India Infrastructure Report Q2 2016
BMI View: Our forecast for India's construction industry remains positive as the government continues topromote ambitious expansion across all sectors, backed by policy reform. Manufacturing, transport, energyand real estate will be key areas of growth throughout our forecast period, given their importance inboosting overall economic growth. Persistent regulatory challenges - including high levels of bureaucracyand the complex web of administrative bodies - will act as a deterrent to potential investors given the risksto project execution and exposure to corrupt practice.
Latest Updates & Structural Trends
India's construction industry will record steady growth over the next 10 years, expanding 6.8% in realterms in 2016 and averaging annual growth 6.7% over five years and 6.4% over our forecast period to2025.
The non-residential sector, driven by the high demand for office space and the importance ofmanufacturing for overall economic growth, will post the highest growth throughout this period.
The need for intermodal transport across the country, to improve freight logistics and the overall ease ofdoing business, will drive investment in the transport sector (particularly road and rail), forecasted toexpand 7% over 2016. Also improving operational risk is the drive to diversify the power supply.
We now expect the contentious Land Acquisition Bill - which has failed to pass through parliament -could gain traction across the country if it receives significant support from state governments. The billwould provide an upside to the construction industry by removing barriers to project completion.
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