Massive efforts are underway to promote Indian construction equipment exports.
V Vivekanand
What is the current market size of Indian construction equipment industry?
As the Indian construction equipment industry rides the crest of its second consecutive landmark performance in 2023-24, the current market size of the industry stands at USD 9.5 billion, including both domestic and export markets.
As India is set to become the third-largest construction market globally, what opportunities do you visualise for construction equipment industry?
India continues to be the world’s fastest growing economy with the aim to be a USD 5 trillion economy by 2030 and a developed country by 2047. This calls for a massive investment in world class infrastructure as the main driver of the economy. ICEMA takes pride in partnering with the government in enabling creation of this infrastructure and Shaping India’s Tomorrow.
The Indian construction equipment industry has already been witnessing unprecedented growth in demand across all equipment segments, resulting in two back-to-back record-breaking annual results. Given that construction equipment comprises 15-20% of the average construction project cost, the rapidly growing construction sector is expected to drive demand for the CE industry’s products in the coming years, in existing as well as emerging segments.
How are the equipment players prepared to introduce more efficient and productive equipment to meet the future demand?
With the construction landscape in India evolving rapidly to align with global imperatives such as reduced ecological footprint, enhanced jobsite safety, and jobsite solutions based on increased automation and digitalisation, the demand profile for construction equipment is evolving in tandem with these developments. Additionally, as the economy expands, new demand segments are emerging, requiring state-of-the-art construction equipment with greater versatility across applications, or alternatively, customised for specialised functions.
In order to meet the rapidly transforming demand for construction equipment, the CE industry players are adopting the latest technologies and innovations, to produce machines with higher levels of efficiency, productivity, safety and sustainability. This process is being facilitated by adoption of the CE Technology Roadmap 2035 which was prepared by ICEMA in consultation with industry and government experts, and released in August 2023 by Shri Nitin Gadkari, Hon’ble Minister, MoRTH. The Technology Roadmap is serving as a step-by-step guide for CE manufacturers to embrace the three salient focus areas of Jobsite Safety, Jobsite Solutions and Sustainability as they pursue the path of tech-enabled growth.
As India is fast becoming a global manufacturing hub, how are you raising the benchmark of quality to cater the global market?
The Indian construction equipment industry, in pursuing the objectives of CE Vision Plan 2030, is poised to emerge as the prime global manufacturing hub for construction equipment by the end of the decade. Capacity, Capability and Competitiveness are the three important aspects all OEMs are intentionally building. Capacity will help us meet the scale of demand that is likely to emerge in the coming years. Capability will help us to stand out on the Quality of products that is on par/better than global benchmarks, and lastly, competitiveness is important as India positions itself as not only a major market for CE, but also the epicenter of manufacturing for CE industry.
Another significant requirement is for OEMs to a robust develop component manufacturing ecosystem which involves enabling the MSME sector to produce components commensurate with global quality standards. This is especially required in the case of component suppliers from Tier 2 and Tier 3 cities. The government’s initiative to create an enabling ecosystem for the MSME sector is expected to catalyse the required changes.
ICEMA is proactively partnering with various international industry associations to attract global supply chain partners to set up manufacturing in India, thereby reducing import dependence, and thus, supply chain disruptions. ICEMA recently concluded a CE Industry Mission to Japan on 24th May, which was intended to promote interaction with the Japanese CE component manufacturers, and sharing with them the Indian CE industry’s growth outlook and the opportunities that it offers. ICEMA has invited the Japanese players to establish their manufacturing facilities in India and be a part of the Indian CE supply chain ecosystem. These initiatives are expected to enable India to grow into a global manufacturing and export hub for CE.
ICEMA is further making consistent efforts to strengthen the CE industry’s supply chain, especially working with tier 1 and tier 2 suppliers, to strengthen their capacities. The Association is also working with policymakers to facilitate building of local capacity and capability through production-linked incentives for both, OEMs as well as tier 1 and tier 2 suppliers of CE industry.
