The Indian CE industry has set itself the mission to enhance the level of indigenization

- Dimitrov Krishnan

President, Indian Construction Equipment Manufacturers Association (ICEMA)

How do you view the ongoing infrastructure developments under the National Infrastructure Pipeline programme in creating a strong nation?

With infrastructure investment known to have a multiplier effect of 2.5 in India, infrastructure development is clearly of critical importance to the nation's socio-economic development. An investment-oriented Union Budget FY23 is a step in the right direction and stands testimony to the government's enhanced focus towards creation of world-class infrastructure in the country. The National Infrastructure Pipeline (NIP) offers a huge opportunity for creating world-class infrastructure in the country. It may be noted that the Rs 111 lakh crores (US$ 1.4 trillion) NIP launched with 6,835 projects initially has since been expanded to cover over 9,000 projects covering 34 infrastructure sub-sectors. However, time-bound completion of NIP projects remains critical for India to achieve its goal of becoming a US$ 5 trillion economy. As of mid August 2022, only 11% of NIP projects, in terms of number of projects, have been completed while more than 50% are under the implementation stage. Infrastructure projects also remain significant from a strategic point of view. A total of 6,195 km of border roads is currently under construction.

How is the Indian construction equipment industry supporting the ongoing infrastructure developments (construction, mining and real estate) in the country?

The Indian CE industry plays a critical role in infrastructure development and offers a wide range of equipment with usage across key infrastructure segments, viz., earthmoving & mining, concrete, material handling, material processing and road construction. Construction, earthmoving, material handling and mining (CEMM) equipment are vital for successful and timely completion of government's mission critical infrastructure projects.

With increased focus on areas such as equipment efficiency, comfort, remote connectivity and safety, advanced technology and digitization in the Indian construction equipment industry has been evolving fast. Extensive usage of telematics in construction equipment and information and communication technology (ICT) enablement helps generate data pertaining to equipment usage hours, efficiency of usage, alarms for system malfunction amongst others. This information enables project executioners to monitor the health of their equipment, enhance preventive maintenance and manage their projects better. The increased use of artificial intelligence by way of autonomous drive technologies in mining equipment such as dumpers is also helping improve productivity and safety of the projects. Additionally, ergonomically designed air-conditioned operator cabins, enhanced safety features and geofencing are some of the other key developments in equipment design and technology that aid faster and efficient completion of infrastructure projects.

What is the current market size of Indian CE market and how is it placed globally?

India is the third largest construction equipment market in the world after China and the US. With a turnover of US$ 6.5 billion, the Indian CE industry sells between 80,000 ~100,000 units per annum on an average. This industry, comprising some of the largest global as well as domestic CE players, is poised to grow by 3x to become the second largest CE market in the world by 2030.

The demand outlook for the construction equipment sector remains robust with MoRTH targeting 18,000 km of national highway construction in FY22-23 at a pace of 50 km per day and expanding the national highway network to two lakh km by 2025. In addition, the proposed river linking projects, last mile delivery of drinking water under Nal Se Jal scheme, Pradhan Mantri Awas Yojana, the railway network expansion and modernization, airports upgradation, mining and quarrying amongst others will create opportunities for all five segments of construction equipment to grow over the next five years.

The outlook for the industry therefore remains positive. Provided that there are no unprecedented incidents in the near future, the industry sales figures are likely to touch 100,000 units in FY23.

How is the Indian CE industry responding to Make-in-India programme? What is the share of local consumption and exports of Make-in-India construction equipment?

Indian CE industry has taken a slew of initiatives towards indigenization. With almost 90% of CE products by volume already more than 50% indigenized, the Indian CE industry is making a significant contribution to the Make in India Mission. However, almost 25~40% components (by value) are imported by this industry. The Indian CE industry has set itself the mission to enhance the level of indigenization. In pursuit of this vision, ICEMA has submitted to the government a draft Production Linked Incentive scheme to encourage investment in mother technologies under the Government's Aatma Nirbhar Bharat initiative. This will be a major step in enhancing the contribution of Indian CE industry to the Make in India programme.

Indian CE exports have grown by 60% YoY in FY22 implying increased focus of the industry towards exports and greater acceptance of Indian manufactured heavy equipment in the global markets. With the Indian CE industry transitioning to the new CEV-IV emission norms for wheeled equipment, there exist significant export opportunities in advanced markets globally.

Given that the supply chain, an integral piece of strengthening indigenization, comprises mostly of MSMEs, the Indian CE industry is making efforts to ease MSME's access to finance. ICEMA also creates platforms such as the Finance Conclave to bring the stakeholders together to discuss and address the challenges faced in last mile financing.

India still lags behind in the manufacturing of heavy and specialty CE. What is your view on this?

The Indian CE industry boasts of world-class technologies and manufacturing processes. Heavy construction equipment manufactured in India are well accepted globally, including advanced markets. The demand for specialty equipment is also gaining traction in India especially in tunnel construction and urban infrastructure projects including pipe laying. However, a key challenge, still faced by the industry is the high dependence on import of precision components, hydraulics, undercarriages, and electricals/electronics from Korea and Japan. Investment in mother technologies therefore needs to be incentivized under Government's Aatma Nirbhar Bharat initiative, through incentive schemes such as Production Linked Incentive (PLI), to help India become a manufacturing and export hub for CE.

How do you visualize India as the CE manufacturing hub for the world? What could be the challenges and opportunities?

The Indian Construction Equipment Industry has stepped up its focus on R&D and innovation. The state-of-the-art manufacturing technologies being used by CE OEMs in India is at par with the world. Further, it is important to note that domestically manufactured equipment is being exported to major markets across the globe, including the EU, UK and the US. This is a clear indication that India has the potential to become a global hub for construction equipment exports. To leverage this opportunity, India needs to develop a robust supply chain operating ecosystem with a view to eliminating supply chain disruptions, increasing localization level and ensuring world-class quality standards at an optimal cost of procurement and operation.

What is your advice to the customers of Indian construction equipment?

With OEMs investing in world-class technologies to support efficient and timely completion of construction projects in the country, the CE industry in India is witnessing a big 'Technology Revolution'. However, to make the most efficient use of these advanced technologies, customers of construction equipment need to upscale, train and skill their operators in the use of such technologies. Skill development in the CE industry thus needs to be given utmost priority. Trained and certified construction equipment operators are essential for on time completion of projects while meeting the desired quality parameters. Skill development is also important from the point of view of safety as most construction and mining equipment are operated in hazardous environments.

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