There has been an increase of 11 per cent in the demand for Indian construction equipment, according to a joint study by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) and consulting firm Feedback. From 13 per cent in FY2015-16, it has grown by 24 per cent in FY 2017-18. An increase in spending on infrastructure saw the sector crossing 90,000 units for the first time.
In spite of hurdles such as emission and GST during April-July 2017 respectively, there has been considerable growth for the construction equipment market. The government is also a major demand driver, and facilitates growth through regulations and policies. The study notes that two-thirds of the demand for India’s construction equipment products comes from the government, and hence, it can be regarded as the largest end customer.
Indian construction equipment makers can approach existing and new markets because of the government’s policies for encouraging export growth. One of the contributing factors for equipment growth, according to the study, has been construction of roads and highways.
In other areas, concrete equipment demand rose due to the metro and railways segment, whereas material handling equipment (MHE) saw demand from the road, railways and metro segment. The study reveals that demand for backhoe loaders and hydraulic excavators contribute a lot to the Indian construction equipment industry. Further, 40 per cent of the total sales by volume came from the backhoe loaders during FY2017-18.
Capacity utilisation for original equipment manufacturers (OEMs) remains above 70 per cent. Most OEMs have already expanded and some others are reportedly planning to grow in sectors such as hydraulic excavators, wheel loaders and other specialised equipment.
According to the study, emphasis on exports is on the rise for OEMs, to improve their capacity utilisation. Certain African countries have shown an increasing interest in Indian backhoe loaders. Till the time private funding starts to flow, the government has been coming up with a series of announcements to facilitate growth through public spending.