Market Monitor - Construction India

Improved outlook due to a better business environment and large infrastructure projects.

The Indian construction sector has been facing challenging times in recent years due to slow reforms, weak investment cycles, subdued business confidence, and delays in land acquisition/clearance processes.
The outlook for 2016 has improved due to a better business environment and large infrastructure projects launched by the new government.
On-the-ground, recovery is expected to be a gradual process as the sector still deals with structural constraints.
Construction companies remain highly leveraged, and obtaining financial support for projects remains a challenge. However, banks have increased loans to the sector.
Payments in the construction sector take between 90-120 days on average.
We continue to maintain a cautious approach in underwriting this sector.
Besides financial information, we assess trading experience with buyers and monitor any changes in payment behaviour. We also assess the strength of the customer-buyer relationship.
We would generally not encourage customers to lengthen their normal terms of payment.

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