Construction equipment will follow an upward trend in the long term.
Samir Bansal General Manager, Off-Highway Research What is Off-Highway Research’s outlook on the construction equipment (CE) sector? Off-Highway Research forecasts that the market for construction equipment will follow an upward trend in the
– Samir Bansal
General Manager, Off-Highway Research
What is Off-Highway Research’s outlook on the construction equipment (CE) sector?
Off-Highway Research forecasts that the market for construction equipment will follow an upward trend in the long term and predicts it to rise 11 per cent to 82,000 units in 2021. Assuming a third wave of the Covid-19 pandemic does not hit the country, sales should increase 15 per cent to 94,100 units in 2022 and a further 11 per cent to 104,650 units in 2023.
The economy is on a growth path. What will be the impact of this on the construction equipment segment, especially after a year of pandemic-induced industry crisis?
The pandemic resulted in increased government social spending and higher borrowings. However, its focus on infrastructure development remains with increased budget outlays. Economic growth leads to higher tax collections and reduces stress on government’s finances, thereby creating a conducive environment for infrastructure investments. Robust growth of stock markets also provides a boost to government’s disinvestment plans and asset monetisation.
What do you think are the demand drivers for construction equipment sector in India?
Rs 111 trillion NIP details the road map for infrastructure development in the country until 2025 with projects planned for all sectors. Foremost driver for construction equipment demand amongst them is the road sector followed by urban infrastructure, railways and irrigation. Recent cabinet approval of the first river linking project (Ken-Betwa) will boost the equipment demand. Additionally, two new recent government initiatives, National Monetisation Pipeline (NMP) and GatiShakti, will help in financing, integrated planning, coordination and faster project execution.
From the R&D point of view, what will be the trends in construction equipment technologies in the next couple of years?
Environment protection is in focus globally leading to development of more efficient machines complying with stricter emission norms along with shift from fossil fuels to alternate power and autonomous operation.
What are the challenges that you foresee for the CE segment and what are your suggestions to iron out these challenges?
Covid-19 is the biggest challenge for construction equipment growth and the fast-spreading Omicron variant may start the third wave. Success of disinvestment and asset monetisation plans of the government is another big challenge. In addition, high commodity prices and supply chain issues such as the global chip shortage can also negatively impact sales of new construction equipment.
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