The construction equipment industry is heading for a revival backed by major infrastructure projects from the government and may clock a double-digit growth in the next financial year ending March 2017.
Major construction equipment makers are bullish about the Union government’s focus on road and highway sector, water revitalisation and other infrastructure projects and additional reforms are expected to act as a catalyst.
Recently, Union Minister for road transport, highways and shipping Nitin Gadkari announced his plans to increase the length of national highways to 1,50,000 km from the present 96,000 km including expressways. The government has also set a target of constructing 30 km of National Highways a day. The government has also announced four major corridor development projects such as the Delhi-Mumbai industrial corridor, Amritsar-Kolkata, Vizag-Chennai and Bangalore-Mumbai.
The Indian construction equipment industry is expected to grow to $5 billion by 2019-20, according to a report released by Indian construction equipment manufacturers association (ICEMA), The current market size of the construction equipment including backhoe loader, concrete mixers excavator is around $2.8 billion.
“The government has cleared certain road and port projects and the work of these would begin next year. Our expectations are that with the market growing the demand for our devices will also grow,” said Sandeep Singh, Managing Director, Tata Hitachi, a joint venture between Tata and Japan’s Hitachi. For FY 17, the company expects a growth of 15 per cent in business as against the present 5-6 per cent. Major contractors have replaced their old equipment anticipating growth in the sector. This has also contributed to the optimism of the device manufacturers. Tata Motors said its commercial vehicles, medium and heavy trucks, which is both cargo and ConsTruck has seen a growth of about 30 per cent and 8 per cent year-on-year, respectively. “Government policies on infrastructure development, will lead to better utilisation. We foresee double digit growth in the sector, going forward,” said Rajesh Kaul, Business Head, Intermediate, Medium & Heavy Trucks, Tata Motors.
Anticipating growth in the market both Indian players and global players such as Diamler, Scania, JCB, Volvo, among others has also introduced new devices and machinery to the market. However, these majors say, most of the manufacturing facilities are currently running underutilised.
“Government will need to be a key enabler for the construction equipment industry to grow while uniform and simplified taxation along with benefits could help promote global practices such as used equipment, leasing and rental business,” said V. Ravichandar, Chairman and Managing Director, Feedback Business Consulting.
