The construction equipment industry in India is embracing advanced technologies to enhance productivity and efficiency.

Dr. Sreyas Vidyasagar, Vice President and Global Head – Industrial Heavy Machinery Practice, Tata Technologies

Vikrant Tambolkar, Market Research Specialist, Tata Technologies

India’s construction equipment market has seen significant growth in recent years, fuelled by the nation’s rapid urbanization and infrastructure development. With the government’s focus on developing modern infrastructure, the demand for construction equipment has surged in recent years.

The construction equipment industry in India plays a crucial role in the country’s economic growth by helping GDP expansion, employment generation, and executing vital infrastructure projects. As pe the ICEMA (Indian Construction Equipment Manufactures’ Association), the industry saw significant fluctuations over the past two years – declining 8% in FY 2022 due to the pandemic’s global economic impact, then skyrocketing to its highest ever growth of 26% in FY 2023 as the economy rebounded. This recovery aligned with the government implementing massive infrastructure drives to spur growth. For the first time, industry sales surpassed 1 Lakh units.

Domestic sales played a crucial role in propelling the overall demand within the Indian construction equipment industry during the last fiscal year, posting an impressive 29% surge in sales volumes. This notable uptick in domestic sales highlights a growing domestic demand for construction equipment, possibly due to the infrastructure development projects and increasing construction activities within the country.

Key trends in the construction equipment market

Technological Advancements: The construction equipment industry in India is embracing advanced technologies to enhance productivity and efficiency. Companies are integrating smart technologies such as automation, telematics, and IoT to boost productivity and efficiency on construction sites. Automated equipment improves precision and safety. Telematics enables real-time data analytics to optimize asset usage and maintenance. IoT connectivity allows remote monitoring and data-driven decision making. Together these innovations are driving the sector toward more productivity, connectivity, and efficiency through digitization.

Shift towards Rental Services: Renting construction equipment has become an increasingly popular trend in India. Construction companies are opting for equipment rental services rather than buying, as it offers flexibility and cost-effectiveness. This trend has given rise to new avenues for equipment rental companies in the Indian market. Tower cranes are playing a major role in the growing trend of renting construction equipment for short-term projects. This shift aligns with the many construction projects happening now across housing, infrastructure, and other sectors. Renting equipment like cranes allows flexibility to ramp up and down efficiently.

Shift towards cleaner fuels: The shift towards electrification of construction equipment in India is gaining momentum, driven by government incentives, environmental concerns, and economic benefits. This trend is expected to have a significant and positive impact on both the construction industry and its supporting sectors in India. Additionally, the increasing focus on use of hydrogen-powered construction equipment is also emerging as a promising trend.

Government policies

In the 2023-24 budget, there is a 33% increase in the capital investment allocation for infrastructure, bringing it up to INR 10 lakh crore (USD 122 billion), equivalent to 3.3% of the GDP. The budget has allocated INR 75,000 crores for the development of 100 projects considered vital for improving multimodal logistics infrastructure.

The National Infrastructure Pipeline (NIP), introduced in 2019, focuses on a broad range of social and infrastructure projects, encompassing sectors such as energy, roads, railways, and urban development. The total value of these projects is estimated at INR 102 lakh crores. Infrastructure growth boosts demand and efficiency, giving rise to commercial opportunities. The government has also launched several other initiatives to promote infrastructure development, such as the National Highways Development Project (NHDP), the Pradhan Mantri Gram Sadak Yojana (PMGSY), Bharatmala Pariyojana, Pradhan Mantri Avas Yojana (PMAY), and several others.

Infrastructure growth and government programs are fuelling demand for the construction equipment such as excavators, backhoe loaders, dozers, cranes, etc. Manufactures and suppliers present in the construction equipment industry can benefit from the India’s increasing investment and infrastructure development.

Key segments

As per ICEMA, the construction equipment market is divided into five major segments, namely, earthmoving equipment, road construction equipment, concrete equipment, material handling equipment, and material processing equipment. The market is dominated by the earthmoving equipment segment which continues to have more than 70% of the total construction equipment sales. The material processing equipment segment grew at a growth rate of 338% between FY 2022 and FY 2023. The growth in sales volumes for the segment was primarily driven by an increase in sales of screeners, which touched 680 units during the year which is highest till date. In FY 2023, Road Construction Equipment saw a 3% decrease in sales. The decline can be attributed to fluctuating road construction progress, rising material costs, supply chain challenges, and funding shortages. Amongst all construction equipment, the backhoe loader stands out as the top-selling equipment, with approximately 42,000 units sold in the fiscal year 2023.

Recent News

• October 2023:JCB India, a prominent manufacturer of Earthmoving and Construction equipment, unveiled its Next Gen Excavator range at its advanced facility in Talegaon, Pune. This unveiling included the introduction of the company’s first Tracked Excavator
• September 2023:The Indian government is developing a Production Linked Incentive (PLI) scheme worth Rs. 12,000 crore to promote domestic manufacturing of heavy equipment used in the mining and construction sectors. This new initiative aims to attract investments, spur local production, and reduce dependence on imported components for this machinery. Currently in the consultation stage, the PLI scheme is targeted to be approved and implemented starting fiscal year 2025-26. The program signifies India’s efforts to boost local manufacturing and become self-reliant in construction and mining equipment.
• April 2023:At a recent event at its Pithampur facility, CASE Construction Equipment showcased its locally manufactured product range, recognizing the achievements of its Indian R&D team in developing global-standard equipment. The company highlighted its commitment to the Government’s Atmanirbhar Bharat campaign. The products displayed included CASE’s latest models – the 770 NXe Loader Backhoe, 770EX Tractor Backhoe Loader, 1107FX & 952 Vibratory Compactors, 1650 Dozer, 865 Grader, and CX220LC Crawler Excavator.
• February 2023:At the Bauma CONEXPO 2023 event in Greater Noida, India, Volvo Construction Equipment unveiled its new EC55 Electric Excavator model. Slated for launch in early 2024, the EC55 offers substantial cost and maintenance savings through its electric power, making it ideal for low-noise and low-emission applications.

Engineering services ecosystem

Engineering services companies in India play a vital role in the country’s rapidly growing industrial landscape. These providers offer specialized expertise across mechanical, electrical, embedded, software, and other engineering domains. India has become a global hub for outsourced engineering services, leveraging its deep talent pool of skilled engineers and track record of delivering innovative solutions.

Indian engineering firms provide end-to-end services from product design and development to project implementation for diverse sectors including automotive, aerospace, infrastructure, information technology, and industrial machinery. With a focus on innovation and advanced technology, these companies enable domestic and international clients to access high-quality, cost-effective engineering capabilities.

Future Outlook

With favourable macroeconomic conditions, government support, and strategic investments in technology, sustainability, and manufacturing, construction equipment market in India is destined for robust and sustained growth in the coming years. The sector will continue to modernize and align itself to emerging trends such as digitization, alternate fuels, and customization to local requirements. With its essential role in infrastructure development, the industry is poised for new innovations and models catering to diverse urban housing, roads, railways, irrigation and other infrastructure needs. While effectively supporting national economic progress, the construction equipment space is also well-positioned to expand its global footprint through exports. Backed by advancements in automation, alternate fuels and data-driven technologies, the industry aims to enhance productivity, efficiency, safety and sustainability. The future outlook remains highly positive as it keeps powering India’s rapid growth and development through enabling critical infrastructure projects.

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