Infrastructure Sector – One of the Biggest Job Market in Post-COVID era

                By: | September 24th, 2020

Author: Suneel Wasan, Executive Director – HR, Egis India

As the world scouts for a new manufacturing destination, after China started losing its popularity during the COVID era as the manufacturing hub of the world, India presents itself as an alternate destination to fill the global manufacturing gap. This situation augurs well with the decision of the Government of India to make India self-reliant with the Make in India Initiative adding further need in the creation of good infrastructure in all sectors – roads, aviation, power, water, port, urban infrastructure, etc.

As per IBEF (1), the manufacturing sector in India is expected to reach US$ 1 trillion by 2025 and will contribute about 25% to its GDP. It is estimated that under the Make in India initiative, indigenous manufacturing is expected to increase by 12-14% per annum over the medium term. As per the World Bank, manufacturing contributed about 16% to the country’s GDP in 2016 which is on the higher side when compared with the global average of about 15% in 2015.

So how this will impact the infrastructure sector and job market?

With the make in India initiative, the infrastructure sector has become the biggest focus area for the Government of India. India plans to spend US$ 1.4 trillion on infrastructure during 2019-23 and estimated the investment of INR 5,000,000 crore (US$ 750 billion) for railways infrastructure alone between 2018-2030.

Today, India’s aviation market is experiencing the fastest expansion in the world – an enviable position to be in. According to the Centre for Aviation’s (CAPA) latest outlook on India (dated 2018), current airport capacity stands at 317 million passengers, but traffic could be close to 300 million. It gives a warning signals that the country could exceed its maximum structural capacity by 2022, or if growth continues at a faster rate than 10% (which is highly likely), capacity thresholds may be breached even earlier. The government is well aware of this dire situation. CAPA’s estimation is that India will require between $36bn and $45bn worth of investment in around 55 airports by 2030, to create an additional handling capacity of 500-600 million-passenger capacity.

In April 2020, the government announced plans to build 100 more airports for one billion flyers by 2035, at an estimated cost of $60bn. But how realistic is this plan, and can the industry respond fast enough to meet rising demand? 

This report was published long before the COVID-19 era and before India is envisaged to be a destination of choice for manufacturing giants in India. As investments pour in and India starts getting more visitors from intra and inter nations, this number of 100 more airports also may seem insufficient. There is a high probability that the government might add more numbers to this. Therefore, this presents a huge opportunity for the infrastructure sector in the aviation sector and this would open up a lot of new jobs that never existed earlier.

The COVID era has seen a rise in e-commerce. Consumers are now preferring to shop online from their homes. The penetration of mobile internet in the rural areas of India have been so far an untapped area. According to IBEF data, propelled by rising smartphone penetration, the launch of 4G network, and increasing consumer wealth, the Indian E-commerce market is fast-growing and expected to reach US$ 200 billion by 2026 from US$ 38.5 billion in 2017. As per estimates, Online retail sales in India are expected to grow by approximately 31 percent led by Flipkart, Amazon India, and Paytm Mall.

Smartphone shipments in India are increasing at a rate of about eight percent year on year and it is expected to reach 152.5 million units in 2019, thereby making it the fastest among the top 20 smartphone markets in the world. Internet penetration in India grew from just 4 percent in 2007 to 52.08 percent in 2019, registering a CAGR of 24 percent between 2007 and 2019. The number of internet users in India is expected to increase from 687.62 million as of September 2019 to 829 million by 2021. This huge surge in demand for e-commerce has opened up immense potential for warehouses and other logistics-related infrastructure which will be hugely beneficial to opening up job potential for millions of people in the country. 

The highways and goods carriage infrastructure also need to be revamped and the following actions of the government suggest that there is huge growth potential in this sector as well:

  • In April 2020, the Government set a target of constructing roads worth INR 15 lakh crore (US$ 212.80 billion) over the next two years.
  • The Ministry of Road Transport & Highways is expected to award road projects with a total length of around 4,500 km worth INR 50,000 crore (US$ 7.15 billion) in 2020.

· To widen and revamp 1.25-lakh km of roads, the Government of India has approved the launch of Phase-III of its rural road programme Pradhan Mantri Gram Sadak Yojana (PMGSY). PMGSY-III is envisaged to upgrade 1,25,000 km of road length over the next five years at an estimated cost of INR 80,250 crore (US$11.48 billion).

Ports and inland waterways remain the priority of the government. The government has announced that the Jal Vikas Marg on the 1,620 km Haldia-Allahabad stretch of river Ganga would be completed. Further, the 890 km Dhubri-Sadiya connectivity was proposed to be done by 2022. The plans are being prepared to energize economic activity along river banks.

Development of Railways is also a priority of the government and the network strengthening, connectivity, and modernization of Indian Railways with the PPP model remains the focus of the Indian Government. 

The ongoing COVID pandemic has shown the world that we are inadequately armed to handle pandemics of this scale. To mitigate the risks posed by similar pandemics in the future, the Government of India has decided to increase its spend on healthcare infrastructure from 1.6 percent of GDP to 2.6 percent of GDP. This translates into a very large amount of investment potential in this sector which will open a lot of opportunities for professionals in infrastructure and allied industries.

Improving the country’s infrastructure in all areas of key importance for the country in making the Make in India initiative successful will remain key. This will lead to better connectivity, which will, in turn, lead to the creation of more jobs as resolving infrastructure-related constraints will enable companies to save a significant % of the total input costs and when the potential costs saved is invested back into the business, in terms of investment in capital, the country can expect an increase in the number of opportunities and jobs being created in the industry.

About the Author

Suneel Wasan

Suneel Wasan is the Executive Director of Human Resources at Egis India. With an extensive experience of over 38 years in both public & private sector enterprises, Mr. Wasan has been instrumental in the development of young professionals through affiliation/ getting accreditation from renowned foreign institutions.