Indian Infrastructure Analysis
In recent times, Indian infrastructure development is scaling greater height. In India, this industry is not only limited to construction roads, but also encompasses railways, water supply, airways, telecommunication, gas and many more. Reports show that in year 2012, Indian infrastructure market was a bit sluggish, marking a poor macroeconomic forces and political instability. The main areas of concern are land acquisition and clearance of environment. With a total share of 2 percent, in year 2011- 12, the construction industry has estimated 670,778 crore to the national GDP (Samuel, 2010).
Background of Industry
The Indian infrastructure industry is one of the earliest phases of investment that is being used by the industrialist and even the Indian government is paving a huge attention for the way to cater a greater private participation of people in this sector (Rud, 2012). Since ages, India is proved to be emerging markets in the world. Availability of skilled labor and technical manpower is the assets. The availability of such manpower in India is huge. Road Transport in India has been declared as the priority and has an access for favorable loans. In order to encourage infrastructural industry in road sector, the monopoly and restrictive trade act was passed by the government. All necessary requirement needed in the development of road sector were provided by this sector (Sharma and Sehgal, 2010).
Pestel Analysis of Indian Infrastructural Industry
PESTLE analysis stands for political, economic, social, technological, environmental, and legal analysis that aims to identify all the external factors that are in or against the favor. It is a process which is often depicted in a standard format and helps to understand all the external and market environment for a specific and relevant industry or sector.
- Political Analysis: From about last one and half years, Indian Infrastructural sectors is battling with very unpleasant orders, broken cash cycles high leverage debt. Support through grants, subsidy, cash funding, and tax support is always provided to the companies in this sector (PEST Analysis of Construction Industry, 2012).
- Economic Analysis: In last few years, India is reeling with a very low GDP growth .The main reason behind this growth is improper infrastructure. Due to an increase in the prices of cement, iron, etc the infrastructural industry is hugely infected. As the prices increased, the people stop working and wait for the time when the price will again fall. Further, with the impact foreign regime in India, there is always a change required in the sector, which lead to decline in the sector. In addition to this, the road structure in the country is very poor. Road connecting to the interior rural segment are undeveloped which leads to broken products at the end (Morris and Shejhar, 2002.).
- Social Analysis: In India, this sector has proved as one of the biggest sector providing employment opportunities to people. Labor class society is especially at the boom. By getting work on daily basis, they are able to fulfill their daily needs. In addition to this, by providing employment opportunities, the sector aims to improve living standard of lower class society.
- Technological Analysis: Technologies often keep on changing. Advancement in these technologies including computer advancement, technology transfer in India is rapidly used by the companies. Technology transfer and investment in infrastructure has become much more important as these directly serve as a path to become sustainable when compared to other countries. In construction, with the help of advanced technology, a blend of traditional touch is provided in India.
- Environmental Analysis: Well designed infrastructure always has a positive impact on the environment, which at the end leads to the development. However, in India, the degradation by various infrastructure industries has largely impacted the environment. Fossil fuel and road transportation is badly impacting the environment. In recent years heavy investments are done by the Indian government to stop this environmental degradation (Samanta and Ashok, 2005).
- Legal Analysis: One of the major issue the all private infrastructure payers faces in India has to compete with legal frameworks. There are number of laws implement by the state laws and some by local authorities. With respect to infrastructure, each state has their individual formulated legislations.
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Five Forces Model
Five force Model was developed by Michael E. Portal aims to identify and analyze five competitive forces that can shape any of the industry by determining the strength and weakness. Five forces identified for the Indian Infrastructural industry are as follow:
- Buyer Power: There are many buyers available in infrastructure industry. Some of the main buyers that exist in Indian infrastructure industry are government agencies and customers of private sector.
- Suppliers Power: The supplier power of Indian infrastructure is accessed to be moderate. Generally, there are two types of suppliers present in this industry.
- New Entrants: A strong growth has been witnessed in India over the last few years. There are many foreign companies that are joining hands with India.
- Threat of substitutes: In infrastructural industry availability of substitutes are negligible because this is a basic industry and is required for the development of other industries.
Competitors: The infrastructural industry in India is largely fragmented. Governments across the world are investing money to develop their own infrastructure plan.
In reference of the above conducted study, it can be concluded that in present time there are many challenges being faced by Indian infrastructural industry. This sector is finding very hard to raise its equity to run the business. Today, India is in requirement for quality infrastructural facilities.
Some Recommendations for Indian Infrastructural industry are as follows:
- Timely completion of projects: Strengthening the project through timely completion would help the industry to unlock the existing capacity which is unnecessarily leading to the high cost of the projects. In most of the cases, this delay is due to the poor planning implemented by the agencies or the infrastructures. So, it is vital to implement those plans and strategies that help in the timely completion of any project (Sreenivas, 2006).
- Improvement in supply of efficient road contractor: One of the most important areas that this sector needs to focus is on the supply of effective road contactors. In most of the rural area, the road is not properly constructed and this in turn causes huge loss to various importers and exporters.
- Thinking one step ahead: In order to have a sustainable development of this sector, it is vital for all to think one step ahead. A project without proper planning might involve high cost and time, which hiders the growth of the sector.
Book, Articles, and Journals
- Arasu, V.G., 2008. Globalization And Infrastructural Development In India. Atlantic Publishers & Dist.
- Chavez, A., Ramaswami, A., Nath, D., Guru, R. and Kumar, E., 2012. Implementing Trans-Boundary Infrastructure-Based Greenhouse Gas Accounting for Delhi, India. Journal of Industrial Ecology. 16. pp.814–828.
- Gupta, A.G., 2010. Monetary, Investment, and Trade Issues in India. Indian Growth and Development Review. 3(2). pp.209 – 213.
- Jethi, N.K. and Sethi, V., 2007. Infrastructure development in India: post-liberalisation initiatives and challenges. Journal of Infrastructure Development.
- Kamel, S., 2006. Electronic Business In Developing Countries: Opportunities And Challenges. Idea Group Inc.
- Miller, B.J., 2000. Principles of Public and Private Infrastructure Delivery. Springer.