India’s construction sector is poised to grow at the rate of 15-20 per cent annually for the next two years. There was an estimated investment of USD 100 billion in the sector during 2004-2005 (March-April), with private sector contributing to over 32.7 per cent of this investment. The sector is likely to record higher growth in the coming years, due to the Government of India’s (GOI) recent initiative to allow 100 per cent foreign direct investment (FDI) in real estate development projects.

Market Demand

The total market potential for building materials and equipment is estimated to be over US$ 2.4 billion by 2010 (excluding steel and cement). (Source: CII) While constructing buildings in India, the availability of materials and equipment is one of the major issues to be addressed. Towards this objective, Indian construction industry is networking with several foreign manufacturers

to create new markets. Only a few building materials and equipment are available in India. To name a few - fly-ash cement, fly-ash block, recycled aluminum, recycled steel, recycled tiles; bamboo based products, green roof, and recycled wood. However there is a huge market for green materials, which is still untapped. Typical building materials that are not available in India would include: composting toilets, waterless urinals, low VOC adhesives & sealants, certified carpets, certified wood, certified cooling towers, HFC based high efficiency chillers, and building controls.

The Government of India opened the construction and development sector in February 2006, and allowed 100 per cent foreign direct investment (FDI) under the ’automatic route’ in order to spur investment in the vital infrastructure sector. Driven by this policy initiative and positive growth in the economy, real estate in India is booming.

In November 2003, the U.S. Green Business Council ((http://www.usgbc.org/) established a Green Business Center (GBC) building in Hyderabad, India, in association with the Confederation of Indian Industry (CII) and awarded its Leadership in Environment and Energy Design (LEED) 2.0 Platinum standard to it. The ‘Platinum Rating’ for GBC in Hyderabad has sensitized the stakeholders of Indian construction industry. Today, several corporate and government entities are considering building green buildings. This has resulted in a spurt in the demand for building materials and equipment GBC in Hyderabad plans to reach out to 2,500 business houses and build the brand in the corporate sector. It plans to promote five more such green building ventures in India. The center is planning to market green products and establish incubation services for entrepreneurs to develop green products and technologies commercially.

Market Data

The Building Materials and Technology Promotion Council (BMTPC), New Delhi has done a research on the needs of various building materials and has established following points:

There is a substantial amount of shortage of conventional and traditional building materials in India. The cost of construction using these conventional options is registering an increase, which is in the order of 15 to 18 percent. These building materials are high in energy consumption and with the increasing cost of energy. The relevance of energy efficient buildings has assumed greater significance in the light of fast depleting energy resources, energy scarcity and environmental pollution. This scenario creates the demand for eco-sensitive building or ‘green building’, which uses the resources judiciously, minimizes emissions and has efficient waste management system.

The GBC in Hyderabad is already having a nation-wide impact on the attitudes of the business community toward building environmentally more responsible buildings. The overall investment towards urban building construction in India is estimated to be USD 1 billion annually. Even if 5 per cent of this urban investment could be diverted for construction of green buildings, the potential is huge. Such an urban expansion could open up a significant market of opportunities for several stakeholders such as construction industry, architects, material, and equipment manufacturers.

Best Prospects

Easy adaptability to foreign technology and the entry of foreign companies in the construction sector have changed the mindset of the developers and manufacturers of building materials. Many Indian firms are looking for innovative and environment friendly building materials and solutions. Indian firms are also working with local R&D institutions to develop new building materials and components, suitable to local conditions. Some of the trends in building materials usage in India are provided below: Composites are emerging with an increasing role in building materials to replace timber, steel, aluminum, concrete etc.

Composites are being used for prefabricated, portable and modular buildings as well as for exterior cladding panels. With the scarcity of wood for building products, the alternative, which merits attention, is to promote the manufacturing of low cost FRP building materials to meet the demands of the housing & building sectors. In this context, certain developments concerning glass fiber reinforced polymer composites, natural fiber composites, industrial waste based composites have assumed importance.

