Robust Growth Anticipated in India’s Construction Equipment Sector Amid Infrastructure Focus
The domestic construction equipment sector in India is poised for strong revenue growth, expected to increase by 14-15% in FY24, driven by the government’s unwavering commitment to infrastructure development, according to a report by Crisil Ratings. Construction activities in real estate and mining sectors will further bolster this growth.
This anticipated revenue growth follows a substantial 29% increase in the previous fiscal year, and it is underpinned by the government’s continued emphasis on infrastructure expansion, particularly in road construction, metro systems, and railways, including projects outlined in the National Infrastructure Pipeline (NIP).
The accelerated pace of road construction, which accounts for 40% of the demand for construction equipment, bodes well for the sector’s expansion. Manufacturers are also witnessing robust demand from the real estate and mining sectors, as well as from contractors involved in bridge, airport, and metro corridor projects, as highlighted by Poonam Upadhyay, Director at Crisil Ratings.
Additionally, there is an expectation of some pre-buying of equipment in the last quarter of the fiscal year. This is driven by the sector’s transition to CEV Stage-V2 emission norms, effective April 1, 2024, which is anticipated to lead to higher equipment prices.
In terms of sales volume, the sector is projected to reach record levels, with an estimated 1.2 lakh units sold this fiscal year, compared to 1.1 lakh units in FY23.
The report breaks down the composition of sales volume within the sector: earthmoving equipment accounted for 70%, material handling and concrete equipment made up 22%, while material processing equipment represented the remaining portion. This diversity in equipment sales reflects the multifaceted growth and demand within the construction equipment sector.