All the global players are in India for the fact that Indian market place is growing and the growth is sustainable.
Construction equipment industry expert Rajinder Raina
The global heavy construction equipment (CE) market is expected to reach USD 90.4 billion by 2025 at a CAGR of 5.4 per cent. So, what is the outlook for Indian CE market?
CE market in India has been doing pretty well for the past three years. During this period, it has registered a growth of about 15 per cent on CAGR basis. The current fiscal will see a similar growth. With the parliamentary elections due next year, the growth may slow down a little. However, on a long-term basis, year 2025, a CAGR of 6 to 7 per cent is very much possible. It will change year on year and product to product but the industry as a whole is in for a big growth. All the global players are in India for the fact that Indian market place is growing and the growth is sustainable.
The Govt. of India is giving major financial boost to the infrastructure sector. How does the industry plan to leverage this opportunity?
The budget allocation, on infrastructure, by the government in its last three budgets has been big and the blueprint clearly spelt out. It is not only the funds allocation but generation of money from other sources that shows the intent of the government. The growth in the market size is the proof of the pudding.
The best part of the good news is the long-term sustainability of the growth. This has given confidence mainly to the outsourced developers of the CE manufacturers who rely heavily on bought out fabricated or developed and purchased sub-assemblies and components. This is the reason that despite sharp rise in demand for various equipment, the supply side was never found wanting. Matching up to an increase in demand by more than 50 per cent in 3 years is not easy but the manufacturers have done it and most of them are geared up for further growth as well.
India’s infrastructure drive has attracted major CE manufacturers to foray into the Indian market. How does the competition look viz a viz the global scenario?
The current CE in India comprises more than 30,000 Backhoe Loaders; 15,000 Excavators; 10,000 Mobile Cranes; 8,000 Forklift Trucks; 5,000 Vibratory Compactors and a host of other equipment in mining, mineral processing, crushing and concreting segments. The volumes, range, variety and value is too big for any global manufacturer not to try and play big. The fact that Korean, Chinese and Japanese companies also have set up manufacturing facilities in India bears testimony to the robustness and long-term potential of Indian market.
As per reports, India is set to replace China as new market for CE manufacturers. What are the growth drivers for this development?
I don’t subscribe to the projection of India replacing China as the biggest market for CE in near future. There will be some equipment like Backhoe Loaders and Vibratory Compactors that will remain bigger than the Chinese market and there could be a few other products for which the Indian market could be bigger than China either today or in near future. However, the total volume and value of the market in China will continue to stay ahead of India at least in foreseeable future. However, this is based upon my experience and knowledge about the two markets.