Rapid urbanisation is setting the pace of the Indian construction industry and, by extension, the construction chemicals market. The government’s ambitious ‘Housing for All’ and ‘100 Smart Cities’ programs are key growth drivers for the construction chemicals sector.
Construction chemicals are essential materials for any construction. Thanks to growing awareness in recent years, construction chemicals are increasingly used in residential and non-residential structures, as well as critical infrastructural projects like roads, bridges, power, ports and highways.
The main purpose of using construction chemicals is to enhance the strength, durability, economy and sustainability of concrete structures.
The construction chemicals market can be broadly classified into concrete admixtures, technical mortars, adhesives and sealants, waterproofing solutions, flooring compounds, repair and rehabilitation, and others.
Market dynamics
The Indian construction chemicals sector - termed as a sunrise industry - grew at an annual rate of 12 per cent between 2009 and 2014, from Rs 1,900 crore to around Rs 3,500 crore. The sector is expected to grow at 15 per cent over the next five years, reaching Rs 7,000 crore by 2019-20.
In fact, the industry is hopeful of much higher growth rates since a new pro-reform and pro-business government came to power in New Delhi in 2014.
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The consumption of construction chemicals is also set to increase alongside robust growth in the cement and construction industries. These two industries are expected to sustain their current growth rates of 8-10 per cent over the next decade, thanks mainly to government initiatives in infrastructure and residential sectors.
Cement consumption, estimated at 250 million tonnes per annum (tpa) currently, is likely to go up to 550-600 million tpa by 2025 while the $150-billion construction sector is already benefiting from the proposed $1-trillion investment in infrastructure during the ongoing 12th Five-Year Plan, until 2017.
These developments bode well for the growth and consumption of the dynamic construction chemicals sector, at least until 2020.
Opportunities and challenges
The growth of the construction chemicals sector in India is being powered by a series of developments including greater focus on infrastructure investment; increase in foreign direct investment; public-private partnerships in key projects; the Smart Cities project; expansion of urban India and the consequent demand for affordable housing in tier II & III cities; maintenance, repair and renovation of structures; expected 20-25 per cent increase in the ready-mix concrete segment driving demand for mechanised concrete; growing awareness for the use and application of construction chemicals; and new product innovations and technologies in the market.
Although the opportunities outweigh the challenges, there is a flipside to the construction chemicals industry. The market is still highly fragmented with a mix of national and regional players of differing expertise, capability and quality generating a requirement for further awareness training on the benefits of construction chemicals in modern construction methodology.
Smart Cities: A demand driver
The mission aims to enhance the quality of urban life and provide a clean and sustainable environment for its inhabitants. According to a UN-backed report, India is on the “brink of an urban revolution” with the population in towns and cities expected to reach 600 million by 2031. The development of Smart Cities will ensure high-tech urban economic zones with new housing, and the rejuvenation of existing urban sprawls and slums.
The construction chemicals sector will play a crucial role in developing robust and sustainable infrastructure in the planned cities and towns. In that sense, construction chemicals will be a key enabler of smart cities of the future.
The ‘Housing for All’ programme will also form a part of the ‘Smart Cities’ venture. However, the high cost of land could impact the development cost of housing units. To make new housing units affordable, it is important that the government plans vertical cities ie, high-rise structures. High-rise construction will require modern construction technology aided by specialty construction chemicals.
Emerging trends
Today, the desire for faster construction, sustainability and use of numerous binders and raw materials is a catalyst for growth in the construction chemicals industry. Economic expansion, higher public investment in infrastructure and real estate, and the participation of overseas investors and contracting companies in the Indian construction industry are driving demand for construction chemicals.
Government restrictions on on-site mixing have boosted demand for ready-mix concrete a sector expected to rapidly increase will in turn drive the demand for the use of concrete admixtures. Admixtures account for the largest share in the construction chemicals market in India.
Construction chemicals are also assisting the economic uptake of manufactured aggregates especially in states where excavation of sand beds is either restricted or banned. These concrete admixture solutions are assisting in the rheology and robustness of the concretes produced with manufactured aggregates.
Building a concrete future
The construction chemicals market is assured of substantial growth due to the construction and manufacturing boom in India. The demand for construction chemicals is expected to develop steadily and will be visible in 2016, when the government’s policy and project announcements take concrete shape on the ground. The sector is geared to play a constructive role in sustainable and energy-efficient infrastructure development.
It must be remembered that the cost of construction chemicals is a negligible percentage of total build cost and a catalyst for cost reduction, speed of execution, durability and quality of the build.
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Giles Everitt is the managing director of Chryso India