Indian CE industry's vision is to achieve annual sales volumes of 250,000 units or more by 2030.

V Vivekanand

President, ICEMA

How do you assess India's infrastructure development and the role of construction equipment in this growth?

The growth of the Indian economy to achieve its target of USD 5 trillion GDP hinges critically on creation of a world-class infrastructure. The Government of India has reiterated its commitment to infrastructure sector through increased capex in consecutive budgets - with the 2023-24 Budgetary allocation at Rs 10 lakh crore - and initiatives such as National Infrastructure Pipeline (NIP), National Monetisation Pipeline (NMP), PM Gati Shakti Program, National Bank for Financing Infrastructure Development (NaBFID) and InvITs.

The momentum for the CE industry's growth derives primarily from the Government's enhanced focus on infrastructure as a vehicle for economic growth. The CE industry is ably partnering with stakeholders by providing solutions for infrastructure development. The products of the Indian CE industry are second to none and are delivered at the highest standards of global quality. Since construction equipment accounts for around 15-20% of total construction project costs, the CE industry braces itself to meet the demands of the incipient infrastructure explosion in the country.

Roads and highways, the highest end-user sector of construction equipment, which accounts for around 40% of total CE demand, is recording a healthy pace of construction, at around 30 km per day, with more expressways and multilane highways. As the reach of India's road network extends to difficult and previously inaccessible terrains, there is growing demand for construction machinery adapted to the requirements of these terrains.

Another 30% of demand for CE derives from the mining sector, which is growing by leaps and bounds in response to the nationwide drive for infrastructure as well as urban and rural reconstruction. Construction equipment are also widely used in other infrastructure sectors including other infra development projects such as railways, aviation, ports, etc.

About 15-20% of construction machinery is also used in waste management, which is an emerging area of demand as the world goes green. Further, as India moves towards net zero, with increasing thrust on sustainability in infrastructure development, there is need for technologically advanced machines for driving efficiency across diverse applications which are catered by CE industry.

How has been the performance of the Indian construction equipment industry this year?

In 2022-23, the CE industry bounced back from 8% de-growth in FY22, with a resounding overall sales growth of 26%, resulting in the highest ever sales volumes due to excellent performance by all five equipment segments. In FY23, the Indian CE industry thus recorded its highest volumes and sold more than 100,000 units, thus proving the resilience of the industry as well as that of the Indian economy. The Indian Government's drive for infrastructure development as the primary vehicle for economic growth is a crucial factor behind the growth of the industry.

So far, the CE industry has continued this positive growth trend with around 18% sales growth in Q1 of FY24 as compared to Q1 of FY23. We hope to sustain this momentum over the rest of FY24 as well.

What are the major developments happening in the CE industry in terms of technology?

The primary focus areas of the Indian CE industry in terms of technology are enhancement in Safety, Sustainability and Solutions.

In terms of Sustainability, CEV Stage-IV emission norms have already been implemented and Stage-V will be implemented from 1st April 2024, along with Phase-II safety requirements. ICEMA has been advocating emission norms for off-road equipment too to strengthen the commitment for sustainability. Further, ICEMA members are also progressing steadily on developing CE using alternate fuels such as hydrogen, CNG, biodiesel and electric.

The industry is constantly endeavouring to develop product offerings with enhanced safety features pertaining to the equipment and the operator, at par with global standards.

Increasing acceptance of Telematics is another breakthrough as the Indian CE industry gradually embraced digitisation and automation. Telematics systems are being integrated into CEVs to improve operational efficiency and reduce downtime.

How is CE manufacturing gaining prominence in India? How is the future scenario of Make in India for CE?

With the government's consistent thrust on infra-led economic growth over the past few years, the Indian CE industry is becoming increasingly prominent in view of its vital role in execution of these infra projects. Besides construction equipment constituting 15-20% of total construction costs for infrastructure projects, the CE industry also bears the responsibility of providing quality equipment for their cost-effective and time-bound completion, often customising equipment according to the requirements of special projects.

Thus, as India gears up to become a developed nation by 2047 on the basis of world-class infrastructure, the CE industry has a huge growth potential, which will create high demand for construction equipment. The industry is working to targets embodied in its Vision Plan 2030 which envisages a compound annual growth rate (CAGR) of over 12%, to attain annual sales volume of 250,000 to 260,000 units and a three-fold growth in market size to USD 25 billion by 2030. With this, the Indian CE industry aims to provide direct and indirect employment to over 6 million people and become the second-largest in the world.

