In India, the profession of architecture is regulated by the Architects Act, 1972. This Act vests the power on the Council of Architecture to regulate the architectural profession and register eligible persons as architects. Under the Architects Act, foreign architects are allowed to practice in India if they are registered with the Council of Architecture. At present, there is no similar Act regulating the profession of engineers.
Indian construction and engineering companies specialize in specific industries and none of the companies are currently in a position to undertake all types of engineering and related work. For example, Gammon, Ansals, AFCONS, HCC specializes in civil engineering work, RITES in rail transport, EPI and MECON in material handling and metallurgy and TCE and WAPCOS in water, power and irrigation projects. Globally, there is an increasing trend towards turnkey projects whereby a single company or a consortium provides a range of services including design engineering, construction, maintenance, management, and financing. Only a few large Indian firms can provide such a broad range of technical, management and financial services.
A majority of Indian construction and engineering companies cater primarily to the domestic market (more than 60 percent of the companies earn more than 90 percent of their income from the domestic business) and there are no specialized export companies as in the case of merchandised trade.
With the liberalization of the economy in the 1990s, various steps have been undertaken by the government to make construction, architectural and engineering services globally competitive. Some of the reforms which have a direct impact on these services include simplified procedures for foreign investments, automatic approval of foreign equity participation up to 74 per cent in key infrastructure industries, such as construction of roads, bridges, rail beds, ports and harbours; duty concessions on imports of raw materials and equipment and availability of ECB (External Commercial Borrowing) for the infrastructure projects. Other developments that have helped the growth of these services are the development of insurance products to mitigate construction risks, grading of construction agencies, the establishment of Construction Equipment Banks, etc.
With liberalization, there has been an increase in privatization and foreign direct investments in infrastructure construction projects. Most of these foreign investments and joint ventures are in the form of BOO (build-operate-own) and BOT (build-operate-transfer) projects.
The Indian economy is expected to grow at a rate of about 7 percent in the next 10-15 years. It has been estimated that an investment of around US$429 billion ( 15,000 billion) is required in infrastructural projects to support this growth rate. Development of infrastructure would, in turn, require significant investments in construction and related activities. The amount of actual investment in these areas would depend on the willingness of private and foreign investors to invest in these services. The government, on its part, needs to support the infrastructural development program by providing appropriate help and guidelines, by making the procedures fully transparent and by encouraging competition.
India’s Trade in Construction and Consultancy Services: India is a marginal player in the global trade of construction, architectural and engineering services and currently its share in the total world trade (of US$120 billion) is less than one percent.
India’s export of construction and related services include export of skilled services for project management, consultancy, design, engineering, and maintenance services as well as unskilled ana semi-skilled labour services for construction and repair activities. In the 1970s and 1980s civi work-oriented projects, such as road construction, building etc. dominated India s exports. Since late 1980s the trend has shifted away from construction towards consultancy and turnkey projects The rising importance of consultancy contracts has, in turn, created opportunities for ancillary construction services including supply of equipment, maintenance, and other engineering services Since construction primarily involves the supply of unskilled and semi-skilled labour while turnkevi consultancy exports entail the supply of skilled labour, professionals, equipment and design etc: there has been an upward movement on the technology ladder of Indian construction, architectural and engineering services exports.
The majority of Indian export in construction and related services is through commercial presence and movement of natural persons. India’s imports in this sector is also through these two modes whereby foreign companies and consortia are granted construction and consultancy contracts and this is associated with some inflow of skilled persons who supervise and manage the projects.
Globally, large construction and infrastructure projects are generally awarded by government and public sector undertakings. Hence, inter-governmental and bilateral relations play an important role in determining the volume and direction of India’s exports. In the 1950s, construction architectural and engineering firms catered to the industrial and infrastructural development in India. They started exporting their services in the early 1960s when a non-aligned foreign policy and emphasis on Third World solidarity encouraged many Afro-Asian countries to approach India for technical inputs into their state-sponsored development programmes. With the oil price boom in the 1970s Indian construction, architectural and engineering firms ventured into the markets of Middle East and Gulf countries. In the late 1980s, Indian companies started operating in East Asia and South Asian countries.
Although the Gulf countries continue to remain as important market for Indian exports of construction services, there is considerable scope for expanding exports in the SAARC region, to countries in South East Asia and to former Soviet Union. The important markets for Indian exports of architectural services include the USA, UK, Germany, African countries, Middle East, Singapore, Australia, New Zealand and the SAARC countries and the major export markets for Indian engineering services are the USA, UK, Canada, South and East Asian countries and African countries. The projected market size for consultancy services in South East Asia for the year 2002 is presented in Table A4 in Appendix A. India’s future trade in construction and related services depends to a large extend on the capabilities of Indian companies to export these services through commercial presence or movement of professionals and skilled/semi-skilled/unskilled labour. Commercial presence depends to a large Butond on the ability of the companies to develop financial strength and raise their professional and technological standards to compete with foreign companies from countries, such as the USA, UK, Australia, Japan and Korea. Indian companies can also explore the possibilities of joint ventures
the foreign construction and engineering companies whereby Indian consultants can provide the detailed engineering and development of requisite software while the foreign company can provide the conceptual design and process know-how.
Given India’s competence in information technology, there are excellent prospects for exporting in blueprint and consultancy services through internet to developed countries, such as the USA,
TIK and Australia. Export to these countries can include new activities, such as feasibility
Techno-economic viability studies, geotechnical, structural design and architectural design services etc. which can be delivered electronically.
India has comparative advantage in the export oflow-costskilled/semi-skilled/unskilled labours and competent and low-cost professionals with good command of English. However, the extent to which India can export these services depends on external factors, such as the entry restrictions and immigration policies in the current and potential markets, and domestic factors, such as upgradation of skills and technology pertaining to construction and engineering services and strengthening of the financial base of the companies.
Given India’s considerable infrastructural needs, there is significant scope for expanding imports of construction and related services. Foreign collaborations in turnkey projects will facilitate the transfer of technology, ease financial constraints and expedite industrial and infrastructural development. Many infrastructural projects have already been opened up for privatization and foreign investment.
Thus, overall, there is substantial scope for increasing trade (both exports and imports) in construction and related services resulting in productivity and efficiency gains for the sector and the economy as a whole.
Q.8. Write a detailed note on trends in India’s foreign trade.
Or Discuss about the recent trends in India’s foreign trade. (2015)
Or What are the recent trends in India’s Foreign Trade?
Ans. India’s Trade Performance: India’s total merchandise trade as a percentage of GDP increased from 29.5 percent in 2004-05 to 44.1 percent in 2014-15. India’s export sector has exhibited remarkable resilience and dynamism in recent years. Despite the recent setback faced by India’s export sector due to the global slowdown. As per the rankings for the year 2015 by WTO India was the 18th largest exporter and the 12th largest importer of merchandise trade in the world. In commercial services, India is the 6th largest exporter with a share of 3.3 percent and 7th largest importer with a share of 2.9 percent.