CHARGING AHEAD: CE OUTLOOK 2023

Indian Construction Equipment market is capitalizing on rapid development of infrastructure and construction sector in the country. Equipment Times explores the market outlook, past performance, future strategies, emission norms, new areas for expansion and proposed new launches, challenges and suggestions to further ease a business-friendly climate in the Construction Equipment sector.

Growing public & private infrastructure, FDI reforms for construction sector, highway projects and growing economy has led to the overall surge in demand for construction equipment in India. In addition, ambitious government projects such as Smart city, Golden Corridor, Housing for all, restructuring and expansion of railways, etc. are further fueling the growth of India construction equipment market.

India Construction Equipment Market size is projected to grow at CAGR of 23.3% during 2021-27. The growth can be attributed to rising investment in the growing public & private infrastructure, FDI reforms for construction sector, highway projects and growing economy has led to the overall surge of construction equipment market in India. In addition, government ambitious projects such as Smart city, Golden Corridor, Housing for all, restructuring and expansion of railways, etc. would bolster the growth of the construction equipment.

Earth moving equipment segment acquired a volume share of 85% in the overall construction equipment market in 2020, owing to increasing number of public private partnerships and government initiatives such as smart city development projects. The market is witnessing a growing trend of adopting multifunctional equipment to cater to a wide range of applications on construction and mining sites.

Construction sector occupied more than 60% of revenue share in the country in 2020 owing to the high use of construction equipment in various applications such as such as retail, government & transportation, commercial offices, industrial & manufacturing, railways and residential. Atal Mission for Rejuvenation and Urban Transformation (AMRUT) Project, Housing for all scheme under Pradhan Mantri Awas Yojana, development of new airports etc. are further resulting into increase in the demand for construction equipment.

Market overview…

Construction equipment or types of machinery are used for heavy operations tasks such as material handling, excavation, lifting, and other heavy operations. Commercial, residential and industrial sectors as well as increased public-private partnerships and global economic growth, are driving the construction equipment market and the equipment provided by India influences the market globally. There are many different types of construction equipment in the market; selecting the appropriate construction equipment is critical. For the construction equipment, companies consider factors such as the material, quality, project’s complexity, and safety which are provided by India. Construction equipment for building construction and construction machinery used in construction projects. CE refers to heavy-duty vehicles specially designed for executing construction tasks, most frequently involving earthwork operations. Proper use of appropriate equipment contributes to the Economy, Quality, Safety, Speed, and Timely completion of the Project. CE is an integral part of any construction process.

Adoption of Products influenced by market opportunities…

Globally Adoption of Products Influenced the Market Opportunities – Various Economies are trusting Indian Construction Equipment and importing lots of equipment and implementing their various activities for development and these factors support the market in India and provide growth opportunities to the market. The U.S. government has made significant investments in the construction of roads, railway tracks, airports, and other infrastructure, which necessitates the employment of excavators, loaders, and other heavy equipment. For instance, in March 2021, the U.S. President introduced a $2.2 trillion infrastructure plan, which includes transportation, broadband, electric grid, and residential & commercial constructions and majorly importing required equipment from Indian CE.

With a solid push from the government’s ambitious infrastructure development plans like National Bank for Financing Infrastructure and Development, National Monetization Pipeline, and Gatishakti, India will rise to [be] a key player, the second-largest in the CE sector by 2030. Rising construction spending across the globe is expected to be one of the long-term factors driving sales in the market over the forecast period. Over the past few years, construction spending in the United States has grown significantly. As a result of the booming infrastructure projects worldwide and the use of heavy-duty excavators for building dams and highways, the earthmoving machinery segment dominated the market. 

Trends… 

The major demand for Indian construction equipment is expected to be driven by the infrastructure sector, in conjunction with a variety of advanced construction equipment in rental fleets. The growing populations of Asia Pacific countries, including China, India, and South Asia, are driving the need for improved infrastructure including homes, schools, hospitals, stadiums, and government buildings.

Industry give thumbs up….

One of the reasons for the growth is anticipated to be the rise in focus on ‘public-private partnerships’ (PPP). These partnerships are characterized as a joint venture between government and private sector companies for construction of public infrastructure systems. In this type of partnership, a private company handles a project and lends technical & operational expertise to government projects.

Dimitrov Krishnan, President, Indian Construction Equipment Manufacturers Association (ICEMA), said, “The Indian CE industry has witnessed a steady growth in last couple of years despite economic volatility observed due to the Covid-19 pandemic in this period. However, with the Government’s renewed focus on infrastructure development, the demand outlook for the construction equipment industry remains robust with several Government schemes and projects including the expansion of national highway network to 2 lakh km by 2025 already underway. In addition to this, the proposed river linking projects, last mile delivery of drinking water under Nal Se Jal scheme, Pradhan Mantri Awas Vikas Yojna, the railway network expansion and modernization, airports upgradation, mining and quarrying amongst others will create opportunities for all five segments of construction equipment industry to grow over the next 5 years. The outlook for the CE industry therefore remains positive.”

