Hyderabad: Call to remove top barriers to construction sector growth

Hyderabad: The Institution of Engineers (India) IEI, Telangana centre, organised R L Raju Sixth Endowment Lecture on 'Effective Resolution on Construction Disputes' by Dr Sridhar Mothe, Head (Contracts and Claims Building Division), NCC Limited.

Mothe stated that the construction industry contributes to about 11 per cent of GDP sector wise. After the agriculture sector which has 16 per cent contribution to GDP, construction is rated second in terms of employment generation in the country.

With significant contribution to the national economy, the construction sector provides direct and indirect employment to around 3.5 crore population in India. In our country construction has accounted for around 40 per cent of development investment in the last 50 years. After economic reforms in 1990 post liberalisation, there has been a spurt in construction activity with all round development in Infrastructure across various sectors.

He also said that there were projects to be implemented in a major way for development of roads, highways, ports, airports, expressways, metro rail projects , industrial and dedicated freight corridors, rail networks, housing and urban infrastructure development in the next five years. With this the plan outlay in construction is estimated around Rs 8 lakh crore per annum. There are plans to develop 100 smart cities in the country which would boost the economic activity and construction sector.

After recovery from the Covid-19 pandemic, within the next three years, the value of the construction industry is expected to touch $730 billion by 2022 with massive investments in infrastructure growth. It is facing various challenges and facing problems with respect to project implementation schedules. Many of the projects are getting delayed resulting in time and cost overruns. Because of this, there are disputes pending in arbitration tribunals and courts.

As per a survey it is estimated that presently disputed amounts by way of unresolved claims in the construction sector amount to 1 lakh crore. This is alarming and deterrent to growth of the industry. He further said that the Govt. has initiated numerous measures for encouraging alternative dispute resolution (ADR) methods by way of amendments to the Arbitration and conciliation act in 2019.

Also formation of Arbitration Council of India (ACI) for accrediting the Arbitral Institutes for promotion of institutional arbitration is on anvil. To compete globally and to attract more foreign investments, it is imperative to make India a global hub for administering international arbitrations. Fair contract administration practices and speedy, cost effective dispute resolution approaches are the need of the hour for harmonious growth.