The long-term potential for India's construction equipment market seems to be very significant. Let's look at the factors which will make a difference...
If the numbers are any truth, then the Earthmoving and Construction Equipment market in India is expected to grow by 20 to 25 percent over the next few years to reach 330,000 to 450,000 units sold in 2020, from current levels of about 76,000 units. This would mean $16 billion to $21 billion market, up from today's $3 billion. Further, the sector is expected to be dominated by backhoe loaders, but broad-based growth is expected across products, with each segment expected to see double-digit growth. Thus, the construction equipment companies in India have all the reason to say Cheers!
Factors in the favour of growth of this equipment segment
Here is a list of six factors that will propel the industry forward in future:
· Demand from end-user industries: Demand from end users will continue to rise as a result of increased use of this equipment in traditional end-user industries, including construction and mining.
· Higher adoption in traditional applications: Increased use of this equipment in traditional applications such as digging and soil loading so as to increase the speed will propel the growth of the segment.
· Demand from new applicatioÂÂÂÂns: Demand for this applications is also expected to grow in new segments such as agriculture which traditionally faced issued like lack of access.
· Growing urbanisation: Urbanisation will also drive the demand for construction activities and in turn this equipment segment so as to meet residential, commercial and infrastructure development needs.
· Increased affordability. New players entering the market will make competition stiffer, thereby, making this machine more affordable. This trend is supposed to deepen the markets to cover users with the machine needs and previously low access.
· Better availability of financing. More financing of this equipment will create wider use by encouraging users to opt for these machines.
Future challenges on the way
· Availability of skilled manpower: As the construction equipment industry will grow, the need for trained operators and mechanics will increase proportionately and this is likely to be a challenge for construction equipment companies in India.
· Stiff competition: The emergence of new construction equipment players in the coming years will make the competition stiff.
· Need for innovative solutions: With growing awareness, end-users will demand world-class technology for better fuel efficiency, higher productivity and profitability, thus, this equipment manufacturers will have to come up with innovative solutions to meet customer expectations.
· Resale of used equipment will be difficult: Since, the secondary market for used this equipment is not fully developed in India, the resale of used equipment will be a challenge for the construction equipment manufacturers in the country.
Despite these few challenges, the long-term potential for India's this equipment market seems to be very significant due to various factors propelling the growth of the segment. Foreseeing large construction activities underway, the construction equipment industry is set to see a boom in coming days. Construction of highways, railways, bridges, ports, residential and commercial building seems to be on the cards of the government and private players and hence, the construction equipment industry is expected to remain bullish about the long-term prospects.