-Ajay Sharma

-Himanshu Singh -Deepak Cyril -Sridhar Iruvanti -Debayan Banerjee

OVERVIEW
Presently one of the most booming industries in the world Categorized as Heavy Engineering, General Construction and Construction involving Specialty Traits Rapidly Growing in Asian Tiger countries i.e. India and China In India Construction is the 2nd largest activity after Agriculture

Construction accounts for nearly 65% of the investments made in Infrastructure and Real Estate sector in India 239.68 Billion Euros are likely to be invested in construction

sector in coming 5-10 years

Real Estate and Construction industry received nearly 216.53 Million Euros in the first half of the current fiscal year

INDUSTRY OUTLOOK
Construction Projects are subject to a host of Central and State

laws simultaneously International Participation in Mega-Projects led to the infusion of advanced technology in construction practices in India Construction-industry growth rate is higher compared to the overall growth rate in India In the next 5years, an annual growth rate of 10% is expected in commercial and industrial segment of this industry.

Central Government is also planning to make massive investments in physical and social infrastructure Planning Commission also estimated an investment of about 320 billion US Dollars during the 11th Five Year Plan Period Real Estate and Construction industry showed the highest growth before we faced the economic slowdown

However recent global economic downturn, has brought huge

insecurity for those having large capital investments in this sector

PROPERTY LAWS
Area of law dealing with ownership of personal and real property Civil Laws categorizes property as movable and immovable

property Movable corresponds to personal property while immovable ones are real property with associated rights and obligations thereon

LAWS RELATED TO IMMOVABLE PROPERTY

TRANSFER OF PROPERTY ACT, 1882
TP Act provides a mortgage by deposit of title deeds and without

any requirement of registration

No clear provision for machineries embedded in land as immovable or movable property Contains provisions relating to transfer of actionable claims No clear provision for transfer of future receivables

REGISTRATION ACT
Contains provisions for the registration of transactions relating to immovable properties No provision for granting title certificates by the registration authorities Documents registered under this act are sale deeds ,mortgage deeds and lease deeds

THE INDIAN SUCCESION ACT

Under this act, a succession certificate is issued only for claims
pertaining to assets, debts and securities No succession certificates are issued for assets that are in the

form of properties and valuables

THE INDIAN CONTRACT ACT, 1872

Contains provisions regarding possession of securities
Law relating to non-possessory securities is covered by the general principles of the contract

HOUSING DEMAND AND SUPPLY

Was witnessing a super boom till the time of economic

slow down. Present scenario is to sustain business. Recession hit IT professionals badly which affected the investments in real estate. Predictions by Indian express states that demand will go high in 2012. According to reports its one of the most dynamic sections.

 Housing industry again started growing at a good

pace. Increase in number of real estate developers, rise in demand for properties, availability of financing options increased the demand. These factors are also added on by governments support. These have added on by large population base, rising income level and urbanization factors.

 Housing industry to overtake other industries in terms of

contribution to GDP. However the reserve bank has influenced in such a way to increase the housing loans by 15 20 percent. This may affect the demand of housing in the future. Its also predicted that India will have a total demand of 2.3 million of residential property in the next five years.

Increase in demand of land in different cities

 Housing policy reflects the political ideology of the government in power.

US HOUSING SCENARIO
The demand for new homes has been held below normal because of; Job and income insecurity. Difficulty in getting a mortgage. Anticipation of additional declines in prices. House to sell (the seller needs to sell another home before buying a new one) Changing attitudes toward home-ownership and renting.
But there has been a small improvement witnessed this year.

CHINESE HOUSING SCENARIO

Residential property prices are in freefall in China. The countrys largest builders began discounting homes in Shanghai,

Beijing, and Shenzhen and has moved to outskirts. Even at the time of good sales construction industry was running out of demand the main reasons are strict government measures, prohibitions on second home Due to these reasons a campaign was conducted which provided mortgage of 30% and second home 60%. There were special taxes from second home onwards. ASIAN HOUSING SCENARIO Was considerably good till the date of recession then had a decline

phase. But compared with other Asian countries India and China did better. It came back strongly towards the end of fourth quarter in 2010. Even the luxury sector has been steady from the latter part of2010. But some major markets lost out mainly because of the policies of Hongkong, China and Singapore.

Change in the Construction Sector over the Years

The fundamental elements needed for the construction Industry: Working Capital necessary for Bonding Purposes: Equipment Needs Cases when IRC Section 531 were relaxed: Ready Paving and Construction Co. Thompson Engineering Co Peterson Bros. Steel Erection Co.

ALTERNATIVE MINIMUM TAX -Loan for New Construction1. Homebuilders: IRC Section 56(a) applies to long-term contracts except for home construction contracts 2. Small Corporations: Exempt from AMT for tax years beginning after 1998. Small corporations are C corporations with average annual gross receipts of $5,000,000 remain exempt in subsequent years until their average annual gross receipts exceed $7,500,000.

