Construction Council Calls For Consortium Approach

Construction exports from India face a grim future in the international markets unless corporates here opt to form a consortium while bidding large-sized projects.

The scope for pure contracting is no longer a lucrative international business and has given way to turnkey operations of large sized projects. This requires a large scale deployment of funds and a consortium approach,S K Mehta, executive director of Overseas Construction Council of India (OCCI), said.

With the development of regional local contractors, Indian export construction business has suffered. The consortium, including bankers, promoters and construction companies, would help india to compete effectively in global construction market.

There is an urgent need for changing the mindset of Indian corporates to cooperatively work and with understanding, Mehta said.

A consortium would enable the Indian corporates to work on low margins and high volumes even while upgrading technology and automating the process. This is what global markets demand today, Mehta added.

Between 1975 and 1980, Indian contractors undertook projects aggregating Rs 5,000 crore. An astounding $1.5 billion were repatriated by Indian contractors from overseas civil engineering and construction contracts.

The situation steadily deteriorated thereafter. The average value of projects secured after 1991 was only Rs 200 crore during the early 1990s.

Unfortunately, Indian companies participation internationally is restricted due to the small-sized operations.

Besides, I ndia is a donee country and not a donor to participate with funds. This severely restricts project exports in the modern world, Mehta said.

In addition, the domestic construction market itself provides ample opportunities. For instance, the four-laning of highways connecting the four metros would give a chance to corporates for bidding rs 50,000 crore worth projects.

The indian insurance companies are not strong enough to cover the risks involved in working abroad, he lamented.

However, some of the large indian companies like afcon pauling, l and t, are trying to attain interatnational stature and are bidding in specialist fields of construction such as roads, big expressways and rail road projects.

Large construction companies, concentrating both in west asia and south east asia are witnessing a steady growth in securing construction and consultancy projects. The last three years of acheivements have been of the order of rs 260, rs 312 and rs 338 crore respectively, giving a marginal annual increase of approximately ten per cent. Till december 1997, the value of the project exports has reached rs 358 crore, according to occi estimates.\ this growth has been despite the low margins of five to six per cent and high risks involved in working abroad. Moreover, we are geographically far from the project sites.

For example, a south african consortium bid for a project in africa would be cheaper than ours, mr mehta said.

The occi, with a membership of 67 companies and 24 building materials exporters, acts as a focal point for channelisation of information and to identify indian companies capable of executing projects in overseas markets and to promote export of building materials.

With adequacy of building materials in the domestic market, thre is a considerable scope for its exports, mr mehta said and added that the council has identified stones and tiles, granite, marble, paints, hardware and allied products, sanitaryware, wood and allied products, electrical fittings.