4 million visitors.
Domestic retailers such as Reliance Retail, The government is determined to maintain
Spencer’s and Aditya Birla Group have strong growth. The Planning Commission
ambitious development plans, adding up to has noted that the World Travel and Tourism
hundreds of new stores in tier 2 and 3 cities in Council believes that India has the highest
the coming years. Meanwhile, foreign brands growth potential in the world during 2009-18,
are moving in – Marks & Spencer has a joint and it aims that under the Twelfth Plan, it
venture with Reliance, for example, and has will achieve a substantially higher growth
so far opened 23 stores, including its first rate. The biggest markets are Delhi NCR and
sustainable learning store in Bangalore. The Mumbai, followed by Bangalore, Hyderabad
government had planned to open the retail and Chennai. Government initiatives to
market to FDI, though it is facing strong promote tourism in tier 2 and 3 cities is
opposition from domestic firms. A likely generating demand there too, especially for
compromise option is to allow single-brand budget accommodation.
retailers such as Marks & Spencer and Zara
to have complete ownership of their stores
but block the likes of Wal-Mart, Tesco and 4.10 INDUSTRIAL
Carrefour for now.
There are already 143 Special Economic
Zones across India, many devoted to IT
4.9 HOTELS AND TOURISM services, and approval has been granted
for almost 600 more (Department of
Alongside construction, tourism is one of the Commerce), covering a much wider range of
largest sectors of the service industry in India, activities. India’s government wants to create
accounting for 8% of total employment. The 100 million new jobs in manufacturing by
tourism sector is estimated to have grown 2025, and has set out a policy to establish
8.1% annually over the last five years, and is manufacturing zones, industrial townships
forecast to grow by 8.8% per year between and industrial hubs across the country,
2011 and 2021. where resident firms will benefit from
Growing domestic wealth, the increasing single-window clearance and financial
globalisation of Indian businesses and the incentives. Special purpose vehicles will
popularity of India as a destination for also be created to develop the necessary
foreign holidaymakers are all set to drive infrastructure under a PPP arrangement.
up the number of visitors the country The RICS estimates that demand for
receives – and with it demand for hotels, industrial real estate accounts for 43.1% of
serviced apartments, convention centres and the total demand in 2011, or 3,259 million ft2,
entertainment facilities. According to the just behind residential demand.

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5/THE INDIAN CONSTRUCTION INDUSTRY

“As India embarks upon an accelerated drive for infrastructure

creation, it will be critical to enhance the capacity and
capability of the construction sector” (Planning Commission)

5.1 SIZE AND CAPACITY The construction sector provides of the work they are undertaking, Larsen &
Toubro has an order book of over Rs130,000
India’s construction sector has grown at a
direct or indirect employment crore (£16.7bn), Jaiprakash Associates’ is
compound annual growth rate of 11.1% over to about 35 million people and Rs55,000 crore (£7bn, while its turnover is
the last eight years, and now makes up 9% of Rs3,097 crore, or £397m), Lanco Infratech’s
is expected to employ 92 million
its GDP. Construction on average accounts is Rs31,016 crore (£4bn) and, at the bottom
for more than half of the investment required people by 2022 of the list, Shriram EPC’s is Rs3,400 crore
to set up critical infrastructure facilities like (£436m).
power projects, ports, railways, roads and
bridges. The construction sector provides
direct or indirect employment to about 35 5.2 OPPORTUNITIES FOR FOREIGN
million people in India and is expected to FIRMS
employ 92 million people by 2022 (Planning
Commission). The industry is highly There is no shortage of established and highly
fragmented with about 3 million entities, of capable design, engineering and construction
which only 28,000 are registered. But the firms working in India, and UK entrants
very largest companies are much bigger than will have to work hard to convince clients
their UK equivalents, with the capacity to that they should hire an untried foreign firm
perform every role on massive infrastructure in favour of an experienced local practice,
or building projects. especially given the much higher cost of
To give an indication of the size of the top employing expats. Indians are very shrewd in
companies in table I below, and the scale business dealings and highly cost-conscious,

[I] top 30 infrastructure companies in india

In November 2011, India’s leading 1 Larsen & Toubro 16 Gayatri Projects

construction journal, Construction 2 Jaiprakash Associates 17 Ramky Infrastructure
Week India, published a list of the top 3 Lanco Infratech 18 IL&FS
30 infrastructure companies in the 4 Reliance Infrastructure 19 Consolidated Construction Consortium
country. It was not based solely on 5 GMR Group 20 Madhucon Projects
turnover or profit, but was also a 6 Punj Lloyd 21 Pratibha Industries
qualitative analysis comprising peer 7 IVRCL 22 Marg Group
comparison, order book analysis, 8 Hindustan Construction Company 23 Vascon Engineers
assessment of the diversity of projects, 9 NCC 24 ARSS Infrastructure Projects
as well as the companies’ execution 10 Gammon India 25 JMC Projects (India)
capabilities. The top companies were: 11 Simplex Infrastructures 26 Ashoka Buildcon
12 GVK Power & Infrastructure 27 Unity Infra Projects
13 IRB Infrastructure Developers 28 SPML Infra
14 Afcons Infrastructure 29 Ahluwalia Contracts (India)
15 Patel Engineering 30 Shriram EPC

