 "India's construction equipment industry sees revival on highway, water projects")
The market for excavators, backhoe loaders and dumper trucks, needed for construction and transport is expected to be $ 2.8 billion this year. The industry is expected to nearly double to around $ 5 billion by 2019-20, according to the Indian construction equipment manufacturers association (ICEMA).
"The market has flattened. We can look forward to more growth in 2016, with further pickup in 2017," said Vipin Sondhi, managing director and chief executive of JCB India Ltd.
Construction equipment firms such as JCB, Tata Hitachi, L&T Komatsu built capacity in the last few years, but it has been under utilised as mining activity froze due to licensing issues and curb in exports of iron ore. Construction activity also had slowed down due to government indecision and large infrastructure companies facing stress on balance sheets. ICEMA expects increased road building and mining taking post the coal auctions to push sales of construction equipment in the country.
Srei Equipment Finance Ltd, which finances construction equipment and also leases them to customers, says that smaller firms are increasingly leasing or buying equipment to execute projects across India. "There are nimble small players who are executing projects. They have seen the large firms struggle, so, these companies are focused on efficiency and doing well," said Devendra Vyas, chief executive of Srie Equipment.
India has an installed capacity of 70,000 units of construction equipment. "There is cautious optimism that by 2018-19, the industry will get back to an output level of 70,000 units that was achieved in 2011-12. The overcapacity built in earlier boom years is expected to be utilised before fresh investments are made," said a statement.
Tata Motors says that it has seen 30% growth in commercial vehicles and 8% in construction equipment over last year as customers replaced old vehicles with new ones, anticipating growth. Diamler Benz and Caterpillar have seen business picking up as customers buy new equipment across regions, officials said.
Tata Hitachi Construction Equipment Co, managing director Sandeep Singh said the firm is witnessing a 5% growth this year, as demand picks up for new excavators for projects such as improving water bodies in states such as Andhra Pradesh and Telangana and improved focus on garbage clearance in cities such as Bengaluru.
"This year the growth is on a low base. The next four to five years, we will see growth coming at 10-15 percent," said Singh.
Volvo construction equipment India head, sales and marketing Dimitrov Krishnan said that government's focus on power sector, coal blocks opening up would all benefit the industry. "In all, we see 15-20% CAGR from 2016 onwards."