Deepak Shetty, Chief Executive Officer and Managing Director, JCB India, said, “India is going to be a growth driver for the world in the coming decades, and much of this growth will come from infrastructure development in the country. There are projects of significant National importance that are gaining encouraging momentum across the country. Large-scale Infrastructure development requires larger and more productive machines. There has been a direct correlation between infrastructure development and equipment sales in the past. This year we witnessed a slow beginning in terms of equipment sales. This was due to a few reasons: the Russia-Ukraine conflict disrupted supply chains, and a steep increase in commodity prices led to lower demand in the year’s first quarter. However, with the government’s increased focus on the infrastructure sector, the cooling off of commodity and fuel prices, and the resumption of supply chains, we are seeing a steady rise in sales for construction equipment”.

V.G. Sakthikumar, Managing Director, Schwing Stetter India, said, “While the buzz word of Industry 4.0 is trending everywhere in the manufacturing industry, people have already started to think about Industry 5.0 where man and machine are collaborated to the work task. In the construction equipment manufacturing industry, the communication, the data flow, real time metrices between the shop floor and the management dashboard have become absolute real time. Any call related to the shop floor activity starting from raw material requirement to the finished good declaration in an ERP are integrated to the kiosk being accessed by the worker at the shop floor. In Schwing Stetter’s Global manufacturing hub, we have currently installed Andon set up inside the production shop floor. The impact of Smart tech Integration is that tablets & kiosks have replaced paper documentation at the shop floor for real time status and traceability. The data flow in the manufacturing process has taken to expressway with the digital format; they enable the manufacturer to deliver the goods and keep the customer track and get update on their delivery schedule.”

E. Moses, Vice President, Division & National Head, Kobelco Construction Equipment India, said, “The Indian CE industry has experienced irregular demand patterns over the years with few years of good growth followed by a drop and then a recovery of sorts. This kind of pattern has been observed over a period of many years making it quite challenging for manufacturers to plan their investments and business targets. This kind of pattern was further complicated by Covid-19 pandemic in Year 2020 and 2021. But, pandemic’s impact was neutralised in Q4’2021 and Q1’2022 with the excavator industry bouncing back aided by ongoing infra and mining activities.”

Amarnath Ramachandran, Managing Director, Arx Mining and Construction Equipment, said, “The outlook for the Indian Construction and Mining equipment industry looks very promising. The Macro indicators are very good as there is no drop in the pace at which projects are being announced. If the Government keeps up the spending pattern things will go well. While we do face obstacles like rising prices due to supply chain disruptions in Western Europe as a result of the war in Ukraine and also the continued pressure on availability of semiconductors, order books are still good”.

Jaideep Shekhar, Managing Director, Asia & EMEAR, Terex, said, “Off-Highway Research forecasts that the market for construction equipment will follow an upward trend in the long term. The Government’s emphasis on infrastructure development, remains with increased budget outlays. For instance, Rs 111 trillion NIP outlines the country’s infrastructure development strategy through 2025 with projects planned across all sectors. The road sector is the most important driver of construction equipment demand, followed by urban infrastructure, railways, and irrigation. Recent cabinet approval of the first river linking project (Ken-Betwa) will boost the equipment demand. Furthermore, two recent government initiatives, the National Monetisation Pipeline (NMP) and GatiShakti, will aid in project financing, integrated planning, coordination, and faster project execution.”

Rajiv Chaturvedi, Vice President – Sales and Marketing, After Service and Parts, Hyundai Construction Equipment India, says, “Overall infrastructure capex is expected to grow at an 11.4% CAGR between FY21 and FY26, driven by spending on water supply, transportation, and urban infrastructure. In the next five years, India plans to invest US $ 1.4 trillion in infrastructure through the “National Infrastructure Pipeline.” Over the next ten years, hundreds of new cities will need to be built, and the demand for urban freight is expected to rise by 140%.

Safar Mohammad Khan, General Manager – Sales and Marketing (Hdd), Apollo Techno Industries, said, “According to the recent research reports, India Construction Equipment including the horizontal direction drilling rigs Market size is projected to grow at CAGR of 22.3% during 2023-28. The growth can be attributed to rising investment in the growing public & private infrastructure, FDI reforms for construction sector, highway projects and growing economy has led to the overall surge of construction equipment market in India. In addition, government ambitious projects such as Smart city, CGD, Power cable distribution, Golden Corridor, Housing for all, restructuring and expansion of railways, etc. would bolster the growth of the construction equipment during the forecast period.”

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