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making decisions overwhelmingly on price. engineering expertise, and firms with The Planning Commission says: “Project
While they can be persuaded to pay more for specialist expertise in areas that are new to management, with a view to deliver on time
a better quality product, they will want to see the Indian market will be in demand. For and within cost, is a learnable capability that
clear evidence of the added value of a more example, there is a trend for much taller can be institutionalised, as demonstrated by
expensive service, and the tangible benefits buildings in the residential sector. Five years the development experiences of Japan, Korea,
it will bring to their bottom line. Local fee ago, there were few buildings higher than Singapore and China. A nationwide drive
levels may be far below what international 40 storeys, whereas designs topping 70 are to improve project management must be an
firms would expect. Consultants not willing becoming increasingly common. This offers integral part of the Twelfth Five-Year Plan.”
to work on a commodity basis must pick and an opportunity for firms with specialist high- Project management tends to opt for the
choose their clients – many prefer to work for rise design and engineering experience. cheapest way of doing something rather
international firms who understand the value A number of UK firms are working in India than the quickest and most efficient, and
of their service and are prepared to pay for it. in some form or another, including Halcrow, client expectations are relatively low in
Mott Macdonald (see 5.3.4, page 18), Scott terms of achieving timescales. Projects tend
5.2.1 Architects Wilson, Arup, Parsons Brinckerhoff and WSP. to follow a linear process – each stage to be
completed and signed off before progress to
Architects are fortunate among consultants 5.2.3 Quantity surveyors the next – which is relatively unsophisticated
in that their work is not so commoditised. compared with UK methods. This leaves a
There is a considerable appetite for buildings Quantity surveying as a profession is not big opportunity for UK project managers to
designed by foreign firms in India, and many indigenous to the Indian construction demonstrate significant time and cost savings
architects from the UK, US, Europe and the market, and the role of preparing bills of to clients.
Far East can already demonstrate built works quantities and managing payments is usually
there. There is a perception that designs by carried out by the project engineer. However, 5.2.5 Contractors
international firms will be better quality, and several UK firms have established successful
an international brand carries significant Indian businesses, providing specialist cost Establishing a contracting business in India
prestige, especially in the residential and consultancy services to international clients will be extremely challenging for Western
commercial sectors. Architects who can offer who recognise the value of a rigorous stand- companies. The cost base is much lower, and
urban design or masterplanning experience alone service. despite improvements in health and safety,
could also find a niche in the growing cities. Where there is a key gap in the Indian standards on site are far below what would
But a UK architect’s role will be limited market is for a more strategic cost be considered acceptable in the UK, posing a
to the concept design, and the baton of consultancy service. This has proved reputational risk to firms proud of their safety
detailed design and on-site delivery will be something of a hard sell to Indian clients who record at home. Balfour Beatty has just signed
handed to a local practice familiar with the are unwilling to pay for additional services up to a collaboration with Tata Projects, to
process of securing approvals – and with without a strong case for the value they work on infrastructure projects, but previous
significantly lower fees. This does mean they bring. Where an Indian quantity surveyor is ventures by UK contractors in India have not
have limited control over what is actually appointed on the project, they will carry out always lasted – Laing O’Rourke established
built – UK practices express bafflement and a very traditional role. However, UK firms a joint venture with developer DLF in 2006
frustration that once a project is on site, the are finding that services such as upfront cost to focus on infrastructure projects, but sold
designer appears to have very little say and planning and benchmarking are perceived its Indian arm in 2011 and exited the market.
the contractor’s word goes. as increasingly valuable by both global and Lend Lease, under the Bovis name, left the
UK architects working in India include Indian clients. market 8-10 years ago because it could not
Benoy, BDP, Hopkins (see 5.3.3, page 18), UK firms working in India include Currie ensure its sites were compliant with its health
John McAslan + Partners, Broadway Malyan & Brown, Cyril Sweett, Gleeds, Turner &
and RMJM, alongside US firms such as HOK. Townsend (see 5.3.2, page 17), EC Harris,
Project management tends
Davis Langdon and Rider Levett Bucknall.
5.2.2 Consultants/Engineers to opt for the cheapest way of
5.2.4 Project management doing something rather than
Engineering services are valued in India,
the quickest and most efficient,
but the market is highly commoditised and Project management is a key opportunity
UK firms will inevitably struggle to build a in India. There is a recognition that cost and client expectations are
profitable business if relying only on bread- overruns and delays on projects are often
relatively low in terms of achieving
and-butter work. down to poor management on the ground.
However, there is great demand for The government is determined to improve. timescales

