Government Unveils National Infrastructure Pipeline; A Boon for the Building Products Industry

Addressing the nation from the ramparts of Red Fort on 15 August 2019, Prime Minister Narendra Modi had highlighted that Rs 100 lakh crore would be invested on infrastructure over the next five years including social and economic infrastructure projects. A task force to this effect was constituted which held several round of discussions with various stakeholders and presented its report titled the National Infrastructure Pipeline, NIP, 2019-2025 on 31 December 2019. NIP is intended at enabling a forward outlook on infrastructure projects which will create jobs, improve ease of living, and provide equitable access to infrastructure for all, thereby making growth more inclusive. According to the report, total project capital expenditure in infrastructure sectors in India during the fiscals 2020 to 2025 is projected at over Rs 102 lakh crore. In the past decade (FY 2008-17), India invested about $1.1 trillion on infrastructure.

The projects are spread across power, renewable energy, roads, railways, and urban development including metros, education, irrigation, health, water, mobility and digital development. During the fiscals 2020 to 2025, sectors such as energy (24%), roads (19%), urban (16%), and railways (13%) amount to around 70% of the projected capital expenditure in infrastructure in India. In absolute numbers the projected investment on energy will be Rs 24.54 lakh crore,  on roads Rs 19.63 lakh crore,  urban development Rs 16.29 lakh crore,  railways Rs 13.68 lakh crore, social infrastructure Rs 3.56 lakh crore, irrigation and rural infrastructure Rs 7.72 lakh crore each, and industrial infrastructure Rs 3.07 lakh crore.

Out of the total expected capital expenditure of Rs 102 lakh crore, projects worth Rs 42.7 lakh crore (42%) are under implementation, projects worth Rs 32.7 lakh crore (32%) are in conceptualization stage and rest are under development.

How Does NIP Benefit Building Products Industry?

If one were to closely study the proposed fund allocation for various ministries /departments, it will be clear that big infra players such as L&T Infra, KEC, HG Infra, Dilip Buildcon, et al and those engaged in EPC will benefit from the focus on energy, road, railways, ports, telecommunications, etc. This invariably means that the consumption of cement, steel, etc, will increase and growth momentum will pick up.

However, it is the allocation of Rs 16.29 lakh crore meant for AMRUT, Smart Cities, Affordable Housing, etc that provides business opportunities for players operating in the tiles, sanitaryware, pipes, bathware, home interiors, etc, segments.  Similarly an allocation of Rs 1.43 lakh crore towards airports implies that the government is focussed towards making UDAN a success. This means not only developing green-field airports but also refurbishing and upgrading the existing ones. Not only does this open opportunities for design and architecture firms, besides the EPC firms, it means a good business opportunity for companies supplying large vitrified tiles, luxury vinyl tiles, premium sanitaryware products, carpet floorings, decorative paints, etc.

Yet another focus area is the social infrastructure. With a proposed investment outlay of Rs 3.56 lakh crore towards higher education, school education, health and family welfare, sports, and tourism, a significant amount will be allocated for construction of new buildings for schools, universities, and hospitals. This again means business opportunity for design and architecture firms along with suppliers of vinyl floorings,  anti fungal/bacterial flooring, resin flooring, LVT, textile flooring,  etc. With specific reference to educational institutes vinyl composition tiles, luxury vinyl tiles, affordable to premium sanitaryware, low VOC paints, ergonomically designed furniture,  etc, will be in high demand.  New sporting arenas to be developed will likewise mean good business for architect firms, interior design firms and building products manufacturers and suppliers.

The national infrastructure pipeline, NIP, could not have come at a more opportune time. The building product industry is witnessing reduced consumption leading to low utilisation of their units; the NIP in all likelihood will help get the industry back on its feet.

 

Will it be a Smooth Ride?

While the government's big bang infrastructure push is aimed at realising its $5 trillion economy target, industry opinion makers are cautiously optimistic. They believe that the targeted spend will spill over FY'25 and that the average spend will be in the range of Rs 10-15 lakh crore per annum on implementation of NIP. Their caution is not without reason for ambitious plans have been rolled out by governments in the past too but their implementation floundered due to a number of factors. Non-availability of funds and resistance to land acquisition, besides concerns over pricing, etc, more of than not have led to projects running aground and becoming expensive. In fact, according to the latest October 2019 report by the Ministry of Statistics and Programme Implementation - which monitors infrastructure projects worth Rs 150 crore and above - as many as 388 infrastructure projects, each worth Rs 150 crore or more, have been hit by cost overruns of more than Rs 4 lakh crore owing to delays and other reasons.

The government has done its groundwork and is well prepared to implement the plan. Releasing the report, the union finance minister Nirmala Sitharaman had remarked, “As we go along, considering the prospects and challenges of each project, there will be the flexibility of dropping a project and picking up a new one so that there are no laggards.” Also with private participation in infrastructure still at 22%, the government has picked up the tab - the centre and state governments will pitch in 39% apiece - rather than wait for the clean-up of banks and corporate balance sheets. This flexibility and recognition are being seen as a great positives by the industry.

Like, Share & Follow

Post Your Comment




About Surfaces Reporter

Surfaces Reporter is India’s 1st magazine specialized on “products & materials” for architecture & Interiors! The prime objective of Surfaces Reporter magazine is to contribute positively to the Indian material industry, with unbiased information & awareness initiatives.

Surfaces Reporter magazine has a clear & niche target group comprising of Architects, Engineers, Builders, Interior Designers, Manufacturers, Celebrities, Showrooms, Consultancy firms, and Leading Business houses, Hotels & Restaurants, and PMCs etc. If you have a Product or Project worth publishing in Surfaces Reporter, please email us hello@surfacesreporter.com or you can also submit your project online.

Like Surfaces Reporter on Facebook | Follow us on Twitter and Instagram | Subscribe to our magazine | Sign Up for the FREE Surfaces Reporter Magazine Newsletter



Read Current Issue

This is alt


Most Viewed

More Stories