Following growth in investment in the infrastructure sector, the domestic construction equipment industry is set to grow at 12 percent, increasing India’s global share to 10 percent by 2017, according to a survey.
According to a report released by Roland Berger Strategy Consultants, India’s construction equipment market, though small by global standards, is extremely competitive and has players operating under different strategies.
“The market is expected to grow at 12 percent CAGR to $4 billion by 2017, which will be driven by infrastructure investment of $1 trillion during the 12th Five Year Plan,” says company’s Managing Partner Wilfried Aulbur in a press release.
Post 2014 general elections, there is an expected economic resurgence which will boost the urbanisation of India, as the government has granted new infrastructure projects and is allowing huge investments in the infrastructure industry.
“Burgeoning real estate industry, increasing coal production and mechanisation of mining operations, will aid the growth in the country’s equipment industry. India is expected to see more competition among the existing players in this segment with an aggressive growth strategy,” he said.
The residential construction industry is expected to grow from 10.8 percent CAGR of 2006-11 to 15.3 percent by 2017, the report said.
According to the survey, developing and developed world would grow 64 percent and 86 percent, respectively by 2050, and growth will be concentrated in India and Africa due to large percentage of youth.
Aulbur further said if India has to successfully constitute 10 percent of the global market, the construction equipment players need to take key strategic actions.
“They will have to design and build equipment suitable to the Indian market. They should also look at a distinctive export business approach,” he said.
On the policy front, the report said there is a need for focused systemic changes towards credit enhancement, banking and regulatory interventions.
The report further said that since the construction equipment capacity far-exceeds current and near term domestic demand, increasing share of exports is a potential option to improve utilisation but would require focused effort by OEMs (original equipment manufacturers) for sales channel development and is not something that can be achieved quickly.