In the Financial Year 2021-22 (FY22), the Indian Construction Equipment (CE) Industry experienced an 8% decline in sales, with 85,385 units sold compared to 92,470 units in FY21. According to the Indian Construction Equipment Manufacturers Association (ICEMA), the earthmoving equipment segment, which accounts for nearly three-fourths of total construction equipment sales in India, experienced a 14 percent decline in growth in FY22, while road construction equipment sales fell by 10%. However, the other three segments, namely material handling, material processing, and concrete equipment, all grew this year. Construction equipment exports increased by 60% in FY22 compared to FY21.
During the previous fiscal year, the CE industry faced a number of challenges that hampered the sector’s growth. “A number of factors pulled the Indian CE industry sales down during the financial year 2021-22,” said Dimitrov Krishnan, President ICEMA and MD Volvo CE India Pvt Ltd. The second and third waves of the COVID-19 pandemic, which negatively impacted the pace of construction activity in the country on the one hand and continued to cause supply chain disruptions, limiting the industry’s ability to meet emerging demand on the other, are largely to blame for the 8% volume decline observed during the period under review.”
In FY22, the rate of road and highway construction slowed significantly to 28.64 km/day, compared to a much faster rate of 36.5 km/day in FY21. This was a major factor in the CE industry’s decline, as India’s road sector accounts for 40% of total construction equipment demand. Unprecedented natural disasters such as cyclones and heavy rains also hampered construction activity, particularly in the country’s south, lowering demand for construction equipment. The sharp increase in input costs as a result of rising steel and other commodity prices put pressure on CE manufacturers’ margins. The industry’s concerns have been heightened as a result of the ongoing conflict between Russia and Ukraine.
“Though the year-on-year growth of the industry remained subdued,” V G Sakthikumar (Convener, Industry Analysis & Insights Panel, ICEMA) said, “it is heartening to note that there has been a steady increase in the sales numbers during the four quarters of the current fiscal.” The fourth quarter, in particular, produced much better results, with sales volume increasing by 12% over the previous quarter. This has rekindled the Indian CE industry’s much-needed growth momentum, which, when combined with recent government announcements on infrastructure investments, presents a strong pipeline and growth opportunities.”
The Indian CE industry saw a tumultuous FY22, looking ahead, the industry is hopeful of a strong recovery during FY23 on the back of enhanced export potential and the Government’s continued thrust on infrastructure development. The sharp increase in budget outlay on capital expenditure for FY23 by more than 35%, from INR 5.54 lakh crore to INR 7.50 lakh has also given the industry confidence in a quick turnaround and delivering a strong growth.
The mining industry in India expects a significant increase in the award of contracts for highway construction, new railway lines, water management, development of ports and others in the current year. Demand for mining equipment has been quite robust in the last 2-3 years is expected to continue its strong trajectory, aided by favourable global demand for commodities. The journey will further become exciting with the introduction of newer technologies in the industry such as the influx of digital, IoT and alternate fuels which will help the industry attain sustainable growth.
ICEMA is working on a revised Vision Plan 2030 to include modified projections and changing trends facing the industry. With new CEV-IV emission standards now completely adopted by the industry, there are significant opportunities for Indian CE manufacturers to tap into developed markets. ICEMA President Krishnan: “The phenomenal exports growth witnessed by the Indian CE Industry in the last 12 months augurs well for its future sustained growth”.