ICEMA's Vision Plan 2030 aims to make India world’s 2nd largest in Construction Equipment industry, reveals President

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  • Nov 28,23
Indian Construction Equipment Manufacturers Association (ICEMA) is the nodal body representing the Construction Equipment industry (OEMs, suppliers and financial institutions) in the country and is affiliated to Confederation of Indian Industry (CII). V Vivekanand, President of ICEMA and of Managing Director at Caterpillar India, in this interview, shares the current outlook of Indian CE industry while emphasising on the need of technology adoption. The association also launched ICEMA CE Technol
ICEMA's Vision Plan 2030 aims to make India world’s 2nd largest in Construction Equipment industry, reveals President

What is your analysis of the present status of the construction equipment (CE) industry in India?
As India progress towards attaining its goal of becoming a $5 trillion economy, infrastructure continues to be the primary driver of economic growth, and concomitantly, of growth in demand for construction equipment. The Indian Construction Equipment industry has seen tremendous amount of traction post-covid, duly catalysed by the government’s thrust on infrastructure development through various flagship initiatives like NIP, GMP and NMP, since construction equipment comprises around 20 per cent of the average project cost.  The industry results for the last fiscal bear witness to this phenomenon, with CE sales crossing the 100K volume mark for the first time, recording an unprecedented 26 per cent annual growth. 

Currently the Indian Construction Equipment industry stands at the 3rd position globally, after the US and China. The record-breaking results of the previous fiscal, along with global recognition for our products and healthy growth of exports, have enabled us to consolidate our position and we are now a strong contender for the number two spot. This is also in alignment with the CE Industry Vision Plan 2030 of ICEMA which has set a goal of Indian CE industry becoming the world’s second largest and fastest growing CE industry, with 3 times export growth and a market size of $25 billion by 2030. 

How is the demand for products and solutions from the CE industry increasing in the market? What factors are driving the demand?
The Indian CE industry is on a high growth trajectory on the back of the government’s continued focus on infrastructure as the primary engine of economic growth in the country. The growing demand for products and solutions from the CE industry is catalysed by the government’s thrust on infrastructure development through various flagship initiatives like NIP, GMP and NMP, since construction equipment comprises around 20 per cent of the average project cost. The industry has consolidated upon the highest ever sales growth of 26 per cent in FY23 with volumes crossing the 100K mark for the first time. In the present fiscal, there has been robust overall growth of 18 per cent and 31 per cent respectively in the first two quarters of FY 24 and we confidently expect an overall growth of 15-20 per cent for the year as a whole.

Projects worth Rs 108 trillion in the National Infrastructure Pipeline are the primary drivers of demand for Construction Equipment in the country. Besides roads and highways sector, which is the largest consumer of CE, these include critical transport infrastructure projects in the Railways sector, including metro and high-speed rail; airports and heliports; as well as ports and waterways, for last mile connectivity. Additional demand drivers include increased activity in the rural infrastructure and urban reconstruction sectors.

What are the key challenges before the CE manufacturers? How ICEMA is helping CE makers to overcome these challenges?
In view of the ongoing and expected spurt in demand for construction equipment in the economy, the industry needs to augment production capacity in tandem with improved productivity of its equipment. This would involve adoption of innovative and cost-effective technologies that can ramp up productivity of existing as well as new machines. In this context Ministry of Heavy Industry’s Samarth Centres are extending facilities to MSMEs for easy access to technological up-gradation and converting their existing machines into smart machines for enhanced productivity. Further, the recently launched ICEMA CE Technology Vision Roadmap aims to serve as a guide to the industry for innovation and adaptation of new technologies to stay ahead of the curve in meeting future challenges for safer, more productive equipment which is also ecologically sustainable.

Additional challenges in meeting customers’ requirements could be constraints in the supply chain due to factors such as sudden increase in raw material prices, which would dent the cost effectiveness of our products, or disruption in availability of raw materials. ICEMA is making consistent efforts to strengthen the CE industry’s supply chain, especially working with tier 1 and tier 2 suppliers, to strengthen their capacities. ICEMA is working with policymakers to facilitate building of local capacity and capability through production linked incentives for the CE industry.

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, crawler motors, pumps, drives, engines, powertrain etc, which are largely being imported at present, and require considerable investment by the Indian manufacturers in the value chain to enable their domestic production. ICEMA is proactively partnering with various global associations to attract the supply chain partners to setup manufacturing in India for establishing their facilities for building the capacity and capability in India.

What are the key trends in the construction equipment industry?
As the construction industry the world over transitions to smart production solutions and ecological responsibility, there is growing demand for more 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.

In terms of demand trends for specific equipment, there is an increasing trend away from large, heavy machinery and towards user-friendly, smaller size equipment, for instance, mini excavators, which have recently exhibited a decided uptrend in demand.

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.

What are some key industries driving the demand for CE products and equipment? Since, railways, power and infrastructure industries are making high investments in construction projects, do you have any such projects on radar currently which is going to drive this demand?
At this juncture the CE industry is experiencing all-round growth. All the infrastructure sectors – roads, mining, railways, urban reconstruction, rural development, ports and waterways etc – are making good progress, thereby driving demand for the CE industry’s products. Speaking of projects, there are a number of projects in the pipeline and in various stages of execution in different sectors, such as the high speed rail corridor between Ahmedabad and Mumbai, Metro Rail in various cities and multiple expressway projects (Purvanchal Expressway, Delhi-Mumbai Expressway etc) which are driving the demand for construction equipment. Additionally, Coal India has been increasing coal output year over year, thus driving the demand for mining equipment.

How has CE industry grown over past years in India? 
Over the past decade the Indian Construction Equipment industry has been on a growth path, with sales volumes more than doubling from 50,000 units in FY 2014 to 107,000 units in FY 2023. The growth trajectory of the industry has been consistently upward, barring two of the pandemic years, namely FY 2020 and FY 2022, when sales volumes dipped by 14 per cent and 8 per cent respectively, owing to the Covid related lockdowns, supply chain disruptions and spiraling raw material prices.

However, post FY 2022, the CE industry has clocked its best ever performance in FY 2023, with a phenomenal 26 per cent growth and sales crossing the 100K mark as the Indian economy recorded a resilient turnaround on the back of the government’s sound growth strategies. Going forward, the prognosis for the Indian CE industry is positive, especially in view of the government’s continued emphasis on development of infrastructure – the highest end-user for the CE industry – as the primary vehicle of economic growth.

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