Construction equipment sales likely to touch double-digits this fiscal year

The sale of construction equipment is expected to grow in double-digits for the second consecutive year this financial year due to high government spending on infrastructure development.

Dimitrov Krishnan, head of Volvo CE India, said, "Sales of construction equipment increased by nearly a fifth since April and are likely to close the year at 125,000-130,000 units, crossing the last peak of 107,779 units in FY23."

In the pre-pandemic year of FY19, construction equipment makers had reported sales of 98,000 units. India is currently the world's third-largest market for construction equipment, after the US and China.

Alexander Markov, vice-president of CASE Construction Equipment, APAC and AME, said, "Among major markets (for construction equipment), while North America is still growing, China is a big problem with sales declining 50 per cent this year. India, by far, is the fastest-growing (one). The push towards infrastructure development is the cornerstone for growth in the country."

According to a report in The Economic Times (ET), in the current financial year, the Centre increased capital outlay on infrastructure development to Rs 10 trillion, amounting to 3.3 per cent of the GDP. India plans to spend Rs 143 trillion for developing infrastructure till 2030, double of the Rs 63 trillion spent in the previous seven years starting 2017, stated credit rating agency CRISIL.

Krishnan said, "Our estimate is that the Indian market will grow 2-3 times by 2030. Not only that, with the direction that the government has set when it comes to sustainable power solutions related to the electrification or use of alternative fuels, India will lead the way."

JCB India managing director Deepak Shetty said that rural India is witnessing high equipment sales. "More than 65 per cent of our equipment is sold in rural areas. And as much as 65-70 per cent of these are sold to first-time buyers. There are a lot of small projects in rural areas where our equipment is being used for construction of ponds, rural roads. There is a lot of work happening under the Pradhan Mantri Gram Sadak Yojana (PMGSY), which is boosting demand," he said.

Markov added that CASE Construction plans to enhance both manufacturing capacity as well as product range. Volvo CE exports 15 per cent of its production to markets in Southeast Asia, Africa, Latin America, Nepal, Bhutan, Bangladesh, and Sri Lanka, JCB India has invested Rs 1,000 crore in a new facility in Gujarat to scale up exports.

Due to the pandemic in FY22, the total sales of construction equipment declined by 8 per cent, but grew by 26 per cent to 107,000 units in FY23.