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and safety standards – workers given steel- India in response to requests from
‘Hooloomann was a relatively
toecapped boots, for example, saved them for international clients. “We opened in Mumbai
Sunday best and continued to turn up to site small company but they brought in 2007 with no work, then we got a call
in flip-flops. with them all of the back-of-house from a client giving us four projects.” Today,
One of the most successful contractors is T&T employs 80 people – almost all Indians
functions like admin, banking,
Australian firm Leighton, which has worked – across offices in New Delhi, Mumbai
in India since 1998 and recently joined with accounts, which meant we didn’t and Bangalore, offering project, cost and
the infrastructure arm of a major Indian programme management across the private
have to learn all of the legal and
corporation to form Leighton Welspun. There and public sectors, and has worked for a
are also a number of large firms entering technical stuff from day one’ string of international names such as RBS
the market from the Middle East and Asia, Stuart Senior, Gleeds and Marks & Spencer and Indian giants
such as South Korea’s Samsung Engineering. such as DLF, Godrej, Tata and Airtel, India’s
These tend to focus on higher-end projects, largest mobile network operator. “You have
and have had some success in raising board director. “That really helped us without to be prepared to change your strategy,” says
standards on sites. a doubt.” Hewitt. “Our intention was to focus on the
Gleeds Hooloomann works for delivery of one line of business, but we’ve
5.2.6 Specialists and manufacturers international companies including Marks & now introduced our full range of services well
Spencer, Astrazeneca, Nokia and Experian, ahead of our game plan.”
Specialist contractors and manufacturers face as well as for large Indian organisations such Whereas global companies have been
similar changes to main contractors in India, as airport specialist CLN and residential credited with raising standards in the Indian
though a select number have opened in India and hotels developer Sahara Group. Gleeds’ construction market, Hewitt believes the
in recent years, including Severfield-Rowen, success in India has also enabled it to pick expectations of Indian clients are now
which established a joint venture with JSW up work in other markets – Senior says it is similar. “Indian clients are sophisticated
Steel in 2010. India’s developing construction also planning to open offices in Malé in the and know what they want. They don’t want
market has a great need for many specific Maldives and Colombo in Sri Lanka. a second-class service. Our first project for
services and products, in particular in the The business has doubled in turnover every Airtel finished on time and on budget, which
field of sustainability. The green building year so far, with new offices in Mumbai and is unusual for India. We then negotiated
movement is expanding at a furious pace, Pune, and another planned in Delhi. Senior a new job – an operating centre to run all
but specifiers complain that they are unable anticipates its pace of growth will continue. mobile phone services for their corporate
to source the necessary materials, or that “We believe there is sufficient work, but the customers, with a 40m x 9m video wall.
they must be imported at great expense. The issue is finding the resources and training These are seriously complicated buildings
Indian Green Building Council has produced people to do it. Clients in India are starting with technologies and design teams from all
a list of products in the greatest demand – a to understand the value of a professional over the world.”
market that it believes could be worth $100bn quantity surveying and project management Those expectations are also changing fast.
by 2015. These include low VOC paints, service, and they’re starting to want it at the While technical competence is generally
high-performance glass, M&E systems and same standard as in the UK. But there is taken for granted, Indian clients always
furniture (see 7/Sustainability, page 23). always the issue of finding the appropriate look for your “value addition” – the specific
level of committed resource. There is benefits your service will give them compared
understandably a big differential between to your competitors. When he first arrived,
5.3 CASE STUDIES UK salary scales and those where we work. Hewitt felt the quantity surveying service
Our strategy therefore is to recruit locally, was more like that of the UK 30 years ago. “It
train locally, build management structures was checking bills of quantities, managing
5.3.1 Gleeds up locally.” Of Gleeds’ staff of 100, only three payments for contractors. Now we’re doing
are UK expats, and it has just launched an proper cost management – upfront cost
Gleeds arrived in India early in 2008, through e-learning platform to train staff to the same planning, benchmarking, life cycle costings
the acquisition of Hooloomann Project standard worldwide. – and we are able to demonstrate the added
Services in Bangalore. “It was a relatively value to clients. Indian clients are embracing
small company but they brought with them 5.3.2 Turner and Townsend it. That’s the biggest growth service we’ve got
all of the back-of-house functions like admin, at the moment. It’s not universal yet, but it’s
banking, accounts, which meant we didn’t Robert Hewitt, Turner & Townsend’s expanding fast.”
have to learn all of the legal and technical managing director in India, admits the
stuff from day one,” says Stuart Senior, main company has been lucky since it entered

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5.3.3 HOPKINS ARCHITECTS Ahmedabad, Bangalore, Chennai, Delhi,

‘I learned that it’s not particularly
Kochi, Kolkata and Mumbai. Mike Barker,
Although Hopkins Architects had looked helpful to over-draw and managing director of Mott MacDonald’s
at India briefly in the past, it had not really over-specify. If we could spend business in India, believes that UK firms
developed a strategy for obtaining work there. need to be clear about what specialist skills
However, its reputation for designing cricket
our fee again, we would produce they can offer the market. “Unless they have
grounds, and in particular the Mound Stand fewer drawing and have more a presence in the country, UK companies will
at Lord’s, caught the eye of the Maharashtra find it challenging to understand the systems.
people on site’
Cricket Association in 2007. Since then, However, coming in and setting up on your
Hopkins has designed a new 55,000-seater ernest fasanya, hopkins own will be difficult as well. You have to set
stadium in Pune, named the Subrata Roy up with a local company, work together and
Sahara Stadium for the owner of the Indian share your specialist skills and knowledge.
Premier League team that will play there, and interpretation of the architects’ drawings There is a very talented, educated workforce
has also worked on a new ground in Chennai and specifications, particularly on a tight in India, who are eager to learn. If you
for the Tamil Nadu Cricket Association. timeline. This made it difficult to control can bring people in to give them specialist
Partner Ernest Fasanya says that the delivery of the design, despite having a experience, that’s valuable to them.”
practice worked with local consultants to help presence on site. Barker believes there is definitely a role for
“Indianise” their designs to fit culture, climate “I learned that it’s not particularly helpful specialist engineers in India. “We now have
and building technology. “We realised that we to over-draw and over-specify. If we could many contracts that are repeat business, and
wouldn’t be able to get up to speed with the spend our fee again, we would produce we have gone from having a small Indian
national building codes and we didn’t know fewer drawings and have more people on presence and resourcing projects largely from
enough about specifying Indian materials, so site. Working directly and in full dialogue the UK to a fully local business. Originally
they would advise us. It was cultural things as with the contractor to resolve issues, instruct we concentrated on the transportation and
well – Indians often need to wash their hands samples and understand the suppliers and water sectors, but our offering has broadened
immediately before they eat, so we might subcontractors’ market rather than full to include many more of the services that the
need a basin here, for example.” reliance on the issued documentation seems rest of the group offers.”
Hopkins is based in London, as were the to be the way to go.” He advises UK firms to focus on technical
early stage engineers – Adams Kara Taylor innovation: “Technology is one area where
was appointed on the structure and BDSP for 5.3.4 mott macdonald British companies have something to
the building services, with Tata Consulting offer, in any area – construction methods,
Engineers (TCE) providing more detailed Mott MacDonald is a long-established name technologies, processes. The skill levels in
design on the ground in India. Fasanya was in India’s infrastructure sector, and has high-tech industries are very high, but from a
struck by the absence of a quantity surveyor. helped to deliver a string of road, rail and construction perspective, there’s a lot of room
“We said, ‘How do you keep track of the airport projects, including Delhi International for development.”
costs?’ It became clear that the architect or airport and metro systems in Delhi, Kolkata,
engineer nearly always did it. TCE expected Bangalore and Chennai. As well as design
to do it and the client expected them to as engineering, it provides planning, feasibility 5.4 Client perspective
well.” studies, project management, costing,
An interesting few months followed, with specification, construction management and
the project cost estimates yo-yoing. “There supervision, repair and maintenance, and 5.4.1 pran kaul, project manager, uk
were details with cost implications that were environmental services on water modelling, department for international development
unfamiliar in the Indian context – a fair- sewage and supply projects. The company
faced concrete wall is more expensive than also works on major commercial and Like many multinational clients building
a painted concrete wall, for example, which industrial projects, and is currently project in India, the UK government’s Department
a quantity surveyor in this country would managing the development of a technology for International Development (DfID) must
have understood. Quantity surveyors are now centre in Bangalore for Shell India, and ensure its projects meet its global standards
becoming a more accepted presence in India, providing engineering review, procurement while remaining competitive within the
and an excellent one, AB Dongre Associates, assistance and construction management Indian market.
was brought on board to stabilise estimates.” services on an edible oil facility in Kandla, “We are guided largely by UK office
Fasanya’s second surprise was the Gujarat. standards on safety and construction,”
relationship with the contractor, which can Mott MacDonald employs 1,700 explains project manager Pran Kaul, who is
be given more carte blanche in the people, mostly local staff, across offices in currently delivering an office refurbishment