The industry is well prepared to achieve this target, with a globally acknowledged product line and a strong manufacturing capability with presence of over 50 leading OEMs. There is further emphasis on increasing localization and indigenization of components to align with the government's Aatma Nirbhar Bharat Mission.

This is crucial as a key challenge that the Indian CE industry faces is dependence on imported components, in spite of a relatively high levels of indigenization. Even though approximately 95% of the products of the Indian CE industry are more than 50% indigenized, we have a high level of dependence on imports of high precision components, especially hydraulics, undercarriages and electricals/electronics, as well as few fully built machines with low domestic demand.

The target is to increase indigenisation levels to 70% overall by 2030. Hence, attracting investment from component and construction equipment manufacturers is important. For this purpose, the CE industry has submitted a PLI proposal to the government which will help the industry attract investment, increase manufacturing capacity, reduce imports and also boost exports of construction equipment.

How is the demand picking up for various infrastructure equipment and machinery?

The Indian CE industry has registered robust growth during FY23 with sales having crossed the 100,000 mark for the first-time ever, as all five major construction equipment segments recorded growth in sales. In the current year too, the growth so far has been good with first quarter results showing 18% YoY growth.

The forecast for this year is quite promising due to the government's focus on infrastructure development, primarily in roads and railways, which are prominent generators of demand for construction equipment. We expect the growth momentum to sustain for this year too.

As India set to become the third-largest economy by 2030, how do you visualise the growth of India in the coming years? What is your vision 2030 for Indian CE industry?

Several reports from international agencies have pegged India as the world's fastest growing economy, with a very positive prognosis. In FY23 the Indian economy did better than expected by achieving 7.2% growth despite global headwinds. The outlook for the coming years is, thus, extremely positive. The government's strategy to drive infra-led growth is expected to play a vital role in bolstering India's growth prospects.

The Indian CE industry's vision is to achieve annual sales volumes of 250,000 units or more by 2030, with a market size of USD 25 billion, becoming the world's second largest and fastest growing CE provider with a globally acknowledged product line and a strong manufacturing capability.

Thus, the Indian CE industry, which recorded its best-ever performance in FY23, is gearing up to achieve Vision Plan 2030 as the macroeconomic indicators line up favourably to push up demand for construction equipment in both, domestic and export markets.

What are the future plans of ICEMA for Indian CE industry?

At the recently held ICEMA Annual Session 2023, we released the Technology Vision Roadmap 2035 for the Indian CE industry. The Roadmap is a strategic document that outlines the ICEMA's technology vision with a bold goal of enhancing safety, enabling sustainability goals while improving durability and productivity of solutions that help build India's tomorrow.

The three major focus areas of the Technology Vision Document are:

Safety: ensuring safety of equipment and operators, to eliminate equipment related safety incidents at the jobsite by 2035.

Sustainability: reducing GHG emissions by 45% from 2005 levels by 2035 and align with the government's commitment to zero emissions by 2050

Solutions: embracing technology much more aggressively to improve output quality and productivity by 2X at jobsite by 2035 through use of the right equipment for the right application and stay ahead of the curve.

There are four key pillars integral to adoption of the Technology Vision Roadmap:

• A robust regulatory framework that is stable and predictable
• Enforcement of rules and regulations that are already in place
• Skilling: investment in skilling for the future for employees, operators as well as end-users to ensure optimum use of technology
• An enabling infrastructure encompassing the right kind of alternative fuels, grid powered equipment, etc.

The Technology Vision Roadmap is, thus, a guiding document for the entire CE industry that lays out India's view for the future in terms of technology adoption, safety and sustainability.

Another point that I would like to discuss is the imperative for proper skilling in the CE industry. Formal training in machine operations and regular skill upgradation courses improve jobsite safety and make a more satisfied workforce, which also impacts overall productivity in a positive manner.

The government is striving to make skilling certification mandatory for machine operators in all infra projects. The CE industry has recently trained 10,000 operators in equipment operations, which is a commendable achievement and a positive step for the future. This initiative needs to be carried forward in a big way. Training people to use equipment efficiently will increase the life span of the equipment, make it more productive and generate increased employment.

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