What is the impact of COVID pandemic on Indian construction industry?
Updated: Jun 29
The construction sector accounts for 9% of the Indian GDP. It employs the highest number of migrant workers. Every year, 9 million people migrate from India’s villages to cities. They work in factories or on construction sites. 
Thus, the mayhem that ensued was inevitable when the nationwide lockdown was first imposed with a 4-hour notice. In March 2020, India witnessed one of the largest reverse migrations in the Global South.
To mitigate the situation for the migrant construction workers, the government decided to transfer funds into their accounts directly. The tax collected by the Building and Other Construction Workers’ (BOCW) welfare boards was to be deployed for the same.
Later, a survey conducted by Jan Sahas, an NGO, revealed how the government had no real mechanism to ensure the social safety of its citizenry. In the absence of BOCW cards, nearly 94% labourers were found to be ineligible for fund transfer. And as workers were left stranded in the middle of nowhere, with no food, water, job security or money, the meaning of ‘home.’ was rendered moot.
Multiple lockdowns and restrictions on cross-border movement forced the populace into quarantine. People were now spending more time at home than ever before. With the birth of remote working, the proximity of one’s home to the office as a critical determining factor lost relevance. The uncertainty surrounding the pandemic made the Indian home buyer realise the security that comes with owning a physical asset.
The second wave of COVID exposed the fallacies of the nation’s healthcare infrastructure. In addition to the sheer number of deaths and hospitalisations, the pandemic caused widespread disruption to businesses.
As per The Economic Times, 59% startups and MSMEs (micro, small and medium enterprises) may shut shop or scale down operations by the end of the year 2021. This is especially worrying since the construction sector primarily comprises small-scale specialty construction firms and design studios. With production and distribution networks suspended globally, material availability and procurement remain difficult.
And as consumers look to shelve ongoing projects, players must grapple with issues related to working capital and cash flow. As per CREDAI, there were 20,000 ongoing construction projects across 18,000 sites before the lockdown in 2020. These involved a workforce of over 8 million. Of this, nearly 30 percent of the workers left for their native places in the initial days of the lockdown. This resulted in a halt for all construction-related activity. Going forward, labour shortages will only become more acute.
To make matters worse, the severity of heatwaves in North India is projected to increase as a consequence of climate change. This further hampers overall site productivity by limiting the number of outdoor working hours.
Short term trends
In the short term, the global construction sector will witness an increased emphasis on digitisation.
1) As working from home becomes the norm, stakeholders are pushing for tools that enable digital collaboration and workflow management.
The pandemic will also speed up the adoption of BIM (Building Information Modeling) across the industry.
2) In a post-pandemic world, safety is primary. As a result, employers are now turning to apps that monitor employee health, well-being, and productivity.
3) Meanwhile, contractors are looking at online channels for site inspection, evaluation, and management. They are also likely to check and identify other channels for material procurement.
4) In real estate, developers are enabling home buyers to search and book property online through immersive 3D walkthroughs, VR, and digital transactions.
Long term trends
1) To address labour shortages, contractors will tend towards the removal of middlemen and demonstrate greater reliance on direct labour instead of a transient workforce.
2) As building material and equipment suppliers look to digitise sales and go direct-to-consumer (D2C), contactless commerce is likely to become the new normal. They’re also looking to deploy Augmented Reality (AR) to boost conversions, online. The fact that Indians consumers, too, increasingly prefer to shop online, helps the transition.
3) The pandemic will speed up the adoption of off-site, modular construction and pre-assembly in a controlled, predictable environment. Despite the recent debacle of SoftBank-backed construction startup Katerra, a more manufacturing-oriented approach to construction is gaining traction amongst industry players.
4) Governments across the globe may also look at re-aligning policies to provide incentives for more sustainable, energy-efficient buildings that prioritize their occupants’ health and well-being.
It is evident that the global construction landscape will look radically different in the foreseeable future. Players who choose to align with these trends may just end up disrupting an otherwise opaque, fragmented industry.
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About the Writers
Ayushi Khemka is an architect, writer, and product designer (experience, interface, UI and UX). She has worked with Delhi NCR based architecture firms, P.G. Patki Architects, Creative Group and Monochrome Design Studio. She is a graduate of the Sushant School of Art and Architecture, Gurgaon, Delhi NCR.
Yug Aggarwal is an architect, illustrator, writer and experimental designer. He is the Co-Founder and COO at Zeyka. He is a graduate of the School of Planning and Architecture (SPA), Bhopal. He is the winner of various national and international architectural design competitions such as FuturArc Prize 2020, World Architecture Festival (2016, Berlin and 2015, Singapore) Student Charrette, and ICCPP Conference on Cities, Places and People (2015, Colombo).
About the Illustrator
Meghna Singh is an architect, urban sketcher and design enthusiast. She is a graduate of the School of Planning and Architecture, Bhopal. She has won numerous national and international architecture design competitions, namely, NASA Mohammad Shaheer Landscape Trophy 2018, Heal+ Regenerative Housing for Kerala 2019, and the World Architecture Festival Student Charrette, Amsterdam 2019. She has experience working at Archohm Consultants Pvt. Ltd.