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in recent years. “A couple of years ago, it was Several UK companies are already working
‘We don’t want companies that
a problem for a client looking for a more with BMRCL and Chavan’s impressions are
run everything sitting overseas professional approach, but standards have positive. “We are finding them good, no doubt

because it escalates project costs definitely gone up. The Indian construction about it. They have good experience. Indian
industry is coming of age as clients are firms are new to building metros. Probably
and it can be a problem in terms coming from all over the world and they need after some period of time, Indian companies
of the after-construction service’ services that meet international standards. themselves will have the expertise to give
There are now companies here who are doing consultancy to other countries.”
pran kaul, dfid
that in a big way.”

5.4.2 B.L.Y. Chavan, chief public relations

officer, Bangalore Metro Rail Corporation LTD
project in Delhi. “As UK-owned assets, our
buildings must meet all the standards and The new Bangalore metro is one of many
legal requirements that UK offices must rapid transit rail systems under construction
meet, in addition to local standards and in cities across India. It is being delivered
legislation.” by the Bangalore Metro Rail Corporation
All DfID projects follow a standard Ltd (BMRCL), a special purpose vehicle
worldwide procurement process, and established by the Indian government and
potential suppliers should register via its the state government of Karnataka.
procurement portal. On his current project, Phase I consists of two lines running east-
Kaul is working with project manager Turner west and north-south through the city with a
& Townsend, which is procuring construction total length of 42.3km. Construction began
work and materials in consultation with in 2006, and the first stretch was opened in
Kaul’s team, to ensure the client’s strict October 2011. Known as Namma Metro –
procurement and technical guidelines are “Our Metro” in the local language – it has
met. indeed proved popular with the public, used
Kaul has three key requirements of a by 200,000 people within the first four days.
construction partner: they must have a The rest of the first phase remains under
presence in India, experience of working construction and is scheduled for completion
in an international environment, and the in December 2013. In January 2012, the state
expertise to enable DfID to meet its technical government gave approval for the second
specifications at the best possible price. “We phase, which will cover 72km at an estimated
like to work with companies that are up to cost of Rs 27,000 crore (£3.5bn). Construction
speed with UK and EU standards, but they is expected to begin in 2014.
have to have a complete presence in the All contracts for the Bangalore metro are
region too. We don’t want companies that put out to international competitive bidding,
run everything sitting overseas because it and winning companies must perform on
escalates project costs and it can be a problem a range of criteria. “We look at companies’
in terms of the after-construction service. But experience, skills and qualifications, based
we don’t want to compromise on standards. on their earlier experience in construction
We want quantity surveyors who can bring us of such projects and what else they’ve done
value engineering and make sure we get the in the past,” says B.L.Y. Chavan, chief public
best out of what we’re spending.” relations officer. “It is not only on technical
Kaul does not believe there is any lack expertise. Companies must compete on both
of technical expertise available in the the quality of the solutions they offer and
Indian market, but that people need to gain on quantity – they must be commercially
experience within “construction companies competitive.”
which have processes, policies and guidelines Health and safety is also of critical
structured properly”. importance. “We have to follow local
Indeed, he feels that the Indian regulations and codes, so these issues are
construction industry has developed quickly built into the contract themselves.”

