With mega infra-constructional projects being planned and pipelined opens new doors of growth opportunities for the construction equipment industry. EPC World takes a closer look on the market sentiments…
The year 2019 saw its fair share of ups and downs – be it the union elections or the natural calamities that hit hard the infrastructure sector. The construction equipment sector was one such industry affected by the slowdown in the infrastructure sector. However, with the situations becoming more stable prospective expectations are being eyed from the year 2020. A major reason fuelling this optimism is the infrastructure focused growth agenda put forth by the Government and the prestigious list of big-ticket face-lifting projects being pipelined.
“The Construction Equipment industry can hope to expect a 40 per cent increase in sales in the near future, as the Government is pumping huge amounts of investment in road and other infrastructure projects such as the development of waterways, airports, ports, and smart cities. But the private sector should focus on bringing down the cost of construction and pollution,” said Shri. Nitin Jairam Gadkari, Minister for Road Transport and Highways, and Micro, Small and Medium Enterprises, Government of India. While addressing at the CII’s EXCON 2019, he further added, “The Prime Minister's vision is to make India a USD 5 trillion economy. To achieve this goal, the government is embarking on major infrastructure and industrial projects worth Rs 100 lakh crore. For the road sector alone, the Centre is investing Rs 2 lakh crore this year. The amount of investment for the next year will increase to Rs. 3 lakh crore. Within the next five years, the total government spend on the road infrastructure will be about Rs. 17 lakh crore.”
The Minister urged the part the private players in the construction industry to focus on mechanization, adoption of advanced technologies and global best practices, usage of LNG and bio-fuels, and innovations in using waste materials as raw materials for their construction projects in order to reduce the cost of construction, and pollution.
Detailing upon the opportunities expected to evolve with the core infrastructural sectors like railways, S. K. Mishra, Executive Director (Infra), Ministry of Railways, said during the Excon 2019 event, “The Government has already taken the decision of allowing 100% FDI in Railway Infrastructure as a significant policy shift to adopt global best practices of world railways and to attract massive investment from all over the world. There will be a substantial increase in the capital expenditure and Indian railways would be investing over Rs. 10 lakh crore in the next 5 years on various projects. Projects include Doubling or Multiple Tracks to decongest saturated network of which 14,000 km work is in progress and targeted to be completed by March 2024. 100 per cent electrification of Broad Gauge track by December 2021. By March 2023, we will be completing the upgradation of speed to 130 kmph on 18,000 km of busy routes.”
“Road transport being vital to India’s Economy, the infrastructure contributes over 4.7% to the GDP. India’s road network carries over 70% of its freight and 85% of passenger traffic making India the second largest country in the road & highway development Industry after the US, and in terms of density we are at number 16 ahead of USA,” shared R. K Suryawanshi, RO- Projects, NHAI.
Experts Opine
The optimism seen in the future for the infra-construction sectors reflects the positive sentiment across the sector’s stakeholders. Agreeing on similar terms Azim Premji, Founder, Chairman Wipro Ltd while talking at the Excon 2019 event said that a well-planned, modern infrastructure is extremely important for India to achieve its USD 5 trillion target. Currently India spends about 5 per cent of its GDP towards infrastructure development. It should increase it at least to 6 per cent, which is what China spends for its infrastructure development.
Vipin Sondhi, Chairman, CII Trade Fairs Council, said that the construction equipment industry is witnessing a digital influx with the advent of artificial intelligence, telematics, Internet of Things, and Big Data making construction equipment intelligent and connected. These developments would increase the site efficiency and productivity of the construction projects in India.
“This year has started on a much better note for the CE industry than last year. Recently, Finance Minister NirmalaSitharaman unveiled Rs. 102 lakh crore of infrastructure projects that will be implemented in the next five years as part of the government's spending push in the infrastructure sector. This move will yield a better outcome for the CE industry. The government has already started work on projects worth Rs. 42.7 lakh crore to draw up the National Infrastructure Pipeline (NIP) for each financial year between 2019-20 and 2024-25. The government also shared the plans for Centre, states to spend over Rs. 100 trillion in the next 5 yrs. Centre, states will share Rs. 100 trillion infra projects at 39 per cent each, balance 22 per cent are private projects. Infra projects in the pipeline will be across 21 ministries and across key sectors of the economy including power, railways, urban irrigation, mobility, education and health. Hence we can presume a bright and cheerful year for the Construction equipment industry. With Budget 2020 awaited, the industry is expecting an enhanced focus on infrastructure and construction industry from the government. We hope to see continuity in major projects launched during the previous government like - Bharatmala, SagarmalaPariyojana and Smart Cities and greater fund allocation thus boosting the infrastructure construction activities. We are hoping 2020 to be a knockout year for the CE industry,” comments PuneetVidyarthi, Brand Leader, Case India.
