Navigating Complex Value Chains for Transformative Policy Action in the
Buildings and Construction Sector
In 2017, real
estate construction contributed nearly 6% to India’s GDP and the figure
is likely to climb to almost 13% by 2025. With more than 40% of the
population expected to live in urban India by 2030, the residential
sector is expected to demand almost 25 million additional mid-end and
affordable units (IRP, 2020). The sector is the second largest employer
in the country, which employs over 51 million people (Saigal, 2020). The
scale and growth trends of the sector indicate the need for strategies
and policies to be framed to ensure that this growth occurs sustainably
and avoids the lock-in of carbon-intensive building materials and
technologies in the process.
In India, like many other developing
countries, the building and construction sector operates in two
dichotomies. The first is large-scale, high-value infrastructure
development, wherein steel and glass high-rise towers and fancy
apartment buildings are designed and built by large developers and
institutions with support from an army of architects, engineers, and
consultants. And, the other is mostly individual-owned housing units and
small constructions driven by local contractors and masons and built
without much technical assistance (Wells, 2007). Although the latter are
mostly small in size, they represent a large proportion of
construction-related activity, especially in small cities and towns.
Construction practices in these two cases vary significantly – not only
concerning the choice of materials, typologies, and designs but also
with very distinct needs and solutions in terms of operational
parameters and the use of appliances and mechanical, engineering, and
plumbing systems. In this, academia and technical
agencies have an important role in developing trustworthy knowledge and
databases that can assist in driving data-based decision-making.
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Market fragmentation
with a concentration of large players at one end and heavily informal
players at the other
Source: Mordor Intelligence (2021)
From a governance perspective, a large dependence on informal labour in
the construction sector creates further challenges. Similar concerns
apply to the processes involving the extraction of mineral resources,
including river sand, stone for aggregates, soil and coal for brick
production, and so on, for construction activities. These activities are
found to be functioning ‘under the radar’, often with local political
support. Furthermore, a significant portion of the sector operates
outside the purview of the established norms and regulations with
respect to the terms and conditions of employment or supply chains for
certain types of building materials. This has led to the concerns around
the informality in the sector becoming significantly more challenging
but all the more essential to be addressed (Amutha, 2018).
The fragmentation of the sector’s value chain is evident in the combined
list of stakeholders and actors across different geographical and
typological categories. It is estimated that the construction industry
in India is directly or indirectly working across 250 sub-sectors with
their intricate linkages (Waghmare and Bhalerao, 2016). This intertwined
ecosystem of actors necessitates the adoption of novel approaches for
targeted policy design interventions to bring transformative change to
the sector.
The policy initiatives not only need to integrate the perspectives of
the various stakeholders and address their core needs but also actively
seek to enhance cooperation and collaboration among them. It is
important to strengthen information flows and knowledge sharing between
actors through improved communication in forms that users with varying
capacities can understand and adopt them. Sharing best practices and
information around innovative materials and technologies is essential to
build capacities in the sector. Free flow of such information through
credible sources can lead to higher levels of trust regarding the
‘sustainability’ of products and bring standardisation in taxonomies and
common industry parlance. Here, robust certification systems can play an
important and convergent role in aligning policymaking, including
regulations, incentives, codes, and standards, with market forces and
financial flows as well as knowledge systems. Certification systems,
however, must adhere to the highest quality standards in terms of
addressing various socio-environmental impacts of building design and
construction using a cradle-to-cradle approach.
It is clear that in a sector as vast, complex, and fragmented as the
buildings and construction sector, a deep understanding of the drivers
and barriers towards sustainability from a multi-stakeholder perspective
is critical. This can enable the adoption of strategic carrot-and-stick
mechanisms tailored to various ecosystem actors and positively influence
responsible choice-making towards the same.
References
Amutha, D. 2018. A study of trend and growth of employment in informal
sector and construction industry. Details available at
https://ssrn.com/abstract=3256181, last accessed on 9 October,
2022
IRP, 2020. Resource efficiency and climate change: Material efficiency
strategies for a low-carbon future. Hertwich, E., Lifset, R., Pauliuk,
S., Heeren, N. A report of the International Resource Panel. United
Nations Environment Programme, Nairobi, Kenya
Mordor Intelligence. 2021. India construction market - growth, trends,
Covid-19 impact, and forecasts (2022-2027). Details available at
https://www.mordorintelligence.com/industry-reports/india-construction-market,
last accessed on 9 October, 2022
Saigal, K. 2020. The Indian construction industry: A brief summary.
Details available at
https://www.investindia.gov.in/team-india-blogs/indian-construction-industry-brief-summary,
last accessed on 9 October, 2022
Waghmare, Y. M. and Bhalerao, N. 2016.An overview of stakeholder
management in construction industry. Details available at
http://www.ijstm.com/images/short_pdf/1469549210_1101ijstm.pdf,
last accessed on 9 October, 2022
Wells, J. 2007. Informality in the construction sector in developing
countries. Construction Management & Economics. 25(1): 87–93
Mohak Gupta
mgupta@devalt.org
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