The government seems to be investing heavily in infrastructure, is this causing a rise in equipment sales?
This year, the Indian Government has given a massive pushto the infrastructure sector by allocating Rs. 10 lakh crore ($ 130.57 billion) for development in the sector. The National Highways Authority of India (NHAI) has been allocated Rs. 134,015 crore ($17.24 billion). An outlay of Rs. 60,000 crore ($7.72 billion) has been assigned to the Ministry of Road Transport and Highways. For the Housing and Urban Development sector Rs. 76,549 crore ($9.85 billion) has been announced, and with the aim to create and augment telecom infrastructure in the country, Rs. 84,587 crore ($10.87 billion) has been allocated to the Department of Telecommunications.
India is going to be a growth driver for the world in the coming decades, and much of this growth will come from infrastructure development in the country. There are projects of significant National importance that are gaining encouraging momentum across the country. Large-scale Infrastructure development requires larger and more productive machines. There has been a direct correlation between infrastructure development and equipment sales in the past. This year we witnessed a slow beginning in terms of equipment sales. This was due to a few reasons: the Russia-Ukraine conflict disrupted supply chains, and a steep increase in commodity prices led to lower demand in the year's first quarter. However, with the government’s increased focus on the infrastructure sector, the cooling offofcommodity and fuel prices, and the resumption of supply chains, we are seeing a steady rise in sales for construction equipment. Current trends indicate that the increase in the sale of machines with continue through the next year. It is predicted that the industry will see a growth of 15-20%.
Are you seeing a demand for JCB equipment for these government-led infrastructure projects?
For over four decades JCB has remained committed to the India growth story. From introducing the Backhoe Loaders in India in 1979, to the global manufacturing force the company has become today, JCB India has been making the nation and its communities stronger every day. With six state-of-the-art factories in India, it manufactures a wide range of world-class equipment, not only for India, but for over 125 countries. Driven by constant innovation, revolutionary products, and adherence to global quality standards, JCB has sold over 3,50,000 machines - furthering the ‘Make in India’ initiative and steering millions towards empowerment. India is today not only an important market for JCB but is also the global manufacturing hub for the Group. Our focus on One Global Quality has led JCB to explore Global markets on such a large scale.
The JCB Backhoe Loader continues to be a favourite for Infrastructure projects for the last 42 years since it is a versatile, easy-to-use,and easy-to-transport machine. It is suitable for government projects like the Pradhan Mantri Gram Sadak Yojana (PMGSY) and Har Ghar Jal in rural areas. PMGSY was launched by the Govt. of India to provide connectivity to unconnected habitations as part of a poverty reduction strategy. According to the latest figures, about 167thousand unconnected habitations are eligible for coverage under the programme. This involves the construction of about 371thousand km of roads for New Connectivity and 368 thousand kmunder upgradation. The Har Ghar Jal mission is envisioned to provide safe and adequate drinking water through individual household tap connections by 2024 to all households in rural India.
While the Backhoe Loader is an ideal machine to reach remote/rural areas, with new road development projects coming up in remote areas, we are also seeing an increase in the purchase of Excavators and Mini Excavators. Projects of significant National Importance are gaining encouraging momentum across the country. Large-scale Infrastructure development will require larger and more productive machines, and a recently launched new range of Excavators (JCB NXT 225LC M) addresses that need.
We are also observing an increase in government tenders floated to acquire construction equipment. The municipal corporations of big states like Maharashtra, Gujarat and Uttar Pradesh regularly acquire JCB machines. In rural sectors, Gram Panchayats across the country float tenders for equipment that is regularly fulfilled by JCB.
Sales of construction equipment — a barometer of economic activity — is expected to increase in healthy double digits in the ongoing financial year on the back of increased government spending on infrastructure projects, especially in rural areas. The industry estimates sales of construction equipment (domestic sales and exports) to grow 15-20% in fiscal 2023. Since JCB has a high market share in the sector, the demand for JCB equipment will increase accordingly. One in every two machines is a JCB and we expect that we will continue to support the government at the same level.
Do you see electric equipment becoming popular over the next few years?
As an industry, Construction Equipment manufacturers are looking at the viability of electric equipment quite seriously. JCB India has been working on its ‘Road to Zero’ initiative for the past few years.Early this year we introduced the industry’s first fully Electric Excavator, the JCB 19C-1E at Excon, Bengaluru. JCB 19C-1E is a zero-emission machine and has four lithium-ion batteries that power the machine for a full day on a single charge. With a significant focus on safety and productivity, JCB’s 2GO system safely isolates all controls as a secondary safety system. Its auto-idle and auto kick-up redistribute powerto preserve battery life. The machine has been introduced after rigorous testing and validation. Manufacturers need to focus on smaller machines to make the Electric segment popular in the Construction Equipment category. These machines can work well in urban areas and indoor projects. Smaller machines can also work well inside tunnels for hydro, metro, and road construction projects.
