Market Trends of India Construction Equipment Industry
Increasing Government Spending on Construction and Infrastructure Development
- Increasing government spending and higher foreign direct investment (FDI) to enhance the infrastructure development of the country serve as the major catalyst for the growth of the construction equipment market in India. According to the Indian Construction Equipment Manufacturers' Association (ICEMA), 85.39 thousand units of construction equipment were sold in FY 2022. Although the sales volume has not been able to showcase pre-COVID numbers, with the aggressive focus of the government to improve the construction sector, sales of construction equipment are anticipated to showcase a rapid boost in the coming years.
- Under the Budget 2023-2024, the government of India has announced various measures to support the infrastructure development of the country. For instance, the Union Budget indicated the capital investment outlay for infrastructure to increase by 33% to INR10 lakh crore (USD 122 billion), which would be 3.3 percent of GDP and almost three times the outlay in 2019-20. Further, the budget also portrays an establishment of the Infrastructure Finance Secretariat to enhance opportunities for private investment in infrastructure that will assist all stakeholders in more private investment in infrastructure, including railways, roads, urban infrastructure, and power.
- Coupled with that, the government of India's massive push to attract foreign and domestic investments for the infrastructure sector will positively fuel the demand for construction equipment in the coming years. For instance, in November 2022, the National Investment and Infrastructure Fund (NIIF) was set up as a collaborative investment platform between the Government of India, global investors, multilateral development banks (MDB), and domestic financial institutions to facilitate investment across multiple sectors in India through an India Japan Fund.
- In June 2022, the Minister of Road Transport and Highways opened 15 national highway projects worth Rs. 13,585 crores (US$1.7 billion) in Patna and Hajipur, Bihar.
- Further, the Indian construction market has witnessed a surge in foreign direct investment in recent years, positively impacting the construction equipment market. In FY 2022, foreign direct investment (FDI) in India's construction and infrastructure activities stood at USD 3,248 million. Subsequently, in FY 2023 (April-December), the FDI inflow touched USD 1,221 million. Moreover, government programs and projects such as Ujwal Discoms Assurance Yojana (UDAY), Smart City Mission, Pradhan Mantri Awas Yojana, Gati Shakti Master Plan, and Bharstmala project propels the market's growth. These programs and projects envisaged are anticipated to fuel the demand and usage of construction equipment in India.
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Electric/Hybrid Construction Equipment Segment of the Market to Gain Traction in the coming years
- Shifting preferences of businesses to promote the use of eco-friendly products, coupled with the increasing push by the government to combat carbon emissions, will propel the electric/hybrid construction equipment segment of the market, which is expected to record a massive surge in the coming years.
- The Indian government has introduced various initiatives and policies to encourage the use of electric vehicles and machinery, such as the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme. Under this scheme, financial incentives and subsidies are provided to manufacturers and buyers of electric vehicles, including construction equipment.
- The Indian government has committed to strengthening the emissions intensity of its GDP to 45% by 2030 from 2005 levels. Further, the government has also unveiled a plan to reach a carbon-neutral economy by 2070.
- To promote the use of electric construction equipment, the government of India has taken active measures to draft regulations that oversee the use of electric powertrains in construction equipment under AIS 156 and AIS 168 regulations (Automotive Industry Standard). This regulation indicates various requirements that electric construction equipment must possess to be sold in the Indian market.
- In March 2022, The central government set up a Technology Sub-Mission (TSM) under the Pradhan Mantri Awas Yojana-Urban (PMAY-U) to facilitate the adoption of modern, innovative, green technologies and building materials for housing construction. TSM enables the preparation and adoption of layout designs and building plans suitable for various geo-climatic zones and helps the states and cities to deploy disaster-resistant and environment-friendly technologies.
- Various companies operating in the Indian market are diversifying their product portfolio to launch electric/hybrid construction equipment products to cater to the growing demand of consumers. For instance,
- In June 2023, Action Construction Equipment (ACE), a material handling and construction equipment manufacturing company, announced the launch of its first fully electric mobile crane in India at the Bauma Conexpo 2023 Trade Fair in Greater Noida.
- In June 2023, Volvo CE India announced a partnership with Vedanta Iron Ore Karnataka by signing a Memorandum of Understanding (MoU) to deploy sustainable power solutions, such as zero-emission electric off-road machines, at Vedanta IOK's mines in Chitradurga on a trial basis.
- Further, JCB has been actively engaging in launching various construction electric equipment products in India, such as the Electric Excavator named JCB 19C-1E.
- With more companies adopting an eco-friendly policy, the market for electric/hybrid equipment will gain massive traction in the coming years.