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6/DOING BUSINESS IN INDIA

6.1 ENTERING THE MARKET to handle one project, while a branch office
The most straightforward, and
is considered more permanent. Both must
Great though the potential rewards are, file the same annual returns as an Indian least risky, way for UK firms to
establishing a presence in India and securing company, but are treated as an office of a enter the Indian market is by
work is not a quick, easy win. The World foreign company for the purposes of tax,
establishing a relationship or a
Bank ranks it 132nd out of 183 countries for and must pay the higher rate of 40% plus a
ease of doing business and transparency, surcharge of 2.5%. Each office may also have joint venture with a local
tailing China at 91st place and just behind to comply with local state regulations.
company
Brazil at 126th. The size and complexity of the There are no restrictions on repatriating
Indian market, and the cultural differences profits from India, as long as the relevant
to the UK, make thorough, detailed research taxes are paid. A UK double taxation treaty
essential and several fact-finding and applies when doing business in India.
networking trips will probably be necessary Companies must also pay indirect taxes, choosing an Indian practice, it is wise to
before you commit to any partner or venture such as service tax, which is normally paid look for specialist experience of construction
or they commit to you. by a service provider and recovered from the contracts, rather than in purely corporate law.
The most straightforward, and least recipient of the taxable service, and ranges
risky, way for UK firms to enter the Indian from 1-15%. VAT is added to products and
market is by establishing a relationship or a services, at a rate determined on a state-by- 6.2 DEALING WITH CORRUPTION
joint venture with a local company. Finding state basis. There are also area specific taxes,
the right local company, however, requires such as the entry tax or Octroi, employment Foreign companies working in India
detailed research and several intensive cess and research and development cess. inevitably struggle to reconcile the endemic
networking trips. Government organisations Excise duty, normally 10.30%, levied on corruption at the heart of Indian society with
such as UK Trade & Investment and UK India manufacture of goods in India, is payable by their own corporate policies and national
Business Council can provide research and the manufacturer and is also a value added legislation such as the UK’s Bribery Act,
arrange introductions as a first step, though indirect tax. which came into force in July 2011 and makes
because they are government bodies they Various labour laws such as Employees it illegal for UK nationals and corporations
cannot necessarily maintain confidentiality Provident Fund contribution, Employees to give or accept bribes anywhere in the
or show any preference between different UK State Insurance contribution, Minimum world. Corruption can also make getting
companies. Wages Act (specific to each state) and paid difficult and protracted, as government
There are two main options for UK Payment of Bonus Act must also be complied officials demand “speed payments” to process
companies wishing to establish their own with. Additionally, an amount equivalent payments.
presence in India: setting up a full-blown to 1% of the contract value is to be paid to For many, the solution is not to work
subsidiary or establishing a branch or the government by contractors and builders on government projects. On private sector
project office, either from scratch or through under the Building and Other Construction projects, especially those for international
acquisition. The costs and tax liabilities o Workers (Regulation of Employment and clients, proper procedures are generally
f each differ, but the best option will also Conditions of Service) Act 1996 towards followed, though a bribe may have to be paid
come down to long-term business strategy creation of a fund for labour welfare schemes somewhere along the line to achieve the
in India. including education, health and maternity. necessary approvals for a project in a timely
A subsidiary of a foreign firm, established Legal advice will be essential to any fashion. Companies that refuse to pay bribes
to carry out project after project, is considered company considering entering the Indian at all may struggle to secure these approvals,
a fully Indian entity, and as such pays tax market. Foreign lawyers are not allowed to and the resulting costs and delays are higher
on profits at a rate of 30% plus a surcharge establish an office or practice in India, but than the bribes themselves, but this is often
of 7.5%. Dividends will usually be taken international firms may have developed regarded as an acceptable cost for avoiding
via a structure established in the low-tax relationships with local practices. For corruption.
jurisdiction of Mauritius, though there are example, Pinsent Masons works with Link
costs associated with such a structure. Legal Advocates, which has offices in Delhi,
A project office will typically be established Mumbai, Bangalore and Hyderabad. When