Reviewing the facets that affected slowdown and prospect for the year 2020, Wilfried Theissen, Managing Director, Putzmeister India says, “Policy paralysis, liquidity crunch and delay in awarding contracts are major contributors to the sales decline. In addition to this, the slowdown in economic growth and liquidity issue faced after the NBFC crisis has largely affected the growth of the industry. As a result of the NBFC crisis, the construction equipment industry hugely suffered as the customers did not get finance easily. “We expect things to improve soon and the CE manufacturers expect better days ahead following some measures initiated by the government.”
Dimitrov Krishnan, Vice President, ICEMA & Vice President-Sales & Marketing, Volvo Construction Equipment comments, “The CE industry has seen tremendous investments in infrastructure in the last decade, with about half billion equipment installed, the industry has employed approximately 1.2 Billion people. In the next 5 years, as India is aiming towards a 5 trillion economy, the expected investment in infrastructure would be 100 lakh crores and equipment requirement will be at least 8 times of what it is today and it is expected to generate 9 times of the employment. To achieve this the industry will definitely require help and support from the government. Internally, to accomplish that kind of growth, as an industry we will be focusing on three major things that include investing in R&D, Capacity Enhancement and Skill building. With the support of all the stakeholders, we are very confident that this industry is going to be an able partner to the Government of India to propel this nation from ‘Make in India’ to ‘Building a new India.’”
Sharing the prospective sentiment DK Vyas, MD, SREI Equipment Finance Ltd echoes, “The year 2019 saw a mixed bag of opportunities and growth phase. Owing to the elections about half the year was masked by the political facets, the uncertainties and excitement along with it. The market and economic uncertainties led to a sector de-growth of 25-30 per cent. Adding to this was the occurrence of natural calamities like floods in numerous parts of the country that further hindered the process of infrastructural development. However, the Government’s increased focus on infrastructure as an epicenter of growth agenda and with numerous big-ticket face-lifting projects being planned and streamlined the future looks promising for the sector as a whole.”
The Tech-Trend
While the big-ticket projects and evolving infrastructural requirements is expected to pump up the demand for construction equipment, meeting the deadline in a cost effective manner with minimum or zero downtime has become a need of the hour. Thanks to the advancements in technology, the sector puts forth an optimistic and a planned approach to explore and evolve with the changing market dynamics.
Sensing the requirement for new-gen technologies stakeholders are actively involved in expanding their product profile and tech-expertise. Even the most prominent and South Asia’s largest construction equipment show Excon 2019 witnessed technology becoming a key point of attraction in the latest product launches.
On the back of Excon 2019 theme ‘Smart i-tech India@ 75’, JCB India showcased its strong focus on Digitisation and Innovation. The new intelligent machines – the new ecoXpert 3DX Backhoe Loader, a machine with fuel savings of up to 12 per cent and up to 22 per cent lower maintenance costs. “Our Backhoe Loader, which probably is the most widely used construction equipment is now even more fuel efficient and comes with ‘IntelliPerformance’. The next level ‘NXT’ series from 14T to 24.5T and the Quarry Master range of Excavators from 14T to 38T now offers a wide range of options to our customers to choose from. The new range of Telehandlers with the Global side engine layout and height from 7m to 18m have also been launched along with a new range of Skid Steers. Mini Excavators are gaining popularity in select applications and we have made our range even more comprehensive in the 3T to 6T range. Smart technologies such as Internet of Things (IoT) and next-generation Construction Equipment will play an important role in achieving the $5 Trillion economy target for the country,” shares Subir Kumar Chowdhury, MD & CEO of JCB Indiaduring Excon 2019.
Another global major and heavy equipment manufacturer Caterpillar launched its next generation Cat® 120 Motor Grader designed to elevate production and lower costs, launched for the Asia Pacific region.GurmanReen, Caterpillar Global Construction & Infrastructure Division Sales & Marketing Director explains, “We launched the Next Gen Cat 120 Motor Grader to expand our presence in India and serve our customers to help them make more profits. Our decision to launch new products to our existing segments demonstrates our commitment to contribute to the India growth story.”
By looking upon the current market sentiments and need for improved and increased infrastructure in the coming years, it is quite evident that technology will act as a magic wand to meet the market dynamics. As per the market experts the tech-tool is expected to evolve as a growth tool not just for the construction equipment industry but in bringing a face-lift to the nation’s growth progress as a whole.
@EPC World Media
