每日吃瓜

India has emerged as the fastest growing economy globally, with a GDP growth of nearly 7.3 per cent during 2015. GDP growth has been fuelled by the increasing number of infrastructure projects such as highways and Metro projects. The construction market contributed nearly 7 per cent to India?s GDP and is further estimated to contribute 8 per cent by the end of 2015. Further, by 2025, India?s construction market is expected to emerge as the third largest globally. This would lead the demand for new construction equipment such as earthmoving equipment, material handling equipment, concrete equipment and construction vehicles. The Union Government?s Clean India project is also driving the demand for construction equipment, especially backhoe loaders, crawler dozers and loaders.

Riding on the growth prospects of infrastructure projects in coming years, the Indian construction equipment market reached $4.6 billion during 2014-15. In volume terms, the market is expected to reach 118,700 units by 2020. In revenue terms, the market would be around $5 billion by 2020, growing at an annual growth rate of around 2.5 per cent. The number of crawler dozers sold was 1,009 units during 2014-15. The demand for small dozers below 150 HP and medium range segment up to 320 HP is being fuelled by construction applications. Crawler dozers above 320 HP are deployed for mining applications. In revenue terms, the market for crawler dozers is expected to reach $41.6 million by 2020.

Growth drivers
The market for crawler dozers is driven by the growing real estate market in India. The emergence of the real estate market near Tier-I and Tier-II cities is fuelling the demand for crawler dozers. Additionally, India?s level of urbanisation grew from 30.9 per cent in 2010 to 32.4 per cent in 2015, further boosting the demand for crawler dozers.

The growing OEM presence in India is also boosting the demand for crawler dozers. Local production of equipment offers cost competitiveness over imported equipment. The OEMs are resorting to follow the dealership or joint venture model. For instance, Caterpillar partnered with GMMCO and Tractors India Ltd for utilising its distribution network and enhancing penetration into the Indian market.

Challenges
In India, OEMs offer limited financing options and lack an internal financing arm. Small and medium sized end-users generally lack huge funds for purchasing construction equipment and rely on non-banking financial institutions (NBFCs) for credit facilities.

Growing commercial infrastructure and public infrastructure have propelled the demand for construction equipment in India. The growth in the construction equipment market would offer an opportunity to Indian as well as international manufacturers to roll out equipment equipped with additional features to grab share in the already fragmented Indian construction equipment market. Until now, construction equipment players focused more on price sensitivity and had lesser focus on parameters such as safety, technology, fuel economy and emission norms. However, the inflow of Chinese construction equipment players in the Indian market, which are offering equipment at lower prices, has led the existing players to focus on additional features such as safety and technology to counter Chinese players. In India, safety standards are not clearly defined for construction equipment. Safety features such as Roll Over Protection Structure (ROPS) and Falling Object Protection System (FOPS) should be made mandatory for each construction equipment.

On the other hand, technology has been evolving for the construction equipment market. End-users are focusing on purchasing construction equipment that can perform the task in limited time, with achieving supreme efficiency and fuel economy. Construction equipment players are focusing on enhancing fuel economy by upgrading engines deployed in construction equipment. Achieving fuel economy would be directly proportional to following emission norms. In India, heavy duty diesel engine-equipped construction equipment follow Bharat Stage-III emission norm. Emergence of new emission norm Bharat Stage-VI would defer the purchase decision of several end users such as government, rental players, and construction companies. End users, who have earlier purchased new construction equipment from the market, are focusing on buying used equipment, available at a lower price than new equipment. Thus, used equipment import from China and the Middle East has an undesirable impact on the profits of domestic and international players.

The Government of India?s ?Make in India? initiative has increased investments from construction equipment players for expansion of construction equipment portfolio along with expanding equipment manufacturing facility vis-a-vis achieving 100 per cent indigenisation in component manufacturing. Indigenisation of component production would ensure easy availability of components to meet customised equipment requirement, coupled with competitive pricing.

Future prospects
Construction application is the leading user segment owing to large number of infrastructure projects such as Bharat Mala and highway expansion projects which are currently driving the demand for new crawler dozers. In the forecast period, the demand for crawler dozers is expected to be driven by the Pradhan Mantri Awas Yojana, which aims to construct around 20 million new houses by 2022, 100 Smart Cities project, which will fuel the infrastructural growth across the country. On the other hand, revenues for construction equipment from mining application declined during 2012-2014 owing to the ban on iron ore mining in Goa and 204 coal blocks across the country. The ban depressed the demand for new equipment. However, in the forecast period, the demand of equipment for mining application is set to flourish owing to removal of ban on 38 coal mines and few iron ore mines by the end of 2015.

In volume terms, the CE market is expected to reach 118,700 units by 2020. In revenue terms, the market would be around $5 billion by 2020, growing at an annual growth rate of around 2.5 per cent.

By 2025, India?s construction market is expected to emerge as the third largest globally.

The market for crawler dozers is expected to reach $41.6 million by 2020.

Demand for small dozers below 150 HP and medium range segment up to 320 HP is being fuelled by construction applications. Crawler dozers above 320 HP are deployed for mining applications.

The author is Research Associate with 6W Research, which is into Research, Consulting, Database, and Outsourcing.