Press Release
Impact of Gulf War on Indian Construction Industry
POSITIVE FALL OUT
Business Opportunity
The post Gulf-War period will have substantial opportunity for the Indian Business Houses who already have good experience of construction works in Iraq. The major stake holders are going to be: (i) Engineering & Construction companies, (ii) Manufacturers & Suppliers, and (iii) Advisors / Consultants / Insurance / F.Is. Iraq has been under economic sanctions and international control since the 1st Gulf War and therefore has seen very little economic growth. The next section provides an estimate of the quantum of work for rebuilding Iraq after the Gulf War.
Extent of possible investment in the next 10 years for rebuilding Iraq.
Sl.No. |
MAJOR OPPORTUNITY AREAS |
STAKE HOLDERS |
LIKELY INVESTMENT IN NEXT 10 YEARS (in US$ m) |
1. |
Construction & Engineering Services |
Engineering & Construction companies |
|
| |
|
|
300 |
| |
|
|
4,800 |
| |
|
|
23,000 |
| |
|
|
10,000 |
| |
|
|
620 |
| |
|
|
400 |
| |
|
|
500 |
| |
|
|
16,000 |
2. |
Supply of goods / trading |
Manufacturers & Suppliers |
|
| |
|
|
|
| |
|
|
4,750 |
| |
|
|
6,000 |
| |
|
|
4,000 |
| |
|
|
3,000 |
| |
|
|
6,000 |
| |
|
|
2,000 |
| |
|
|
4,000 |
3. |
Support Services: |
Advisors / Consultants / Insurance / F.Is |
|
| |
Training of construction workmen. |
|
90 |
| |
Establishing regulatory framework |
|
- |
| |
Lending & Financing Norms |
|
1,750 |
| |
Insurance and Risk Mitigation Services. |
|
1,000 |
| |
Engineering Consultancy Services |
|
3,000 |
| |
Valuation and Costing services |
|
500 |
|
Basis of Estimate:
-
Water requirement per capita: 110 lts per day
-
Sewage / sullage per capita: 60 lts per day
-
Power requirement: 1000 MW per crore of population
-
Housing: 200 sft per family of 7 members
|
Source:
-
Cement Manufacturers Association
-
CIDC Survey
-
Building India Brick by Brick
-
Asia Construct Country Report
-
World Bank Country Report
-
World Bank Fact Book
|
Negative Fall Out
|
1. Impact of Gulf War on Cost of Construction:
|
The Gulf War will result in escalating cost of construction throughout the country primarily due to increase in cost of fuel, lubricants etc. As estimated by CIDC the average increase in cost of construction will be a 0.53% in the short term period (1 to 3 months time) and thereafter the price may stabilize in the mid-term period (6 to 9 months). In the long term period (12 to 18 months) the increase in cost is likely to be 0.29%. Table 1 gives an overview of the impact.
|
Table 1:
Average increase in cost of construction is given as follows:
| |
Delhi |
Kolkata |
Chennai |
Hyderabad |
Bangalore |
Over-all Average |
Short term ( 1 to 3 months) |
0.525 |
0.627 |
0.596 |
0.627 |
0.596 |
0.52 |
Mid term ( 6 to 9 months) |
0.525 |
0.627 |
0.596 |
0.627 |
0.596 |
0.52 |
Long Term ( 12 to 18 months) |
0.295 |
0.295 |
0.295 |
0.295 |
0.295 |
0.295 |
|
Table 2 & Table 3 indicate the percentage increase in cost for various sectors and various regions over the short term and long term period respectively. The computations are made as per the indices calculated by CIDC
|
Table 2:
Percentage increase in cost in the short term period sector wise(1 to 3 months)
| |
North |
East |
South |
West |
Building |
0.59 |
0.66 |
0.65 |
0.59 |
Bridges |
0.66 |
0.76 |
0.75 |
0.64 |
Dams |
0.66 |
0.7 |
0.69 |
0.66 |
Medium Industry |
0.44 |
0.58 |
0.52 |
0.42 |
Maintenance |
0.34 |
0.44 |
0.42 |
0.34 |
Roads |
0.59 |
0.69 |
0.65 |
0.59 |
Mineral Plant |
0.6 |
0.7 |
0.69 |
0.6 |
Urban Infra. |
0.25 |
0.35 |
0.32 |
0.25 |
Power |
0.72 |
0.89 |
0.82 |
0.77 |
Railways |
0.38 |
0.48 |
0.43 |
0.38 |
Transmission |
0.55 |
0.65 |
0.62 |
0.56 |
|
Table 3:
Percentage increase in cost in the long term period sector wise (12 to 18 months)
| |
North |
East |
South |
West |
Building |
0.295 |
0.295 |
0.295 |
0.295 |
Bridges |
0.295 |
0.295 |
0.295 |
0.295 |
Dams |
0.295 |
0.295 |
0.295 |
0.295 |
Medium Industry |
0.295 |
0.295 |
0.295 |
0.295 |
Maintenance |
0.295 |
0.295 |
0.295 |
0.295 |
Roads |
0.295 |
0.295 |
0.295 |
0.295 |
Mineral Plant |
0.295 |
0.295 |
0.295 |
0.295 |
Urban Infra. |
0.295 |
0.295 |
0.295 |
0.295 |
Power |
0.295 |
0.295 |
0.295 |
0.295 |
Railways |
0.295 |
0.295 |
0.295 |
0.295 |
Transmission |
0.295 |
0.295 |
0.295 |
0.295 |
|
Source:
Primary data collected by CIDC. Analyzed as per CCI, formulations. Prepared in association with:
-
Labour Bureau
-
Ministry of Labour
-
Dept. of Economic Affairs
-
Ministry of Industry
-
Ministry of Urban Affairs & Employment
-
Dept. of Economic Affairs
-
Ministry of Finance
-
National Sample Survey Organisation
-
Ministry of Surface Transport
-
Asian Development Bank
-
Central Statistical Organisation
-
Ministry of Planning & Programme Implementation
-
Central Water Commission
-
Central Public Works Deptt
-
Army Headquarters
-
National Building Organisation
-
Construction Industry
|
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