The construction industry contributed about 8% of India’s gross domestic product (GDP) in fiscal 2019-20, generating revenue of ₹10.5 trillion, according to the National Account Statistics: Ministry of Statistics and Program Implementation, Government of India, 2019-20. A unit increase in expenditure in the construction sector has a multiplier effect with a capacity to generate income as high as five times. The government construction projects, such as new airports, smart cities, and other projects across key locations, are providing a boost to the rising Indian construction industry. Additionally, due to the high demand for office spaces in the country and the country’s success in its maiden REIT (Real Estate Investment Trust), there is a rise in investor activity in the commercial segment.
At the beginning of 2020, the construction sector was reeling with multiple challenges, including a lack of capital and credit avenues, insolvencies, and regulatory burden. The industry was later deeply affected by the COVID-19 pandemic across the globe, including in India. It has impacted the fast-growing construction market, which has been hit hard in the past two decades. The sector is facing several challenges, such as supply chain disruption, project slowdown due to a shortage of subcontractors and materials, and the termination of contracts to control expenses. Also, the change in work culture, such as work from home, relaxed lockdown, and social distancing, may hamper the growing commercial space and the construction industry as a whole.
Green Buildings are a step toward a Sustainable Environment
Green building involves using environmentally friendly and energy-efficient processes and technologies throughout the building’s lifecycle from designing, construction, operation, maintenance, renovation, and deconstruction. Green buildings may cost 15-20 % more than conventional buildings. However, the long-term benefits, such as low operating costs with potential health benefits for the occupiers, make it a viable option. The call for sustainability is due to rapid urbanization and the expansion of construction projects. The concept of green building involves the usage of green/environment-friendly materials, and the project should be designed to ensure higher energy efficiency and a lower impact on the environment. All stakeholders, including builders, architects, green consultants, and contractors, must collaborate to build an effective green building project. Green buildings help improve the environment’s ecology in numerous ways to reduce energy consumption by 20 to 30%, water usage by 30 to 50%, and significantly reduce waste generation through extensive recycling.
The concept of green building began in the late-1990s in India. In 2001, the IGBC (Indian Green Building Council) was formed as a part of CII (Confederation of Indian Industry) to build a sustainable environment by 2025. IGBC is also a founding member of the World Green Building Council, the nodal body of country councils from across the globe. Also, in early 2000, GRIHA (Green Rating for Integrated Habitat Assessment) was initiated, which is recognized as India’s green building rating system. It was developed by TERI (The Energy and Resources Institute) and MNRE (Ministry of New and Renewable Energy). Since then, the green building movement in India has gained tremendous impetus over the years. The growth of green buildings in India is driven by increasing awareness, environmental benefits, government support, subsidies, and supporting regulations.
The Indian government and respective authorities introduced various regulations and guidelines, but they are voluntary:
- LEED (Leadership in Energy and Environmental Design) India is a green building certification program certified by GBCI and developed in compliance with the USGBC (US Green Building Council). It is a voluntary certification on green projects, which are conceptualized, designed, constructed, and operated as per GBCI ratings. It has 27 ratings to cover all typologies, including residential, commercial, industrial, hospitality, healthcare, and others.
- GRIHA rating was adopted as the national rating system for green buildings by the Government of India in 2007. It consists of 34 criteria categorized across four sections.
- ECBC (Energy Conservation Building Code) was developed by the BEE (Bureau of Energy Efficiency) with its rating system for the buildings. Based on the energy-efficiency standards, EPI (Energy Performance Index) is set for a building and given clearance as an ECBC-compliant building.
- EDGE (Excellence in Design for Greater Efficiencies) certification is developed by IFC (International Finance Corporation), a member of World Bank Group, and CREDAI (The Confederation of Real Estate Developers’ Associations of India) to promote green building in India.
India is among the Top 5 Countries in Global Green Building Projects
India has emerged as one of the leading countries in terms of green building projects, though it is still in a nascent stage. As per 2019 USGBC, India ranks third after China and Canada on the number of green technology projects and built-up areas. By pursuing LEED certification for buildings and spaces, India is not only contributing to economic growth and development but actively raising the living standard for its residents by providing more resilient, healthier, and efficient buildings and communities. As of January 2020, India has 6,055 registered projects with a green footprint of about 7.61 billion sq. ft., including 1.4 million green homes covering 1.9 billion sq. ft. over 250 green factories, 1,800 green offices, 48 green townships, 12 green cities, and 24 green villages, according to IGBC. Growing at an exponential rate, the Indian green building market is expected to reach about 10 billion sq. ft. by 2022.
Maharashtra, with 375 certified green building projects, leads the list, followed by Karnataka, Haryana, and Tamil Nadu. Apart from private companies, many government buildings are in the lead to get green certification due to strong support from the government across states.
Growth Potential may reach 12.5% in next three years in Green Building Market
According to a recent survey conducted by NAREDCO (National Real Estate Development Council) and APREA (Asia Pacific Real Estate Association), India’s real estate market is poised to hit $1 trillion by 2030, making it the third-largest market worldwide. The intensifying threat of climate change has heightened the need for green buildings to benefit the environment, especially in high-end projects. As per the industry estimates, India’s green building market is projected to reach about $35 billion to $50 billion by 2022. The awareness about green buildings is on the rise, along with favorable policies. Most of the key players in the construction industry are focusing on green buildings; firms such as Raheja Corp, DHL Group, GMR Infrastructure, TATA Realty, Mahindra, Kalpataru Constructions, Larsen & Toubro Ltd, NCC Ltd, etc., have a presence in this sector.
The growth in the green building market is expected to bring enormous economic growth in the commercial and industrial sectors. As the market grows exponentially, there will be an increase in the number of professionals and also more demand from architects, technicians, energy experts, consultants, and others to have adequate knowledge of green buildings. IGBC and GRIHA have already started educating dedicated professionals. Currently, there are 1,185 LED Accredited Professionals in India.
The development of smart cities has created an emphasis on green building and related concepts. The IGBC Green Cities rating system, which is a voluntary and consensus-based program, was developed with the support of the IGBC Green Cities Committee. The IGBC Green Cities rating system is the first of its kind in India to address environmental sustainability in emerging cities. The rating system enables the development authorities and developers to apply green concepts and planning principles to reduce environmental impacts that are measurable and improve the overall quality of life. IGBC and MSCL (Mangaluru Smart City Limited) have signed an MoU to boost the green building initiatives in the city.
The Indian government is developing an initiative to target 200 million square meters of green-certified buildings by 2022. Countrywide, green building policies have existed for many years, but the rate of adoption has been slow due to the lack of a level playing field. There should be intensifying emphasis by the government and other nodal agencies to build a sustainable environment and reduce the carbon footprint.
Arushi Thakur Upadhyay,
Associate Director,
Industrial Practice,
Frost & Sullivan.