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6.3 RECRUITING AND TRAINING revealed major skill shortages in all of the standards on site.
LOCAL STAFF professions up to 2020. Over that period, it On major sites, international best practice
predicts a shortfall of about 39.4 million civil is generally applied and the wearing of
Recruiting local staff is an essential part of engineers, 3.64 million architects and 1.1 personal protective equipment is firmly
establishing a presence in India. UK firms million planners. It also predicts new demand enforced. However, there are still many
will not be able to compete in the market for specialised disciplines such as quantity smaller building sites where workers perched
if they are employing expats. Wages for surveying, valuation, facilities management precariously on bamboo scaffolding are the
professionals are around a quarter or a fifth and sustainability. Over each of the next 10 norm, and injuries and deaths remain at
of UK levels, though with wage inflation of 12- years, the RICS says there will be an average unacceptable levels. Health and safety is not
15% annually, they are fast catching up. requirement of 83,000 QSs and 136,000 only a procedural issue, but a cultural one
Even the outsourcing centres established facilities managers (see table E, page 8). and will require a change in attitude on the
by UK engineers and architects to service These things are covered to some extent part of both employers and workers. Another
projects elsewhere in the world are too in the traditional architecture, engineering difference to UK sites is the sheer number
expensive by Indian standards. and planning curriculum, but RICS urges of operatives – becauselabour is cheap
Indian clients recognise the value that the creation of dedicated courses. There are compared to materials, labour-intensive
expats can bring, and when employing a now a small number of quantity surveying construction methods are preferred to
foreign firm they will expect to be able to degrees, but none in project management, modern mechanisation.
draw on expertise from outside India, and for facilities management and sustainability.
expats to be on hand for technical supervision Instead, engineering graduates must learn
and peer review. Nevertheless, they will not these skills on the job and they are not 6.5 PROCUREMENT
be prepared to pay for an entirely expat staff, practised at a sophisticated level.
and a willingness to pass on skills to local The RICS also believes there is a need For public sector projects, tenders will be
staff is seen as respectful and as evidence of a for continuing professional development published on official websites and the process
commitment to the market. Indians are often throughout the industry, creating a follows standard international practice. Once
voracious learners, and will use foreign firms culture of improvement and enabling the bidders have met the minimum technical
to pick up skills they do not already have. implementation of emerging technologies. It and quality criteria, decisions are generally
Local staff will also bring valuable knowledge has been working to increase professionalism based on lowest price. For this reason, UK
of local standards, bureaucracy and culture. in the Indian construction industry and companies may prefer to seek opportunities
The Indian workforce is generally well its image among the wider population on India’s growing number of PPP projects as
educated and highly trained, though the since 2009. It has introduced the concept part of consortiums, where there is a greater
growing demand for construction services of a professional qualification, a code of appreciation of the added value that their fee
means that there are severe manpower ethics and greater accountability. It is represents.
shortages in certain areas. There is great also developing information and training Networking and relationships are very
competition for skilled employees, and some courses on areas such as valuation and important for securing opportunities on
UK firms complain of little loyalty on the part project management, and begun awarding private sector projects. Clients may want
of workers, who will move for even a small MRICS status to quantity surveyors who can to get to meet key members of staff over
jump in salary or a shorter commute – a major demonstrate the necessary skills. several meetings before inviting firms to bid
factor in traffic-choked big cities. exclusively or competitively for work.
Indian professionals tend to be technically Private sector projects are generally
excellent, though their orthodox education 6.4 HEALTH and SAFETY procured under a construction management-
does not place the same importance on style approach. The client will appoint a
creative problem-solving or natural thinking, Health and safety standards have improved project manager, who will commission a
which can be difficult for UK firms to on Indian building sites dramatically design and then break it into a series of works
deal with. The three core construction in recent years, thanks to an influx of packages which are awarded to contractors
disciplines taught in Indian universities are international companies and the efforts of working directly for the client.
civil engineering, architecture and urban bodies such as the Construction Industry The general contracting and design-and-
planning. Research by the RICS in 2011 Development Council (CDIC) to improve build models are generally not used.

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6.6 CONTRACTS AND DISPUTE

RESOLUTION

Until the turn of the millennium, government

projects were always procured under the
Central Public Works Department standard
contract, a cumbersome and rigid document.
Since the introduction of PPPs, there has
been a move towards FIDIC, though this
usually balanced form of contract is often
modified in favour of the client. This leaves
contractors vulnerable to project risks such as
cost escalation.
The entry of foreign investors has also
driven the adoption of international standard
contracts.
FIDIC is also typically used on private
sector projects, though in a fairer form that
sticks more closely to the standard document.
Private sector clients are more willing to
negotiate and to accept some portion of the
risk themselves to secure a better deal.
Dispute resolution procedures are largely
based on UK laws, though there is no
equivalent to adjudication, which imposes a
30-day deadline for responses. This means
that arbitration is very protracted, and cases
can take years to reach the courts. It is also
expensive, as a large number of government
contracts prescribe arbitration by three
arbitrators (one appointed by each party, and
a third appointed by the two arbitrators).
Even if you are successful at the end of the
process, lawyers warn that enforcing the
award can still take three or four years. In its
report on Doing Business, the World Bank
rates India right at the bottom of the table
for enforcing contracts – 182nd out of 183
countries.
The time and expense of arbitration
means that it is only ever a last resort, and
parties in the commercial sector will usually
try to resolve disputes between themselves
privately. Public sector organisations,
however, will not make that decision and so
disputes on these projects more frequently
go as far as arbitration. Ironically, fears of
being perceived as corrupt can also lead
to arbitration. Even where contractors are
entitled to certain payments, public sector
employees may be reluctant to sign them off
in case they are accused of impropriety.

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7/SUSTAINABILITY

7.1 GREEN BUILDING MOVEMENT which was the National Commission on building movement. To this end, it carried
Enhanced Energy Efficiency, which included out a series of one- and two-day training
India’s green building movement is taking the promotion of energy efficiency and programmes to engage with the building
off at an astounding pace. The Indian Green buildings. and real estate industry. Over the last 10
Building Council (IGBC) was established India’s first LEED-accredited building years, it has delivered training to almost
by the Confederation of Indian Industry was the CII-Sohrabji Godrej Green Business 16,000 professionals. In September 2009, the
(CII) in 2001, and today has local chapters Centre building in Hyderabad, completed Indian Green Building Council Accredited
in Ahmedabad, Bengaluru, Chennai, Delhi, in 2003, which was only the second building Professional Examination was launched.
Hyderabad, Kolkata, Kochi, Mumbai, Pune, in the world to achieve LEED Platinum and Today there are more than 690 qualified
Goa, Vadodara and Coimbatore. Its stated the first outside the US. There are now 212 green building professionals in India.
aim is to make India one of the world leaders certified green buildings in India up and
in green buildings by 2015. The first Green running, and 1,466 registered projects with a Numbers of LEED rated projects
Building Congress in 2001 attracted 20 total built-up area of more than 1 billion ft2. Platinum 59
manufacturers and 100 people. The ninth, in If this rate of growth can be maintained, the Gold 109
2011, featured more than 300 exhibitors and IGBC believes India will have 100 billion ft2 of Silver 36
2,500 delegates from all over the country. LEED-accredited space by 2030. Most of the Certified 08
Under the Twelfth Plan, the Planning accredited space so far represents commercial Total 212
Commission states that improved energy offices, spread across India’s IT parks, but Source: Indian Green Building Council

