We expect more mining contracts to start in the near future.

We expect new equipment demand ahead of 2021 that would contribute to next year's expected growth of 6.6%.

- Dimitrov Krishnan, Managing Director, Volvo CE India

How do you look at opportunity of manufacturing the components that you currently import? 

Most of our components are produced in India so we have faced relatively few disruptions due to import challenges caused by Covid-19.

To what extent the earthmoving equipment segment has contracted due to current crisis? 

We expect Q4 of 2020 to return to a normal quarter where there will be more purchase of new equipment. We expect new equipment demand ahead of 2021 that would contribute to next year's expected growth of 6.6% based on Moody's forecasts.

What sort of course correction is needed to scale up the infrastructure investment that can trigger fresh equipment buying?

The Minister of Roads, Nitin Gadkari has commented that he would like to increase the kilometre of road building per day from 30 km to 60 km. If the government is able to increase to that construction speed, then we expect demand for construction equipment to be quite strong in six month. But this forecast is dependent on the ability of migrant labour workers to return to the construction sites from their hometowns and the economy returning to a more normal way of working.

How does the supply-demand scenario look like after the announcement of the stimulus packages?

The Indian government has announced a $260 billion Corona virus Rescue Package, the stimulus package mostly provides liquidity to small, medium and large businesses. The government has provided some relief measures for the banking and financial industries to allow credit to open up.

The Reserve Bank of India has also taken additional measures to incentivize credit to go further. We believe that while credit is available, people are still very cautious. The government has already provided credit guarantee schemes and announced that banks and financial industries must provide a moratorium on repayment of loans for an additional three months, but the government will need additional measures to ensure people feel safe and comfortable using its stimulus packages.

What time frame do you expect the opening up of commercial mining to trigger the demand for excavators and wheel loaders?

Toward the end of May, we saw activities resume with the relaxation of lock down provisions. One of the first segments to resume operations was mining sites and we expect more mining contracts to start in the near future. But the speed of pick up after Covid-19 is yet to be seen and until that is clear it will be hard to predict the demand level for excavators and wheel loaders.

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