What is the current status of Make in India initiative of Indian CE industry? What are the plans to scale up the Make in India initiative?
The Indian CE industry is intrinsically aligned with the Government of India’s Make in India initiative, as we are taking concrete steps to reduce our import dependence and be self-reliant, which not only enhances competitiveness but also improves resilience in supply chain. The industry’s objective to become a global manufacturing and export hub for construction equipment also segues into the Make in India initiative, as embodied by the MHI mantra of ‘Local to Global’.
Despite achieving minimum 80% indigenisation level in case of more than 50% of CE products, the Indian CE industry is heavily dependent on import of high precision components. The industry’s high technology products and precision components, which will drive future trends, involve high technology aggregates and systems such as hydraulics, electronic controls, pumps, drives, engines, powertrain, undercarriage items etc., which are largely being imported at present. These require considerable investment by the Indian manufacturers in the value chain to enable their domestic production. The CE industry’s endeavour to become a global sourcing hub is expected to generate sufficient demand to create the requisite scale for production of these components within India.
These initiatives will go hand-in-hand with the government’s endeavours to strengthen the MSME sector on one hand, and attract FDIs and overseas manufacturers on the other. The CE Industry Missions to relevant countries are also expected to help in attracting the foreign CE component players to India and build the necessary supply chain ecosystem that is critical to enhance domestic value addition and enable the Indian CE industry to become AatmaNirbhar.
What are the sustainability initiatives in the construction equipment industry?
To cater to the evolving demand trends in construction equipment, the industry needs to adopt measures to improve the sustainability and efficiency of machines as well as processes. There are high expectations from the construction equipment sector in enabling the Indian economy to become carbon neutral. In this a key role will be played by equipment operated on alternate fuels, use of alternate materials and measures to promote circular economy.
Currently, OEMs are working on development of construction equipment powered by alternate fuels such as hydrogen, CNG, methanol, bio-diesel and hybrid technologies to reduce emissions. Further, electrically powered CEVs have also been developed on fast track, by most of the OEMs. Recycled materials reduce the demand for raw materials, transportation costs and mining activities. Additionally, use of alternate materials can make the machines cheaper, lighter and more energy efficient.
What will be trending in future in Indian CE market and what is the road ahead to become the 2nd largest CE market globally?
As the construction industry transitions to smart production solutions and ecological responsibility, there is growing demand for more productive and energy-efficient machines operating on alternate fuels such as electric batteries, CNG, bio-diesel, etc, which would reduce the carbon footprint of the construction processes and make the industry more sustainable.
As far as demand trends for specific equipment are concerned, there is an increasing trend away from large, heavy machinery towards user-friendly, smaller size equipment, for instance, mini excavators, which have recently exhibited an uptrend in demand. With emerging demand, sectors such as rural and urban reconstruction projects, agricultural, waste handling and circularity-related requirements, there is growing demand for machinery that can be adapted to carry out multiple functions and is versatile across applications.
Additionally, with the newer generations of end-users, there is growing awareness about safety of machines, operators and the overall jobsite, and a willingness to invest in smart machines with technologically advanced safety features, as well as in skilling of operators, for the sake of long-term benefits in terms of increased efficiency and productivity.
Besides the enormous growth potential due to new trends and segments in the domestic market, export markets are another area of focus, as Indian CE industry gears up to attain the number 2 spot in the global CE arena. India’s CE exports worth about USD 0.7 billion are currently less than 1% of global CE exports, which the industry plans to increase to USD 3 billion by 2030. Massive efforts are, therefore, underway to promote Indian CE exports.
Skilling is another strategic requirement since skilled equipment operators are essential, not only for efficient and time-bound completion of projects, but also from the safety standpoint, especially in view of the fact that the bulk of construction and mining equipment are operated in hazardous environments. The industry’s transition will, thus, be driven by its workforce, which needs to evolve in response to the changing workplace requirements.