EMPLOYMENT TAX

FINANCIAL ASSISTANCE
First time home buyer loan
Housing Loans

RECENT HOUSING TRENDS HUDCO-Entered into the retail housing finance with the launch -Hudco Niwas Scheme

HOUSING FINANCE
HDFC HUDCO

ANZ Grind Bank, Standard Chartered and Citibank

BUILDERS LOANS

PROBLEMS RELATED TO LAND ACQUISITION

The biggest hurdle in the growth of Indian construction

industry story is land because it is a scarce resource. Increased economic growth has increased the alternative uses of land such as for industries, infrastructure projects. In India the issue of land acquisition has become politically sensitive. The dislocation of farmers from their lands has led to agitations and in some cases violence also.

 By bringing in development we are disturbing ecological

balance of tribal areas. Plus the farmers dislocated from their land often dont get adequate compensation. But this has a downside to it the if state government asks sellers to give higher compensation to farmers investors can move to another state. Another important problem is the rehabilitation and skill development of the dislocated farmers.

 The land acquisition bill was enacted in 1894.

There have been many attempts to amend the land

acquisition (amendment)Act 2007 but all were unsuccessful due to political controversies.

RECENT NOIDA EXTENSION LAND ISSUE

The recent Noida extension land issue affected many

infrastructure projects. More than 15 villages were affected by the Noida extension dispute like Shahberi village, Bisrakh, Yusufpur etc. Renowned real estate builders like Jaypee, Supertech were alloted 4 lakh sq. mtrs. of land by GNIDA at very low prices. Farmers decided to protest against the govt. and moved to court.

 As a result their compensation was increased.

Many flat owners withdrew the booking amounts, and various

other investors even cancelled their bookings. The dispute badly affected the investors interests in the area. To see that in future this problem does not occur in future govt. should provide adequate compensation to the farmers. Skill development and training should also be provided to the farmers.

Budget 2012-2013
Housing sector contributes about 5% of total GDP. With institutional credit for housing investment growing at a compounded annual growth rate of about 18-20 per cent per annum, contribution to GDP is likely to increase to 6 per cent. For every rupee that is invested in housing and construction, Rs 0.78 gets added to the GDP. Permission for external commercial borrowings (ECBs) for low cost affordable housing projects. (Players in this industry are not used to taking the ECB route for affordable housing projects.)

Nothing done to give incentives to home buyers to encourage them to purchase property so as to clear up the housing stock that has piled up.

Investment in infrastructure to go upto Rs. 50 lakh crore, more than half of this expected from the private sector.( Delhi metro expansion bags 1112.57 crore of a total of 3164.57 crore and remaining to be pumped into construction of metros across the country (Kolkata, Kochi, Chennai, Mumbai and Jaipur). More sectors added as eligible sectors for Viability Gap Funding under the scheme Support to PPP in infrastructure Target of covering a length of 8,800 kilometre under NHDP next year.

Tax free bonds worth Rs. 60,000 crore to be allowed for financing infrastructure projects.

Conclusion
Cut-throat competition- In India there are very few construction projects in the pipeline and there are many companies bidding for a single project so the competition is immense. Corruption-The recent land, housing(Aadarsh housing scam), telecom scams etc. has reduced the confidence of companies that wanted to invest in India. Environmental clearances & sustainability- There are many environmental checks that a company has to undergo before starting a project this involves getting clearance from Ministry of Environment and Forests as well as separate clearances from individual state ministries, too much time as well as resources are consumed waiting for getting all environment clearances. Land acquisition problems- Singur, Nandigram and the recent Noida case show the current problems that are linked with land acquisition. Time-The time that is required for project completion in India is long as compared to other countries because there are issues related to land acquisition and environmental clearances

Recommendations
Review of present procedures of procurement of projects & services including dispute resolution mechanisms, and quality issues and evolve measures for improvement The Contract Conditions being used by various Project Authorities in the Country, whether in Public or Private Sector, should be harmonized.

A National Plan for training and certification of Construction personnel at all levels should be developed and implemented.
Systems & Institutions should be developed for expansion of network for project export and attracting more foreign investment. Interactions with Indian Missions abroad , should be intensified, through evolution of an Institutional mechanism. A mechanism for registration of professional engineers need to be established for which a nodal agency need to be identified. Intake in academic institutions be regulated to mitigate declining trend in the availability of civil engineers.

Institutional Arrangements be made to identify, prevent and mitigate the effects of Natural Disasters.

References
http://www.seminarprojects.com/Thread-indian-constructionindustry#ixzz1maAcYk9Q http://www.constructionupdate.com CII Website Livemint.com FICCI http://mhupa.gov.in/