After a 15 per cent drop in construction equipment demand to 83,470 units in 2019, some signs of
recovery were visible at the beginning of 2020. However, due to the COVID-19 pandemic and an
unprecedented national lockdown beginning March 25, 2020, sales declined by an estimated 39 per
cent in the first half of the year. However, demand for construction equipment recovered at
unexpected levels in the second half and monthly sales reached peak levels by November 2020.
Road construction activities have remained strong even in the crisis period, and the Ministry of Road
Transport and Highways alone successfully completed construction of 3,951 km of road during April-
September 2020. It has achieved the construction of 21.6 km per day even during the pandemic and
aims to construct a total of 11,000 km of roads in the financial year ending March 2021.
The rural economy has also been driving sales of construction equipment. A good monsoon, record
agricultural production and huge procurement by the government agencies along with a focus on rural
infrastructure are all attributable to increasing rural prosperity.
After a dismal performance in the quarter ended June 2020, it was expected that the construction
equipment market would decline by over 30 per cent in 2020. However, a strong economic recovery
and postponement of the implementation of the new emission standard CEV Stage-IV applicable to
wheeled construction equipment to April 1, 2021, resulted in a dramatic turnaround. Sales of backhoe
loaders, excavators, pick-and-carry cranes, and road building equipment have recovered much
rapidly in the second half of 2020 compared to other construction equipment.
Boosting economic growth is currently a major challenge for the government to achieve its dream of
making India a $5 trillion economy by 2024 (financial year ending March 2025). This would need an
estimated investment of about $1.4 trillion (Rs 100 trillion) on infrastructure during 2019-2024.
The report of the inter-ministerial task force to draw National Infrastructure Pipeline (NIP) for each
year has a projected total infrastructure investment of Rs 111 trillion during 2019-2024. As per the
NIP, central government (39 per cent) and state government (40 per cent) are expected to have equal
shares in funding of the projects, while the balance of 21 per cent is expected to come from the
private sector. However, the financing of the NIP would be a challenge.
Many infrastructural development projects in sectors such as roads, railways, rural and urban
development, airports, power, ports, and real estate are underway in the country. Indian mining sector
is also very strong with huge reserves of coal, iron ore, bauxite and various other metal and non-metal
minerals. Many ambitious programmes aimed at improving rural and urban infrastructures are being
implemented nationwide, which have the inherent potential to boost the construction equipment
market.
Apart from infrastructure, industrial development such as the construction of new factories and the
expansion of capacity in steel, power, cement, fertilisers, oil refineries and other sectors will have a
positive impact on the growth of construction equipment. The industrial sector is also expected to do
well due to programmes such as Atmanirbhar Bharat and Make in India with support of recently
announced production linked incentive (PLI) scheme.
Considering the set of conditions prevailing in the country and other foreseeable factors at the
moment, the market for construction equipment will follow an upward trend in the long term, but with a
dip in 2020. Off-Highway Research predicts the market to fall by 13 per cent to 72,925 units in 2020.
Sales should increase 14 per cent to 82,800 units in 2021, 12 per cent to 92,900 units in 2022 and a
further 8 per cent to peak at 100,300 units in 2023. The impact of the general election will reduce
sales of construction equipment by 7 per cent to 93,450 units in 2024.
Sales of all equipment types will rise, except irregularly sold machines such as articulated dump
trucks, crawler loaders and wheeled excavators. Structurally, there will not be much change and the
market will continue to be dominated by popular products: backhoe loaders, crawler excavators,
mobile cranes, compaction equipment and wheeled loaders. Together, these five types of equipment
should account for 92 per cent of the market in 2024.
Source:Equipment India