Open prefab systems based on an appropriate production level and small, easy to handle elements with rationalized production methods have attracted the attention of Indian housing experts as an important option for arresting the rapidly rising escalation in the costs of material and labor. Cellular Lightweight Concrete (CLC) has been used in over 40 countries over the past 25 years to produce over hundred thousand houses and apartments, apart from schools, hospitals, industrial and commercial buildings. It is especially suitable in India for low-rise load bearing constructions and for partitioning work in high-rise buildings.

Key Suppliers

Around 96 cent of the construction companies is small players. The following website will provide a number of Indian manufacturers’ contacts.

Prospective Buyers

The end users of this sector typically are from the governments, private sector, architects, designers, property developers, and facility executives. The idea of "green buildings" gained momentum in the mid-90s. As interest grows, so does the knowledge that many facility executives and design professionals bring to their purchases.

Architects, designers and facility executives are asking more targeted questions and refusing to take assertions on faith. For instance, they may ask whether an independent testing authority has verified the amount of recycled content in a product. The architect and design community is becoming much more astute and more knowledgeable. The following websites may provide some lead contacts: http://www.cidc.in/members.asp and http://www.constnindia.com/.

Market Issues

The GOI permits imports of building materials and products under open general license (OGL) system. Under the Government of India’s (GOI) new Export-Import (EXIM) Policy, the duty on building products is pegged at 15 percent. The GOI has announced its intention to reduce progressively the import duty rates http://www.cbec.gov.in/).

India’s EXIM Policy permits imports by end-users and agents. Also, consultancy, designing, and engineering firms that take up turnkey assignments are permitted to import. The GOI permits FDI up to 100 per cent for development of integrated townships, including housing, commercial

premises, hotels, resorts, city and regional level urban infrastructure facilities such as roads and bridges, mass rapid transit systems and manufacture of building materials. Development of land and providing allied infrastructure will form an integrated part of township’s development. http://urbanindia.nic.in/

The Bureau of Indian Standards (BIS) and the Indian Bureau of Mines are the main authorities for issuing and maintaining the codes/standards pertaining to safety and other practices in the Indian construction industry. However, most of these standards are similar to worldwide standards. LEED standards currently available or under development in India would include:

New commercial construction and major renovation projects (LEED-NC); Existing building operations (LEED-EB); Commercial interiors projects (LEED-CI); Core and shell projects (LEED-CS); Homes (LEED-H); Neighborhood Development (LEED-ND)

Resources & Contacts

CII-Godrej GBC & Indian Green Building Council, Survey no 64, Kothaguda Post, Ranga Reddy District, Hyderabad: 500032; Telephone: 91-40-23112971-76 Ext 214; Fax: 91-40-23112837 Email: m.selvarasu@ciionline.org

National Institute of Construction Management and Research, Walchand Center, Tardeo, Mumbai 400 034; Telephone: 91-22- 24927847/24961183 Fax: 91-22-24952453 E-mail: nicmarmb@giasbm01.vsnl.net.in

National Institute of Construction Management and Research, 910, 9th Floor, Hemkunt Chambers, 89 Nehru Place, New Delhi 110 019. India; Telephone: 91-11-51618415/51618417 Fax: 91-11- 51618416; E-mail: nicmargr@giasdl01.vsnl.net.in

Ministry of Urban Development, Nirman Bhawan, Maulana Azad Road, New Delhi - 110011 Telephone: 91-11-23012309; Fax: 91-11- 23014459/23015446; Email: js_uae@nb.nic.in

Building Materials and Technology Promotion Council, Core 5 -A, First Floor, India Habitat Center, Lodi Road, New Delhi- 110 003; Telephone: 91-11-24638096/24638097/24651243/24636759; Fax: 91-11-24642849; E-mail: info@bmtpc.org

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Extracts from: India Green Building Equipment, US Commercial Service, May 2008