Construction Equipment Business Projections for the Next 5 Years
When we look at the comparison between other industries and the construction sector, there is a noticeable decline in productivity growth, even though it is a remarkable contributor to the world’s overall economic development. In recent times, there are a number of social and political factors that bring new challenges to the industry in the form of a higher demand for resource friendly construction sites and lower emissions. In addition to these demands, the vice-like grip of Covid-19 on the economy gave birth to a plethora of negative consequences for the construction sector (national lockdowns, factory closures and stalls in projects to name a few).
Having said that, in the global construction equipment market, countries in the Asia-Pacific regions are on top, with India, China and Japan holding a major market share. The Indian construction equipment industry shows an estimated projection of crossing 4.7 billion USD in the next 5 years with foreign investments on the rise, and an expected growth in the construction equipment business specifically after Covid-19 un-locks. For 2021 alone, the ICRA expects the construction equipment industry to grow by 15-20% provided that the pandemic does not hinder this growth by posing potential negative consequences. In Asia, a few drivers for the growth of the construction equipment industry are the real-estate business, commercial and residential complexes, expansion of rail and road infrastructure and dam construction projects. It also helps to know that the Indian landscape of the construction equipment business is dominated by these specific segments of the construction equipment market: Road construction equipment, earth moving, material handling and concrete mixing. As India picks up after the Covid-19 slowdown, there is an anticipation for increase in demand in the coming years for specific products like backhoe loaders, crawler excavators, forklifts, etc owing to constituents like shorter completion time, larger project sizes and growing demand for multipurpose and customized construction equipment by end-users.
The Government of India, by continuing its Build India momentum is aiding to counter the economic slowdown in the ecosystem by creating initiatives that focus on infrastructure development which further boost demand and growth in the construction equipment business. Projects like the metro rails in cities, the Smart City Mission, AMRUT (Atal Mission for Rejuvenation of Urban Transformation) are also key elements in this boost. The liberalising of taxation policies and reducing the GST on construction equipment from 28% to 18% in 2018 are additional measures the Government of India has taken to ensure that construction equipment manufacturers can mitigate operational losses and overall cost of construction equipment.
Volatile times like these, where even predictions for trajectories of growth in the construction equipment market are subject to so much change, tend to open up the conversation to the subject of the increased global focus on automation and reliance on digitalisation in the manufacturing and construction processes.
Automation, connectivity, digitalisation and new technologies pave the way for new ecosystems in the construction equipment industry. The fairly nascent concept of renting pieces of construction equipment also has its benefits in terms of equipment costs and including professional operational services and manpower along with the cost of the rent. Transformations in the construction equipment industry like these strive to elevate the boundaries of existing construction equipment business models to new levels.
At Mahindra, we take stock of the current global scenario and provide products that have cutting edge technology, are relevant to the Indian market, and cost effective. Every piece of Mahindra construction equipment is diligently crafted to meet the specific needs of the Indian consumer, climate and construction industry. The EarthMaster range of backhoe loaders boast of revolutionary iMAXX technology, along with the cheapest servicing costs in the market. We believe that in today’s climate, the equipment that saves the most, earns the most, and those are the kind of products we strive to create.