EY - Making India brick by brick

Engineering Procurement & Construction

Making India brick by brick

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Infrastructure development has been fuelling India’s economic growth over the past decade. This EY report serves as a guide for policy makers and the captains of the Engineering Procurement & Construction (EPC) sector in charting their course of action.

The Government plans to invest INR56.3 trillion in infrastructure during the Twelfth Five Year Plan (2012-17) and approximately 50% of the investments are to be contributed by the private sector. Considering this major potential opportunity in the infrastructure segment, the EPC sector is likely to be benefited.

 

According to industry estimates, the Indian construction industry was worth INR8, 184 billion in FY13, which is estimated to be INR9, 013 billion in FY14.

India’s construction sector

 

EY – India’s construction sector

Infrastructure projects are major demand drivers in the Indian construction industry accounting for an estimated 49% of industry value followed by real estate and housing (42%) and industrial projects (5%).

Future of EPC sector in India

  • The EPC market in India has evolved over the last few years with increased project size and complexity. This has increased private clients and entry of several foreign players.
  • The concept of EPC has emerged as a preferred form of contracting by clients along with PPP models. Even when projects are awarded on PPP basis, there is an EPC opportunity for market players.
  • Specialized EPC sectors such as marine, tunneling, hydro, industrial and oil and gas continue to prefer awarding projects in the EPC mode.
  • The Union Budget 2014–15 has also emphasized on removing the bottlenecks in the infrastructure sector.
  • Given the size of the infrastructure market, there are ample opportunities for EPC players. They can expand their business by diversifying operations, strategic tie-ups and moving up the value chain. This re-emerging euphoria in the infrastructure sector is expected to get the EPC sector back on the growth trajectory.