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Construction chemicals: good growth potential in coming years

March 30, 2015

CC-Industry

Photo: Anthony Azavedo

ANUAnasuya Gupta, Chairperson and Managing Director, CICO Technologies Ltd, is hopeful that a higher GDP growth, faster implementation of large infrastructure projects and real estate will create a positive impact on construction chemicals and set the tone for the growth of the industry in India.

Construction Chemicals is an important part of the chemicals industry by virtue of the role it plays in nation building. The use of construction chemicals, however, is negligible in India due to awareness levels not being what they should. In India, the construction chemicals’ sub-sector contributes between 6.5 per cent and 7 per cent to GDP but is highly underdeveloped. Take the comparative figures with China, for instance, where the GDP contribution is $7.9 billion, as against India’s $600 million in 2013 (as per a report on the construction chemicals industry by FICCI).

As per the 2014 FICCI report, the Indian construction chemicals market has grown at the rate of 17 per cent per annum in the last decade. This has been attributed to the construction boom, and a growing awareness of methods to ensure better quality construction. Urbanisation has also played its part.

Current scenario
The demand for construction chemicals hinges on the real estate and infrastructure sector to a great extent. Both the sectors received a fillip in the past decade, with the government taking a slew of initiatives to boost the housing sector and develop robust infrastructure within the country. The sector is benefiting from greater emphasis on high-quality construction, good workmanship, and the selection of appropriate building materials. This trend has led to real-estate and infrastructure developers opting for construction chemicals that protect structures from natural factors and industrial corrosives, besides elongating the period of regular maintenance.

Restrictions on the usage of natural resources at construction sites have played a crucial role in the increased usage of construction chemicals.

To keep pace with the developments in the infrastructure and real estate sector, construction chemicals’ manufactures are also investing in research and development to come up with innovative products that make construction of modern structures possible. These products not only impart easy workability and provide better strength development characteristics to buildings, but also enhance their performance in extreme environments besides prolonging their life.

Going forward, we expect increase in construction expenditures and compliance with international manufacturing standards to drive the demand for construction chemicals. The entry of foreign construction companies and use of foreign technology in the construction business are positive developments for the sector. These factors have positively impacted the growth-rate of the Indian construction chemicals’ industry.

The industry has a key role to play in the development of smart-cities in India. The recent government announcement to develop Visakhapatnam, Jaipur, Allahabad and Indore into smart cities can be a big growth driver for the sector in the coming years.

India’s duty and taxation system is complex and expensive. We are of the view that implementation of Goods and Services Tax (GST) will make taxation simpler for the industry besides addressing challenges like considerable loss of time in transit.

Key challenges
Low consumer awareness and a price-sensitive market will remain key challenges for the industry this year as well. This will lead to customers demanding the best quality at very low prices without being fully aware of the benefits of various construction chemicals.

Low entry barrier and lack of relevant quality standards will also pose challenges for the sector as it will lead to high competition from unorganised manufacturers, who may use low cost material thus initiating frequent price wars.

Growth imperatives
The construction chemicals’ industry has a good growth potential in the approaching years. The industry needs continued support of the government, regulatory bodies as well as industry associations/ federations for sustained growth.

Some of the key growth imperatives seen for the construction chemicals industry in the year ahead include strong marketing and increased customer awareness towards applications and benefits. Manufacturers will invest to educate construction contractors and other stakeholders about the benefits of using superior construction chemicals, in terms of lower project completion time and ease of usage. We, however, expect companies with innovative, low-cost products to capture a significant share of the market.

The year may also see an increase in spending towards imparting skill-development among workers about how to appropriately use these chemicals in construction. This will ensure correct application and better results, reinforcing the customers’ belief in the utility of construction chemicals. I call for a collaboration between industry and academia to provide dedicated courses/training on construction chemicals to engineering institutes and ITI’s.

Modern techniques of delivery, such as on-site mixing of concrete and product deliveries to the consumer’s doorstep, will also play critical role in the success of construction chemicals players.

Conclusion
I am hopeful that a higher GDP growth, faster implementation of large infrastructure projects and real estate will create a positive impact on the construction chemicals industry.

It is an exciting time for the construction chemicals’ industry. I sincerely hope the slew of measures taken by the government to boost the economy and infrastructure development in the country will set the tone for the growth of the construction chemicals industry in India.

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