India is a country that has undergone enormous socioeconomic growth over the past 15 to 20 years. The change began in earnest in 1991 when the country started to open its markets to the outside world and implement far-reaching economic reform. The economy has posted an average growth rate of more than 7% in the decade since 1997. GDP grew by 8.5% in 2006 and 2007.

The resulting increase in per-capita income has led to the emergence of a large middle-class that is now a major driver in the Indian economy. The emergence of the middle class has provided the necessary impetus to the growth of the residential construction market. Research carried out by Feedback Consulting, on behalf of Living Steel, has found that there is great scope for the increased use of steel in residential construction in India.

Demographics

With over 1.1 billion people, India is the second most populous country in the world. The population is growing at a rate of 2.1% per annum. In 2007, 28% of people lived in urban areas but this is expected to rise to 40% by 2020.

More than 5 million dwellings are built in India each year. The 2001 census of India found that average household size was 5.3. As the middle class grows and urbanisation increases, this figure is expected to drop to between 3.7 and 4.7 persons per household. This will create demand for an additional 5.4 to 5.7 million new housing units a year indicating that there is remarkable potential in this segment of the market for steel.

New initiatives

To address the need for housing, India's federal and state governments are cooperating on a new effort to build six million houses for the rural poor. Up to 1.5 million houses will be constructed every year between 2005 and 2009.

As part of this project, the Institute for Steel Development and Growth (INSDAG) has developed a number of innovative and cost-effective steel designs for typical village buildings. A number of model villages will be constructed that demonstrate the potential of steel to help solve India's housing shortage.