efficiency is essential for containing demand there are also notable exceptions, such as the
without jeopardising growth. It proposes a vast new Terminal 3 at Delhi’s Indira Ghandi
mix of increasing energy prices to dampen International Airport, designed by HOK, 7.2 STANDARDS AND CODES
demand, and other initiatives to push the which became the first airport to achieve a
economy towards better efficiency. In 2008, LEED Gold rating last year. India initially adopted the US LEED standard
the National Action Plan for Climate Change One of the IGBC’s greatest tasks has but in 2006, launched LEED-INDIA, tailored
was launched with eight missions, one of been raising awareness of the green to its unique climatic and social conditions.

[j] Number of leed-rated buildings in india

1,600
1453
1,404
1,400

n Registered n Certified
1,200
Source: Indian Green Building Council

1,000
884

800

600
465

400 322

201 209
200 134
80
17 40 10 63
1 0 2 1 10 2 5 15 30
0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

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India has five distinct climatic zones, ranging [k] OPPORTUNITY FOR GREEN BUILDING MATERIALS AND EQUIPMENT BY 2015
from the cold mountainous north to the
tropical climate in the south, where there are The IGBC has published a list of key shortages that it says could offer a market of $100bn:
both humid and dry areas. The Indianised
standard is also adapted to recognise the
limitations of India’s developing transport
Materials Equipment/systems
infrastructure, and much higher cooling
demand. LEED-INDIA New Construction, n High SRI coatings n Building integrated solar photovoltaics
recently updated, is designed primarily for n Low VOC paints & coatings n High CoP chillers
new commercial buildings, while the Core & n High performance glass n Wind towers
Shell standard was launched for developers n Wall & roof insulation n MERV filters
who do not have control over tenant fit-out. n FSC certified wood n Geothermal systems
Running in parallel with LEED is the n Bamboo based furniture n Building management systems
indigenous GRIHA rating system, or Green
Rating for Integrated Habitat Assessment. Source: Indian Green Building Council

Launched in 2008, it was developed jointly by

The Energy and Resources Institute (TERI)
in New Delhi and the Indian government’s
Ministry of New and Renewable Energy, and
is now administered and promoted by an The Ministry of New and Renewable Three years ago, the IGBC also launched
independent body, ADaRSH (Association for Energy has made compliance with GRIHA the Green Homes scheme for rating new
Development and Research of Sustainable compulsory in order to receive green residential buildings that achieve energy
Habitats). To date, ADaRSH has trained development subsidies, setting a minimum savings of 20-30% and water savings of
more than 10,000 professionals, students and of a three-star rating. Several states have now 30-50%. Almost 400 residential projects are
government officials. gone further and made GRIHA a mandatory now registered, most of them apartments.
GRIHA is designed for new commercial, part of development. In Karnataka, for The CIDC has also launched a Green
institutional and residential buildings with example, new government buildings should Rating system to measure the embodied
a total built-up area of greater than 2500 m². receive a three or four-star rating, while energy of infrastructure projects, aiming to
For smaller projects, there is the SVAGRIHA in Delhi, a three-star rating is compulsory provide a more holistic picture of the energy
system (Small Versatile Affordable GRIHA), for both government and private sector use of a project. The rating includes more
which was launched in 2011. A draft rating buildings. In November 2011, ADaRSH also than 450 different elements.
system for educational campuses and signed an Memorandum of Understanding
mixed-use township developments is also at with the Confederation of Real Estate
the pilot phase, and a specialist rating system Developers’ Associations of India (CREDAI) 7.3 OPPORTUNITIES
for retrofitting existing buildings is planned to work together to increase uptake of
in future. GRIHA. Despite the growth in demand for green
There are 34 criteria in a GRIHA rating. In 2007, India’s Bureau of Energy buildings, the range of building products
The basic principles are a reduction in energy Efficiency also launched the Energy on offer locally is limited, and the necessity
consumption of up to 30%, a reduction in Conservation Building Code (ECBC), of importing products can make schemes
waste production through recycling, low which specifies energy performance prohibitively expensive. As manufacturers
water consumption and reduced pollution, requirements for commercial buildings enter the market, costs are coming down.
and certified buildings are awarded between with an electrical load of 500kW or more. Green buildings used to be around 25-30%
one and five stars. This is now mandatory in several states, more expensive, but the premium is now only
So far, 167 project across India have been including Rajasthan and Odisha, and more 5-10% and it is continuing to fall. The Indian
registered under the GRIHA system, and than 700 ECBC-compliant buildings are at Green Building Council has published a list
eight completed sample project buildings various stages of construction. A few further of key shortages covering many areas, which
have been rated. Two buildings have achieved states, such as Karnataka, Uttar Pradesh it says offer a potential market of $100bn
the top, five-star rating – the Centre for and Uttarakhand, have implemented the (£63bn) up to 2015 (see figure K, above).
Environmental Sciences and Engineering ECBC after some amendments to suit local
at IIT Kanpur (completed in 2009) and the requirements, and areas such as Kerala,
Suzlon “One Earth” office complex in Pune Punjab, Haryana and Gujarat are also in the
(completed in 2010). process of implementing the ECBC.

