The Indian construction equipment market is expected to grow to $5 billion by 2020. According to V G Sakthikumar, the need of the hour for the industry is to think proactively, followed by surefooted action to meet the growing demands of the future - as India marches ahead to become a major manufacturing power to reckon with in 2020.
These are interesting times. India is currently fast progressing to be the manufacturing centre for the globe, as for the first time in its history, the nation dares to bridge the gap with China, a long-existing, hitherto insurmountable one. India grows at the pace at which China grew two decades back, and investments in infrastructure building is now at a record high, and continues to increase.
Thanks to the Government’s impetus and focus on manufacturing with its ‘Make in India’ push, we are seeing fast strides of growth in manufacturing across all sectors. One sector that holds the key for the success of numerous others is the construction equipment manufacturing sector, which is now showing signs of revival from the recent slump and great promises of growth in the coming years. The sector’s growth, if properly stimulated by the government and diligently pursued by all manufacturers, will for sure create ripples across not just Indian, but the global economy as well.
The changing goalposts
We remember a time in 2011 when a study by Accenture predicted that the Indian construction equipment market to touch even $ 20 billion by 2022. Riding on optimism, the study was based on the meteoric rise of the number of equipment sold in the recent years leading to 2011, as well as the solid growth registered by multi-national companies who manufactured in India. It is now expected to grow to $5 billion by 2020, and further higher growth in the following years.
The manufacture of construction equipment in India started only in the early 1960s, and up until then, the country imported all of its requirements. With decades of innovation by indigenous players as well as the entry of multinational corporations, India became self-sufficient in construction equipment, and even started exporting to other countries. India has a great advantage over the West as products manufactured here are not only cost-effective, but also better reach and support to its neighbouring countries.
After hitting an all-time high during 2011 in terms of sales, the industry saw tough years between first quarter of 2012 to end of 2015. Following this steep fall in growth, the markets began to recover in the last two years. The recovery, however has not been without roadblocks. The focus on renewable energy and high coal inventory impacted equipment demand in power plants and mines, resulted in a negative outlook. Also, the growth in iron ore production during recent years has also not translated to an increased demand from the steel industry, which would has muted high expectations. The recent slump in the real estate development has also contributed to the lull during the past years.
Also, there is an impasse currently over the Bharat stage emission norms being imposed on construction equipment too, beyond just cars and bikes. This has also pressurised businesses to redraw their manufacturing processes to accommodate this impending change. The industry is also confident that with proactive measures and hard work, products can leapfrog to BS6 norms in the coming years from the current BS4 engines.
The Government of India has announced the Rs 5.35 lakh crore BharatMala Pariyojana to construct 34,800 km of highways. The concrete road construction is one of the best example which helped the growth of concreting equipment. Roads are number one sector in pushing the business growth. More and more of these roads like national highways, expressway roads are becoming concrete roads than asphalt roads.
Similarly, India has in many towns, the metro rail construction in Delhi, Pune, Nagpur, Bengaluru, Mumbai, Chennai, Ahmedabad, etc going on, this sector is driving the concreting business again. With the bullet train project’s announcement, construction equipment industry is expected to gain a major boost in demand in the coming decade. In future, real estate is expected to grow further from its recent slowdown.
The future beckons
Infrastructure development initiatives of any major institution including the government would boost the construction equipment manufacturing industry. The government should expedite the stimulus packages extended to the construction equipment market to drive infrastructure development across all levels. This stimulus would further boost and strengthen public-private partnership and fuel economic growth. Moves such as authorising the Indian Infrastructure Finance Company Limited (IIFCL) to raise Rs 10,000 crore for highways and port projects is commendable.
Rapid urbanisation, growth in infrastructure, focus on mining sector would all fuel the demand from the Indian construction equipment manufacturing industry over the coming years. The proactive measures by the government were responsible for stopping the slump, and propelling the industry forward. The industry-friendly policies are here at last.
In due course
The optimism in the industry is now palpable. As key infrastructure projects are now on the anvil including stranded ones that got revived, the construction machinery manufacturing sector is suddenly facing the good pressure to deliver, in time to meet the increasing demand. To name a few, the government’s 100 smart cities project, urban infrastructure renewal projects such as metro rail, ports, industrial and freight corridor building and the much-anticipated bullet train project between Mumbai and Ahmedabad. Added to the above, the real estate market in India that is expected to reach $ 180 billion by 2020 will also boost demand greatly.
Making products that are compliant to the new (and future) norms, offer high value proposition by integrating new tech elements such as IoT capabilities (Internet of Things) and rendering the products flexible enough to offer a wide range to choose from, construction equipment makers should always have an ear to the ground and eyes on futuristic trends. Therefore, for the industry, the need of the hour is to think proactively, followed by surefooted action to meet the growing demands of the future - as India marches ahead to become a major manufacturing power to reckon with, in 2020.
V G Sakthikumar is the Managing Director, Schwing Stetter Sales and Services Pvt Ltd, and Chairman of Mechanization Committee, Builders Association of India. He has been associated with Schwing Stetter, since its inception in India in 1998, and has played a part in its growth story. He has over two decades of industry experience in the ready-mix concrete business. Having consolidated Schwing Stetter’s position in India, he now also handles the SAARC and ASEAN nations from India.