The prevailing high interest rates and delays in clearance of large infrastructure projects of national interest by the Centre are likely to impact the growth of the Indian earth moving and construction equipment (ECE) industry in the immediate future.
The $3.3 billion ECE industry, which reported a 30 per cent growth in 2010 over that of the previous year, is likely to witness hardly 15 per cent growth rate presently and in the next few years, a top industry expert said.
“From $1.7 billion in 2006, the industry grew 18 per cent CAGR to touch $3.3 billion in 2010 despite a bad year in 2009. Presently, the industry is facing strong headwinds in the form of higher interest rates, high oil prices and delays on the part of the government in clearing projects of national interest and slow pace of land acquisitions. These factors will impact the growth of the industry in the next 8-12 months,” Vipin Sondhi, managing director & CEO, JCB India Limited and Chairman, Excon 2011, said.
Despite the present scenario, the industry expects to grow 6-7 times in the next nine years to touch a level of $23 billion, he said, quoting a study by consulting firm, Accenture.
The study report is being released at the inaugural function of Excon 2011, the sixth international exhibition on construction equipment industry, here on November 23.
“We can achieve a level of $23 billion in the next nine years provided the government creates an enabling environment by speeding up the process for clearing large infrastructure projects of national interest and pass the new Land Acquisition bill in the ongoing session of the Parliament and award contracts under the public-private partnership model,” Sondhi said.
The Planning Commission has envisaged an investment of $1 trillion in the infrastructure sector during the 12th Five Year Plan period, which is double the target set for the 11th Plan period.
While accepting that the liquidity position is comfortable on Tuesday, Sondhi said the industry is looking for the interest rates to decline 2-3 per cent from the present levels.
He said, Excon 2011, being held from November 23 to November 27 at the Bangalore International Exhibition Centre (BIEC) will showcase the latest technologies and products in the construction equipment industry.
About 636 exhibitors from India and abroad are participating in the event which has eight country pavilions from Germany, Italy, Spain, Turkey, China, South Korea, Finland and Japan.
Coinciding with Excon 2011, the Confederation of Indian Industry (CII) will organise a CEOs’ Roundtable on ‘Skill Management in Construction Equipment Industry’.
