The construction industry in India is passing through a difficult phase, with growth rates standing at 4.8 per cent in 2011-12, compared to 8 per cent growth in 2010-11. This was reflected in poor performance of various listed companies in the construction space in the first three quarters of 2011-12 as they were hit by slowdown in real estate, shortage of skilled labour, high interest rates, slow environmental clearances and so on. However, experts believe that the sector can be an attractive prospect for longer term investors.

In India, construction contributed about 8 per cent of GDP in 2011-12, down from 12 per cent in 2004-2008. The sector employs around 33 million, second only to agriculture. More than half of the sectoral revenues come from infrastructure, while industrial construction contributes another 35 per cent. Household and small commercial developments account for the rest.

Strong governmental outlays especially in infrastructure, will provide a boost going forward. The Twelfth Plan alone is supposed to contribute Rs 41 lakh crore worth of infrastructure creation, of a total estimated Rs 140 lakh crore worth construction projects in the pipeline.