The growth of the infrastructure industry is expected to drive the global construction equipment market. Sounds familiar? Global experts believe that this increase can be attributed to upcoming construction projects around the globe, primarily in developing nations. Major upcoming events, such as the 2018 World Cup in Russia, are also expected to contribute to the demand for construction equipment.
The construction equipment market is projected to develop at a CAGR (compound annual growth rate) of 4.59%, to reach a market size of $134.86 billion by 2021, while the mining equipment market is projected to grow at a CAGR of 6.42%, to reach $136.03 billion by 2021.
The market is primarily driven by the increased infrastructure activities around the globe and revised government norms regarding construction and mining activities. The Indian construction equipment market, however, recorded a steep growth of about 40 per cent in sales last year compared to the previous year. According to the latest Off-Highway Research report, the Indian CE market is expected to grow steadily in the coming years. The report says that 'the robust Indian market is forecast to go from strength to strength.' Increased investment and a pick-up in project implementation in the country's infrastructure market is expected to drive consistent and steady growth in Indian construction equipment sales for the next five years, and as the industry matures, India could emerge as a significant regional manufacturing hub, according to the report. The Indian market has achieved this growth at a time when matured markets such as Europe, Japan and North America suffered a 3 per cent fall in sales. These markets are, however, going to bounce back with growth predicted in the coming years.
It is heartening to see that the construction and infrastructure market is gaining momentum after a depression. More and more projects are under execution and new projects are being announced. While mega projects such as Golden Quadrilateral are in full swing, some other mega projects which were held up in the complications of policy paralysis, have seen some positive signs of taking off. Roads and highways projects are doing well, while other infrastructure segments such as ports, airports and power have new projects in the pipeline. All these are good news for the Indian construction equipment market.
EQUIPMENT INDIA is celebrating its nine years of successful service to the industry, when the Indian CE market is at the brink of a turnaround. The Budget 2017 has made a progressive approach towards the infrastructure development in the country with increased allocation for road and railway projects, while giving infrastructure status to affordable housing, the government has provided a new lease of life to the under-performing realty and housing segment.
The current year has begun on a volatile note. On one hand we have had the demonetisation effect hurting parts of the industry, we have had the Supreme Court's diktat on BS IV guidelines virtually leaving the commercial vehicle industry gasping. The GST bill introduction is expected to provide a positive effect on enhancing the momentum in the economy. The shift of power from the centre to the states is seeing public spending increase through the state coffers. The Pradhan Mantri Gram Sadak Yojana has too been provided with a larger capital expenditure of Rs 27,000 crore. The pace of rural road construction was 133 km per day under PMGSY in 2016-17 as compared with 73 km per day in 2011-14.
Allocation for Pradhan Mantri Awaas Yojana, a housing scheme for the poor, too has been raised by 44% to Rs 23,000 crore for 2017-18 to go toward building 10 million houses. Higher rural spending will add to driving revenue across the country. In short, infrastructure spending is the main driver for a yet to be scripted success story in 2017-18.
The government is not only providing funds and sops to infrastructure projects, but is also focusing on quality and speed of execution. To achieve these goals, various agencies have set certain quality parameters, to be followed by contractors. They have to use standard quality equipment with automation and control that can lead to optimum use of the equipment which leads to faster execution of projects and better quality. Our Ninth Anniversary Edition is discussing this changing paradigm in the use of equipment. Please read our Cover Story section to know more on the new technologies and innovations in different equipment segments offered by various equipment OEMs, and how to procure and maintain them at project sites.
While thanking you, dear readers, stakeholders and well-wishers for the support over the years, we welcome your suggestions to enable us track trends for you and and serve you better.