Wider context

The Indian construction industry anticipates robust growth during 2023 due to high consumer demand, foreign direct investment (FDI) and strong government emphasis on infrastructural works. Between 2023 and 2026, the industry is projected to grow by an average of 6.2% per year.

Construction costs have increased in recent times, following global headwinds such as the COVID-19 pandemic. As a result, the government is expected to spend approximately 22% more on infrastructure projects than originally estimated. Although challenges continue with the rising cost of raw materials and inflation likely to remain elevated throughout the year, the government will continue to invest in infrastructure in 2023 with commercial projects, including data centres, also driving growth.

Heavily impacted by the pandemic, the hospitality and commercial sectors have now returned to their pre-pandemic levels. We anticipate traditional seasonality to return to leisure markets, leading to improved occupancy levels in 2023, as people get back to their pre-pandemic routines.

India's G20 presidency is a huge boon to the country's reputation as a top meeting, incentive, conference and exhibition (MICE) destination worldwide, leading to increased FDI prospects.

Global headwinds sometimes present opportunities as well as challenges. Due to geopolitical developments, nations worldwide are emphasising supply chain resilience, diversification and security. The strong demand for manufacturing exports has presented much opportunity for India's trade agreements to integrate manufacturing into the global supply chain. At the start of last year, FDI equity inflows have increased, suggesting that global investors are motivated to invest in manufacturing and services.

The construction industry has changed its course post-COVID. The overall impacts of the pandemic included labour shortages, supply chain disruptions, decreased construction productivity, an increased project financing rejection rate and reduced foreign investment in the construction industry. Good practices established during the pandemic, including the embedding of digital platforms and tools, will accelerate project delivery and improve profit margins.

As part of our industry outlook, Gleeds India Intelligence conducted a survey to understand the current market perspective, receiving responses from stakeholders including architects, clients, contractors, developers, project managers, investors and consultants who shared their experiences and expertise.