"Lack of trained manpower is the most fundamental problem the Indian construction
      industry faces today."
 
 

indiamarkets: Where does the Indian construction industry stand today in the international market?
Dr. Satya: Indian has not done much in the global construction market, just some work on a contract basis in the Middle East and Malaysia. The presence has not been much as compared to the Koreans, Japanese or the Americans. In terms of ratings, I definitely do not rate the Indian construction industry high at the global level. It has still got a long way to go.

In the domestic market, Indian companies are doing well. The foreign players who take up development works use Indian players as sub-contractors in the project.

indiamarkets: What are the major problems faced by the Indian construction industry?
Dr. Satya: There are lots of problems that the industry faces. The most fundamental problem is the lack of trained manpower. India is one of the few countries where one does not need proper training to become a contractor. We do not have adequate formal training mechanisms. The industry has right now started to address this issue.

The other problem is that civil engineering is the least desired subject among students. The input is weak. It is the last branch selected among the engineering branches. During the seat allocation time for engineering, a few civil engineering seats are left vacant (untaken) due to inadequate demand for the branch. When infrastructure is actually taking off in the country, this is a very unfortunate trend. We are not getting the right people to do the right work. Basically anywhere in the world, construction is a fragmented industry.

indiamarkets: What is the role of IIT in changing this scenario?
Dr. Satya: The curriculum at the civil engineering department has been designed to produce the best professionals in this field. But unfortunately the IT sector has become a big black hole, sucking all the students, irrespective of their branch. Whether you are a civil, architecture, mechanical or electrical engineer finally most of them end up in taking up a career in IT. So the direct impact of the total manpower or number of people getting into the industry is going down. A number of civil engineers go abroad for higher studies. Those who  prefer to stay back also take up an IT job.

This problem is not confined to civil engineering alone. This is a problem faced by the manufacturing sector (mechanical) also. We need to wake up. The salary differential is too high. We cannot tell a person to take home a measly sum and work for long hours under hot sun, while the one who works in an air-conditioned chamber takes home almost double that.

The market will take time to adjust.

indiamarkets: Recently, the construction sector got the ‘industry’ status. How will this benefit the players in this sector?
Dr. Satya: It is not a full industry status, only under the IDBI Act. From the financial point of view, the sector will get benefited. But getting this sort of a status will not change the industrial scenario to a great extent.

In India, the government controls large part of the construction sector. Once you have the government controlling the major activity, it is very difficult to change. In every country, the government has a share. But the volume of construction handled by the Indian government is high.

indiamarkets: Do you feel that the BOT (Build Own Transfer) concept can increase the rate of infrastructure development (roads, ports etc) in the country?
Dr. Satya: Attracting private financing into infrastructure is not going to be easy considering the long periods involved in breaking even in these projects and the various uncertainties involved.  Probably less than 20 per cent of the projects can be implemented under this concept especially under the road sector.

indiamarkets: The Indian construction industry is growing at a rate of 15 per cent annually as against the global average of 5.1 per cent. This indicates that the Indian construction is doing well. Please comment.
Dr. Satya: We are definitely growing. There are no questions about that. The infrastructure development is bound to increase at least for the next 10 years or so. But whether the industry is prepared to really face the challenge is a big question.

Project controls, quality, and safety - are not in place. One of the major advantages of foreign companies is that they have well-established systems. Indian companies (except a few) have no proper systems in place. The attitude towards quality, the attitude towards finishing the job in time all these have not been as agreed so. The scenario is changing for better.

The owners have a lot to do for this. Only when the owner demands will the contractor put systems in place. Unless the owners demand, the contactors will not change. The Indian owners have not been demanding enough. Of course, they must not only demand, but they also have to pay for the service. If you look at the life cycle cost of the project then the extra you pay for quality is actually much lesser than the costs you incur for later repairs. A good quality structure will last longer and lesser maintenance is required.

In the US, there was a business roundtable of the construction industry, where the owners in the early 80’s felt that they were not getting their money’s worth. Based on this they have set guidelines for the industry. One of the things was that a Construction Industry Institute (CII)was set up in the University of Texas, which would involve an industry application-oriented research. If you look at the membership of the CII, it is half-owners, half-contractors. Something of this kind should happen in India. The owners have to demand and pay for the service.

indiamarkets: Right now, there is no exclusive ministry for construction. Do you think this is one of the drawbacks?
Dr. Satya: It is definitely required. Almost every country (Japan, Korea, etc) has a ministry of construction. In India, it has been dispersed among the various ministries like the Ministry of Urban Development, Ministry of Transport that takes care of the construction of roads. Somehow the Indian government never recognised construction as an important input to generate revenue, though construction accounts for 40- 50 per cent of the government’s expenditure. The government has never looked at this sector as something that could bring in better productivity or can adopt better technology. Therefore, we still have labour-oriented technologies. Only in the last ten years, they have woken up to the fact that unless infrastructure (road, power) is developed, you cannot get the 10 per cent growth you are aiming at.

indiamarkets: How do you see the role of academic institutions in synergising with the industry?
Dr. Satya: The academic institutions' main role is providing manpower through proper training. The other aspect is that academic institutions play a key role in the development of technology (R&D) and transferring the technology to the needs of the country. Academic institutions cannot change the entire scenario. The industry by itself has to change.

indiamarkets: Is ‘equipment bank’ a need for a country like India?
Dr. Satya: This initiative has to come from the private sector. There is a definite need for this in the industry. A couple of private companies have stepped in. There are people talking about equipment rental bank for better usage of the equipment. Internationally, equipment rental is a major business. For example, in America there is Association Equipment Distributors that  publishes the equipment their members have and their rental values all over the country. This sort of an organised business is almost non-existent in India and is a possibility in the near future.

indiamarkets: Where do you see the construction industry five years down the lane?
Dr. Satya: There will be an increase in growth terms. Many international players will enter the domestic market. The Indian companies should gear up, get the systems in place and use more advanced techniques of construction. There will be demand for quality work and the construction industry has to meet the expectations of the customers. More trained manpower should be available.
 

The interviewer can be contacted at pradeep@indiamarkets.com