We will require a robust infrastructure to support Electric Construction Equipment.India right now is at the initial steps of the electric equipment revolution. The Government has a relentless focus on the development of EV-compliant infrastructure across the country. A private consumer expectation survey recently showed that around 66% of Indians said that electric vehicles will surpass petrol and diesel cars by 2030. For electric construction equipment, popularity will depend on manufacturers’ investment to developsmaller engines that can provide a powerful experience without compromising on the overall cost of the machine.
What will be some of the biggest infrastructure projects in India in 2023?
India’s infrastructure development for the next decade is lined with huge projects and government schemes. Plans to develop India’s infrastructure have been given impetus through the National Infrastructure Pipeline (NIP), the National Monetisation Plan (NMP) and Gati Shakti and the National Single Window System (NSWS). NIP is an aggregation of social and economic infrastructure projects. It aims to enhance investor confidence through better access to financing resources, and better management of projects. The NMP monetises previously government-operated sectors by transferring the operations to private companies in sectors like railways, roadways, airports, energy etc. Gati Shakti is India’s master plan for multi-modal connectivity that brings together 16 ministries to coordinate infrastructure development to ensure last-mile connectivity and network between the various modes of transportation.The NSWS is another strategic policy to implement NIP and NMP. It is an online platform where investors can apply for clearances. The issues of delays in approvals and provision of information are dealt with through NSWS. Under the Bharatmala programme, the government is planning the construction of 22 greenfield expressways, 23 tunnels and bridges and 35 multi-modal logistics parks.
Cargo traffic in India is expected to reach 2,500 MTPA by 2025. In 2021, the Indian government announced plans to upgrade port infrastructure and an investment of $82 billion in port projects. It has identified 92 non-major ports for capacity expansion, adding 712 MTPA to the existing capacity. The government’s Rs. 6,50,000crore ($ 97.5 billion) Sagarmala programme will address this need by undertaking projects such as national waterways, last-mile road and rail connectivity, construction of multi-modal logistics parks, and connecting ports to freight corridors. India has the world’s fourth largest Railway Network and for FY 2023, Rs. 1,40,000 crore ($21.5 billion) have been allocated to the Railways. The government also plans to improve Railways’ freight movement to 45% from the existing 26%.Railway development plans include the renovation of 400 existing stations and the development of 40 new stations. We are slated to become the world’s third-largest aviation market for passenger traffic. The government plans to increase the total number of airports from 140 in 2022, to 220 by 2024. Passenger traffic is estimated to grow to 520 million by 2037. Early this year construction of 21 airport projects was approved and the government plans to build airports in Tier 2 and 3 cities.
The Government of India has also introduced the National Logistics Policy (NLP) and the National Bank for Financing Infrastructure and Development Bill (NBFID) to back up infrastructure projects nationally. The NLP 2022 developed by the Commerce and Industry Ministry aims to increase India’s ability to compete internationally, generate more jobs, boost its standing in international rankings, and open the door for India to develop into a logistics powerhouse.The policy aims to make Indian goods more competitive while also promoting economic growth and expanding job possibilities.
To increase long-term funding for infrastructure projects, the NBFID bill was introduced in March 22, 2021. It seeks to establish the National Bank for Financing Infrastructure and Development (NBFID) as the principal development financial institution (DFIs) for infrastructure financing. DFIs source long-term funds from the market, government, as well as multilateral institutions, and are supported through government guarantees. Among the people of the country, there resides a sense of faith in the India Growth Story owing to its political stability and policy reforms in the past decade.
Waste Management, the number one item on our priority list is overall reduction of waste. Linked to this is the issue of single use plastics which, for many years, has been a wasteful use of resources. We also recognise that they contribute to polluting our oceans, harming wildlife, and preventing recovery of valuable resources. We are currently working hard to research on elimination of single use plastics and packaging in our business. All JCB India manufacturing locations have taken up at least 2 waste reduction projects. This has helped to reduce packaging waste by 15% and we are all set to achieve zero single use plastic usage, soon. Two of our manufacturing locations, Pune and Ballabgarh have achieved “Zero waste to landfill”. This has been possible as the locations have started giving away waste to cement industries, who co-process this waste for their internal use. So, our waste becomes their raw material. This is a perfect example of circular economy wherein everything is utilised and nothing goes out as waste. We continue to invest in Research and Development towards waste eliminations and are hopeful of elimination maximum waste in the coming years.