Metro Rail Projects To Provide Rs 80,000 Crore Business Opportunity For Construction Firms In Next Five Years

Given the strong order pipeline, the construction entities in the metro rail segment have a business potential of Rs 80,000 crore in the next five years.

“Currently, metro rail projects of about 1,400 km worth Rs 2,00,000 crore are under approval/proposal stage. Based on the projects currently under approval/proposal stage, it will translate into around Rs 80,000 crore business opportunity for the civil construction industry,” ICRA said.

Also, ICRA, in its research report, expected competitive intensity to remain moderate, with incumbents likely to be the key beneficiaries of this business potential.

“Unlike the road segment, which has witnessed steep competition in recent times with most of the bids in EPC segment at discount, the metro rail segment has continued to witness relatively better pricing/bidding discipline amongst participants. Almost 58 per cent of the metro rail projects in the last 15 months were awarded at premium over the base price, with 14 per cent of projects awarded at a premium of over 20 per cent,” ICRA noted.

It added that a sizable number of metro rail projects are funded by multilateral agencies, which has helped ease the financing burden on the government and speedy expansion of the project.

India currently operates a metro network of around 746 km in 15 cities. ICRA estimates it to increase to almost 1,900 km in the next five years.

At present, around 991 km of the metro rail project is under construction or approval stage, and about 1,040 km is in the proposal stage.