Sales of construction equipment likely to grow in double digits

Sales of construction equipment are expected to increase in healthy double digits in the ongoing financial year on the back of improved government spending on infrastructure projects, mainly in rural areas.

The industry estimates construction equipment sales to increase 15%-20% in the financial year (FY) 2023, against an 8% decline in the last fiscal year. Even though exports increased 60.5% to 7,802 units in FY22, local sales declined 11.4% to 77,583 units.

Managing director at market leader JCB India, Deepak Shetty, told the media that in the last FY, the industry output dropped by around 8% due to a decline in demand for road construction and earth-moving equipment. While adding that the government’s emphasis on infrastructure investment to boost economic activity would, in turn, also help increase demand for them. But a steep incline in input costs and limitations in the supply chain are concerned, he said.

The government has budgeted a 36% upsurge in its capital spending to a record Rs 7.5 lakh crore this FY, with a special focus on infrastructure development to stimulate growth. It has expanded the scope of the National Infrastructure Pipeline to include 9,335 projects, with total envisaged Rs 108 lakh crore investments during FY20-FY25.

Among others, the scheme to provide piped drinking water to rural homes, the commencement of new metro rail development projects, the building of smart cities, and the construction of new airports at Navi Mumbai and Jewar will initiate growth in the construction equipment industry.

The PM Gati Shakti national master plan is a path-breaking move that will bring a holistic focus on infrastructure development.

He envisioned India to become the second-largest market for construction equipment by the decade's end. India is presently the third-largest industry, after the US and China.

Given the regulatory motivation worldwide toward clamping down on carbon emissions, manufacturers are mainly focusing on assessing and developing products powered by green fuels such as biofuels, CNG, and hydrogen.

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Also read: Construction equipment industry to grow in H2 of 2022: JCB India