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7.4 INTERVIEW: M. ANAND, iGBC ‘We’re not saying we want to lead

the world. We want to learn the
While developed countries are facing a
mammoth retrofitting challenge to reduce the
best management practices, and
carbon emissions of their built environment, to take best practice whether it
India has the potential to get it right first
comes from East or West’
time. The IGBC is determined that it will.
“In a nutshell, 70-75% of India has yet to m. Anand, IGBC
be built,” says M. Amand, senior counsellor
at the IGBC. “Retrofitting would cost a
huge amount, so we don’t want to get into
conventional design that will need a huge
amount of retrofitting 15 years down the
line. That’s why we’ve set the resolution that
India should be one of the leaders in green
buildings. We’re not saying we want to lead
the world. We want to take best practice
whether it comes from East or West.”
India is highly vulnerable to the effects
of climate change, but there are also other
drivers for greater efficiency: “Power and
water are both big issues, and there were
already shortages in many of our cities, towns
and villages. Going green by design would
make the world of difference for us.”
Compliance with green building standards
is currently voluntary in most states, but
this may change: “There are indications
that in a couple of years the ECBC could be
made mandatory. Already some of the state
governments are taking the lead, and they are
responsible for many building projects.”
All of this adds up to a massive market for
UK firms. “There is an enormous amount of
opportunities emerging as far as the products
and services industries are concerned,” says
Anand. “There is also a challenge to the
design teams to reduce the cost of green
buildings.”

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8/THE CONCRETE SECTOR

8.1 Overview construction, particularly the construction of

In 2009, the CMA conducted
cement concrete roads.
India is the world’s second-largest producer of One of the main barriers to growth is the a survey and found that coal
cement, after China, accounting for 7-8% of availability and quality of coal, the industry’s supplied was frequently between
global production. In 2010-11 it produced 228 main fuel. The CMA is also working to ensure
one and four grades below the
million tonnes, up from 217.44 million tonnes the supply of coal and its quality. In 2009,
in the previous year. The total capacity of the it conducted a survey and found that coal billed grade. It is negotiating with
Indian cement industry rose to 323.02 million supplied was frequently between one and four
the coal industry to find a solution
tonnes from 294.32 million tonnes in 2009-10. grades below the billed grade. It is negotiating
It exported cement and clinker to more than with the coal industry to find a solution.
30 countries. The manufacturers also suffer from the poor
Despite the size of India’s cement market, quality of India’s rail network, as rail is the
its per capita consumption is far below the main means of transporting heavy materials,
global average, at 180kg compared with and the CMA is working closely with the rail
430kg. However the pattern of demand bodies to improve the network.
has followed the upward growth of GDP,
supplying the booming infrastructure and
real estate sectors, achieving a compound 8.2 INNOVATION AND
annual growth rate of over 9% from 2006-07 SUSTAINABILITY
to 2010-11. Over the period of the Twelfth
Plan, the Cement Manufacturers Association According to the CMA, the most efficient
(CMA) expects demand for cement to grow by producers of cement in India are almost on a
8-12% each year. The CMA has been working par with world energy-efficiency standards.
to promote the increased use of concrete in India’s most efficient plants use 68kwh/

[l] INCREASE IN cement CAPACITY AND PRODUCTION 1999-2011

350

n Capacity n Production
300

250

200
million tonnes

150

100

50

0
1989-90

1990-91

1991-92

1992-93

1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

1999-2000

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

Source: CMA

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tonne of cement produced, compared

with the world best of 65kwh/tonne. The
industry’s particulate emission levels meet
the international standard of 50mg/Nm3, and
in some cases are as low as 15-20mg/Nm3.
The cement industry is also India’s largest
consumer of hazardous wastes including fly
ash and blast furnace slag.
Major cement manufacturers in India
are increasingly using alternative sources of
fuel, especially bioenergy, to fire their kilns.
Examples include:

l Madras Cement, Alathiyur plant: Uses

bioenergy through burning of coffee husk
and cashew nut shells. Annual cost savings of
$1.7m (£1.1bn)
l India Cements, Dalavoi plant: Uses
low sulphur heavy stock (LSHS) sludge
as alternate fuel. Annual savings of about
$6,500 (£4,100)
l UltraTech, Gujarat cement works: Uses
tyre chips and rubber dust as an alternate
fuel, resulting in reductions of about 30,000
tonnes of carbon emissions annually
l Lafarge, Arasmeta plant: Substitutes 10%
of coal used in kilns with rice husk, resulting
in higher energy savings and lower carbon
emissions
Source: CMA

[M] top cement producers by capacity

1 UltraTech Cement
2 ACC
3 Ambuja Cements
4 Jaypee Group
5 India Cements
6 Shree Cement
7 Madras Cements
8 Chettinad Cement
9 Dalmia Cement
10 Century Textiles
11 Lafarge India
Source: CMA

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9/key contacts and glossary

Organisation Website Comment

Glossary

Common abbreviations used in the text Note on South-east Asian numbering system

CDIC – Construction Industry Development Council Lakh is a unit equal to 100,000 in Western notation
CII – Confederation of Indian Industry Crore is equal to 10 million
CMA – Cement Manufacturers Association Lakh crore is equal to 1 trillion (1,000,000,000,000 )
ECBC – Energy Conservation Building Code. Specifies energy
performance requirements for commercial buildings with an
electrical load of 500kW or more Note on currencies
GRIHA – Green Rating for Integrated Habitat Assessment.
Environmental rating sustem for buildings Where the original citation is in dollars, this has been maintained.
IGBC – Indian Green Building Council Exchange rates are current in the week 13/2/2012-20/2/2012
Rs – Rupees
RICS – Royal Institution of Chartered Surveyors
UNESCAP – UN Economic and Social Commission for Asia and
the Pacific

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